Oil retreats after concerted government moves

With refinery runs expected to decrease by 0.3% I am expecting a modest draw in gasoline stocks. Gasoline stocks are expected to decrease by about 2.0 million barrels which would result in the gasoline year over year surplus coming in around 6.4 million barrels while the deficit versus the five year average for the same week will come in around 8.6 million barrels.  

Distillate fuel is projected to decrease by 1.0 million barrels on a combination of steady exports but warmer than normal weather last week. If the actual EIA data is in sync with my distillate fuel projection inventories versus last year will likely now be about 18.8 million barrels below last year while the deficit versus the five year average will come in around 0.6 million barrels.

The following table compares my projections for this week's report (for the categories I am making projections) with the change in inventories for the same period last year. As you can see from the table last year for the same week the inventory changes are modestly different as there was a much larger decline in  gasoline stocks versus the projections for this report. As such if the actual data is in line with the projections there will be modest changes in the year over year comparisons for most everything in the complex except for crude oil inventories.

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Even though WTI is still trading above its technical support level of around $104/bbl the market may be entering into a medium-term downside correction as the immediate tensions with Iran seem to be easing a tad. As such I am downgrading my view to neutral for the moment while I sit back and see how the market digests all of Monday's news related to the geopolitical situation in Iran. Even as the market seems to be in the midst of a sentiment adjustment, oil continues to be driven by the evolving geopolitics of the Mideast...in particular Iran with just about all of the other normal prices drivers taking a secondary role...including fundamentals.

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