The DOE report- is it enough to slow down the inevitable?

Before opening the DOE report today, one day later than normal because of President’s Day, I thought how much today’s report could either help or hurt. Well, after reading through all the numbers and descriptions, I think is report is some much needed good news; however, it does not come without some concerns.

My concern: refineries operated at a dismal 83.5% of capacity, the lowest utilization in recent years.

The better news:

Midwest gasoline storage is nearing its peak (PADD 2) again. Last year we hit 57 million barrels, and last week the Midwest gained 2 million barrels of gasoline (Are these Winter Storms really helping slow demand that much?) We’re currently sitting at 56 million barrels.

Total gasoline inventories rose by 1.1 million barrels, and we’re ahead of last year’s numbers by about 8% which definitely is good.

Total oil inventories rose by 4.2 million barrels, and we’re still behind of last year’s numbers by about 4%. However, we’ve gained 24 million barrels of oil the last 9 weeks- pretty impressive! (However, much of that could be due to lower refinery production)

Overall petroleum demand is down 1.1% over last year.

We should start seeing the Chicago Discount really kick in as supplies have continued to climb in the Midwest… this could help Michigan stay under the national average for gasoline.

I’ll be watching closely for more refinery trouble as some refineries start to switch from heating fuel to summer gasoline- there are bound to be issues… and with oil prices so high (hardly any refining profit, thus the reduced utilization), we’re bound to have some refineries continue their low utilization rates.

Due to the Chicago Discount, we have an equal chance of seeing a hike to 3.29 or no hike… its hard to tell at this point.

Patrick

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