“Going along with ‘drill, drill, drill’ is now ‘ship, ship, ship,’ ” said John Kilduff, energy analyst with Again Capital.” The bottleneck has been addressed in Cushing [Okla]. We’re seeing those inventories plunge. We’re seeing it from all the rail movement. It’s having an impact, as are the pipeline reversals.”
That is the rhetoric and here are the facts from the latest EIA report: Last year Cushing had 46.8 million barrels in storage and today Cushing has 47 Million barrels in storage. Thank goodness for all the rail and pipeline movements of the last year. I guess “plunging inventories” justifies the recent narrowing of the WTI-Brent spread from a year ago.
Funny Business Going on with Inventories
There was a 20 million withdrawal from inventories the last two weeks for the first time in 30 years. What are the odds that this is wholesalers stocking up for the rest of the summer? Expect a substantial build next week in inventories as Saudi Arabia`s upcoming increased export shipments finally hit the market, many wholesalers summer needs have been met, and product inventories are higher than this time last year.
2% GDP Economy
But the one thing that is apparent is that consumer demand for products didn`t all the sudden spike by a factor of 10 over the last two weeks. Furthermore, Oil inventories still stand at 374 million barrels compared to starting 2013 with 361 million in storage. This is after an unprecedented and highly unusual withdrawal occurrence that doesn`t fit with the 2% GDP growth environment that necessitates the Fed having to stimulate the economy with $85 Billion of monetary stimulus each month, and a total unemployment rate well above the 10% level. (more)
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