Roll out the barrels; raise up production before supply falls again. Fill up the tanker; I may be rushing things, but supply is down again now. For we need a little oil, right this very minute, refiners have a window, no matter how bears spin it. And we also need distillate, right this very minute. It hasn't snowed a single flurry, but refiners have to be in a hurry. So producers get busy, build up the production to highs we have never seen. Raise up the out take. It's time to get ready for new tax cut demand now! Supply has grown a little leaner, and its going to get colder, refiners get cracking, it’s time to get bolder. We need a little oil now.
The American Petroleum Institute (API) reported another massive drawdown in U.S. crude supply coming at a drop of 5.222 million barrels last week. That is the third big draw in a row and was almost twice what the market was looking for. The drops add to what has been one of the biggest peak to valley drops in United States crude supply and is reflective not only of the success of OPEC production cuts but also evidence that Shale oil producers can’t keep pace with the OPEC production cuts and record compliance.
While the market is showing more concern about the tightening global oil supply situation and rising geopolitical risk, a build in gasoline supply and a build in Cushing, Okla., is keeping the market from boiling over. Still, just last week the API reported a 7.385 million barrels drop in crude supply and this is indicative of a situation where demand by refiners is exceeding supply and causing this draw. The market won’t be able to ignore this much longer.
Yet, the API reported another build in gasoline inventories at 2.001 million barrels, which was in line with expectations but we saw a drop in distillates where supply globally is well below average in the strongest demand period of the year.
This comes as geopolitical risk is on the rise. Fox News reported that the Saudi-led coalition fighting Yemen’s Shiite rebels announced it intercepted a missile fired over southern Riyadh Tuesday, while the Yemeni rebels said they targeted the royal palace in the kingdom’s capital. U.S. officials at the Pentagon confirmed to Fox News Saudi Arabia’s report that the Houthi missile was shot down successfully.