Oil price took a hit as oil inventories rose much more than expected and fears of a euro bond flop permeated the marketplace.
The Energy Information Administration set the negative tone by reporting U.S. commercial crude oil inventories increased by 3.9 million barrels from the previous week. At 369.0 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 3.7 million barrels last week and are in the upper limit of the average range. Both finished with gasoline inventories and blending components inventories decreasing last week. Distillate fuel inventories decreased by 2.9 million barrels last week and are in the middle of the average range for this time of year. The EIA said that U.S. crude oil imports averaged 8.7 million barrels per day last week, up by 196 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged nearly 9.1 million barrels per day, 395 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 427 thousand barrels per day. Distillate fuel imports averaged 119 thousand barrels per day last week.
Oil also was hit by concerns surrounding Europe as well. The Spanish bond auction went ok. The AP reported that the interest rate, or yield, on the 10-year bond was 5.7 percent, up from 5.3 at the last auction on April 4. Demand was more than double the amount sold, down from about triple at the last auction. On the shorter-term notes, the bid to cover ratio was 3.3 this time while the average yield was 3.5%.
From the bigger picture, oil should be near the lower end of the trading range. The $100.00 a barrel area should hold until the May Iranian meeting. You may want to do some option trades accordingly.