Energy Tidbits

Oil inventories rose 6.9 million barrels compared with expectations for a 100k increase. Non-OPEC production is surging, displacing OPEC barrels. The world is awash in oil. There are even tankers (approximately 10) sitting idle in the gulf because storage tanks are maxed out. Tanker rates are below their 5-year average, reflecting slower demand. Worldwide oil demand is running about 80% below expectations this quarter and yet the price recently broke out above $68 and is only down about $1 today. Madness, pure madness. Prices could drop to $40 and we would still be swimming in oil.

US refining run rates are about 500,000 b/d below the 5 year avg, but gasoline output is running 400,000 above its 5 year avg reflecting higher yields thanks to the impact of increased fuel ethanol blending. There is absolutely no shortage of gasoline either.