If you were looking for the market analysis from May 4, "Cycles start setting up," by Jeff Greenblatt, please click here. We apologize for any inconvenience.
It seems like old times for the crude oil market. With the dollar falling and the euro soaring it reminds me of the old quantitative easing risk on, risk off days. Now with supply in Cushing, Okla., falling for the first time in 21 weeks, it is almost symbolic of everything that was wrong with the "Ultra- Bears" arguments. The Ultra Bears were making the argument that no matter what, U.S. production would continue to rise, and supplies in places like Cushing would continue to rise until it was over flowing. Yet now with increasing signs that U.S. production is falling and demand is rising we have a very different oil market than the one we had last November when prices began to crash.
The Energy Information Administration helped oil breakout from what may be a major technical saucer bottom. They did this after they reported that U.S. crude oil inventories rose by 1.2 million barrels, which was below the market estimates. That, coupled with the fact that supply in Cushing fell by 500,000 barrels and the dollar was tanking, set the stage for what may be a bottom in prices for years to come.
Refiner demand was also very strong as refineries operated at 91.3% of capacity--what has to be near a record for this time of year --and crude oil refinery inputs averaged 16.1 million barrels per day. Consumer demand was respectable as motor gasoline product supplied averaged came in at more than 8.9 million barrels per day, up by 2.6% from the same period last year. Distillate fuel product supplied averaged about 4.0 million barrels per day over the last four weeks, up by 0.2% from the same period last year. Jet fuel product supplied is up 11.9% compared to the same four-week period last year.