Oil focuses on inventories as jobs report looms

With refinery runs expected to increase by 0.4% I am expecting a modest build in gasoline stocks. Gasoline stocks are expected to increase by 1.1 million barrels which would result in the gasoline year over year surplus of around 16.8 million barrels while the surplus versus the five year average for the same week will come in around 10.6 million barrels.

Distillate fuel is projected to increase by 1.5 million barrels. If the actual EIA data is in sync with my distillate fuel projection inventories versus last year will likely now be about 2.2 million barrels below last year while the deficit versus the five year average will come in around 13.7 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's inventories are mostly in directional sync with some differences compared to last year’s changes. As such if the actual data is in line with the projections there will be modest changes in the year over year inventory comparisons for most everything in the complex.

I am maintaining my view of the entire complex at neutral but keeping my bias at cautiously bearish as prices have breached the current support level. Global demand growth is still looking like it is turning to the downside.  Even the externals have turned into the negative area in the short term.

I am maintaining my view at neutral and bias at cautiously bearish after this week’s price reversal and breaching of the range support level driven by a neutral inventory report and a fundamental picture that is looking much less supportive than over the last few weeks.

Markets are mostly higher as shown in the following table.

Best Regards,

Dominick A. Chirichella

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