Decent DOE Report marred by “neutral news” turned significant by traders

The DOE report which was released this morning at 10:30am due to the holiday was a relatively good report.

I will make a few highlights.

  • Refiners operated at 90% of capacity last week, a bit low, but above the psychologically significant 89.9%.
  • Gasoline production increased (albeit small) to 9.4 million barrels per day (demand is 9.6 million barrels per day)
  • Oil imports averaged 10.8 million barrels per day, a nice change of pace. Anything over 11mb is quite significant.
  • Gasoline imports averaged 1.4 million barrels per day last week, above the 1.1mb average.
  • Crude Oil inventories rose 3.1 million barrels to 354 million barrels, the highest in well over a decade, and nearly 13-percent higher than the 5-year average.
  • TOTAL INVENTORIES ROSE BY 8.3 MILLION BARRELS (nice!)

Now we have the good. The bad? Traders turning relatively small, insignificant news into a big deal. A girl was kidnapped in Nigeria today, the daughter of a oil worker. While its news, it certainly shouldn’t be pushing oil higher; I mean- COME ON! Also in the news, Iran. What now? We haven’t heard anything new in weeks! Sure the threat of sanctions still exists, but WHY is this “new” news? Its not! Next story! Hurricane Season. This is the ONLY one of these three stories that should be putting an upward pressure on prices, however, we haven’t even seen an organized storm, much less a tropical storm, coming from the Atlantic.

Overall, look for prices to hang out today perhaps, but then I will be looking for a small downward correction in oil at least as traders realize the junk news is insignificant compared to the huge amount of inventories in the U.S.

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