The API reported a big drop in gasoline stocks to the tune of 5.37 million barrels. They also reported a 1.29 million barrel drop in distillates. The drops seem to suggest that perhaps demand is improving and despite the recent weak economic data perhaps we are seeing economic activity pick up as reflected by the drop in supplies and a better than expected industrial production number. Crude did build by 1.75 million barrels.
Reuters news reports that "Valero denied that it was set to commit to shipping oil on the planned Double E pipeline from Cushing, Oklahoma to Houston, saying it was still backing the rival Keystone XL project. "Valero has no plans to commit to receiving crude via the Double E pipeline," the company said in a statement to Reuters. "(It) remains committed to receiving shipments of Canadian oil via the Keystone XL pipeline extension."
Two industry sources, including one familiar with Valero's strategy, told Reuters earlier on Tuesday that the San Antonio-based firm was "likely" to sign on for shipping crude down the planned Double E pipeline. The line is a 450,000 bpd oil link planned by Enterprise Products and Energy Transfer, for construction by the end of 2012. But during a so-called open season for the past several months, the 50/50 partners have struggled to gain the necessary commitments to ship oil on the line. If it is built, Double E could help put an end to huge price distortions in world oil markets, since a lack of southbound pipelines from landlocked Cushing to the Gulf Coast has contributed to discounts of more than $22 a barrel for West Texas Intermediate (WTI) crude, which is delivered at Cushing.
Big oil find in North Sea! Take that peak oil!
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.