Prepare for crude to spike back hard
Still oil had to deal with the realities of the moment when the Energy Information Administration reported that crude supply increased to the 406.7 million barrels, the highest level in 80 years. Still the 8.87 million barrel build was less than the American Petroleum Institute build and it came with a bigger than expected drawdown in distillate and gasoline inventories. The EIA said that distillate fuel inventories fell by 3.9 million barrels in the lower half of the average range for this time of year and gasoline inventories were down by 2.6 million barrels last week--but still well above the upper limit of the average range. While refiners get ready for maintence we may see products tighten. Refinery runs fell back to 88%.
This come against a back drop of a Federal Reserve Statement where the Fed is showing more worries about the lack of inflation and more worries about how its actions on raising interest rates could impact the economy internationally. Oh, sure, the Fed said the U.S. recovery is 'solid' but is that wishful thinking? The Fed is starting to worry about the companies that are feeling the pain of the strong dollar and how deflation in Europe could be inflamed if the Fed acts too soon.
Europe is seeing more pressure as a run on Greek Bank is slowing. The Guardian reports that Daniele Nouy, who chairs the European Central Banks's Supervisory Board, declared that Greek banks are strong enough to survive the crisis, and hailed their progress in improving their balance sheets. They also say that Deputy PM Giannis Dragasakis told reporters last night that Athens will seek dialogue, not confrontation, with its lenders. He also said, "our concern is the proper functioning of banks," suggesting the government wouldn't let them collapse.