Another good DOE report!

Its very good news this time of year when the DOE releases a “favorable” report like they did moments ago at the normal 10:30am time.



  • Refineries operated at a low (albeit slightly higher than last week) 84.7% of capacity last week


  • Crude oil inventories rose by 3.2 million barrels last week. At 308.5 million barrels, we are now into the MIDDLE of the average range for this time of year… we’ve had consecutive oil inventory gains the last couple months. NOTE: we are 11 million barrels below our last year level. We need to fill this gap ASAP.
  • Gasoline inventories rose by 2.3 million barrels last week and are above the upper limit of the average range
  • Gasoline demand remains flat compared to last year, averaging about 9 million barrels per day
  • Distillate demand fell about 3.5% last week compared to last year
  • Overall demand of petroleum products fell 2.4% last week, averaging about 20.6 million barrels per day
  • Midwest (PADD2) storage is nearing 57.5 million barrels or storage. Anything over 57.5 million barrels would be the highest level since March of 1999!

This is good news, I’m mixed on a hike- but due to the ever increasing Midwest storage, don’t believe a hike to happen. If it does, it would only be to 3.25 or so.


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.


DOE Report Comments

Wow… today’s DOE report was a terrific read. I read a lot of good news from this week’s report on petroleum inventories.
As typical, let me highlight some of it:


  • Oil inventories rose by 7 million barrels, pushing them into the middle of the average range
  • Gasoline inventories rose by 3.6 million barrels, keeping them above the upper limit of the average range
  • Huge gasoline gain DESPITE much lower refinery utilization (see cons)
  • Midwest (PADD 2) inventories sit at 54.4 million barrels, their highest level since March
  • Chicago Discount could slowly work out to market as storage nears its limits


  • Refinery utilization slipped to 84.3% of capacity. This is the lowest I can remember in quite some time
  • Distillate inventories gained virtually nothing (100,000 barrels)

Overall a good report, with the Midwest PADD being in excellent condition. We can expect to see the Chicago Discount start to appear as storage facilities near their storage limits soon. This could be anywhere from 3 to 7 cents per gallon. I don’t see any reason for a hike at this time.

Prices should work down to possibly as low as the 2.70s. We’ll see!


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As the year ends…

As 2007 comes to a close, lets go over a brief review (seems like EVERYONE is doing a review of 2007- in pictures, in news, WHAT ELSE? Gasoline!)

>High Price for Regular Unleaded was $3.65 on May 29, 2007
>High Price for Diesel was $3.65 on November 19, 2007

>Low Price for Regular Unleaded was $1.85 on January 22, 2007
>Low Price for Diesel was $? on ?

We (PADD 2, Midwest) started 2007 with 53 million barrels of finished gasoline in stockpiles. This year, its looking like we’ll end at under 50 million barrels. Not a huge loss, but incredibly bad news as last year was the worst in terms of a spring price run. We’re on target to beat last years “running of the bulls” at the end of winter.

I will continue to compile more data as time goes by here, but in the meanwhile, be on the lookout for a price hike tomorrow!

(I’m seriously thinking about ways to avoid this year’s price run up come Spring. At this point, I’m expecting national averages to hit $3.20-$3.70, which could find as much as half the U.S. with prices near $4. More on this later)

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DOE Report- the good and the bad…

It’s Wednesday! I’m sure many of you know that means the Department of Energy releases its weekly petroleum report!

Lets take a peek at what this weeks report contained:

Well first, BP’s Toledo refinery came back online. This was echoed in the Midwest PADD numbers. The Midwest’s inventory of gasoline is at its largest number since the last week in June (over 49 million barrels!)

*Refiners are going backwards! Refinery utilization dropped again to 87.8%. Not sure why this dropped, but refiners should be coming OUT of maintenance, not slipping away back into it…
>We need this number to rise to over 90% very soon to dodge a huge Spring run-up in prices…

*Oil inventories dropped a whopping 7.6 million barrels.
>In the last 3 weeks, inventories have dropped over 16 million barrels. WOW. Do a conversion- thats 672 MILLION gallons of oil. HOWEVER, keep in mind that as we get closer to the end of the year, folks in the oil business are trying to draw down their stocks of oil (less tax to pay at the end of the year if you don’t have as much on hand). I’m not too worried about this huge drop, but keep this in mind- we’ve been “well above” the average range for oil the last few weeks- now all of a sudden we’re in the lower half of the average range for oil… no good.

*Gasoline stockpiles increased again… a 3 million barrel gain this week.
>In the last 2 weeks we’ve seen an increase of 7 million barrels. A nice build… we need more weeks like this where we have large builds in gasoline stocks. This news was semi-surprising because gasoline production dropped this past week. We’re now only down 1% compared to stockpiles last year. We sit on 205.2 million barrels of gasoline this week. We need this to hit 215 million barrels in a hurry to counter the Spring run up in prices.

*Distillate inventories (Diesel, heating oil) took a hit this week to the tune of 2.1 million barrels.
>Again- after being in the “above average” range for many weeks, distillate inventories have slipped into the “lower half” of the average range for this time of year. Look for diesel prices to continue their climb this winter. We’re now 8.8% lower on distillate inventories compared to last year. Thus the large increase for the fuel compared to last year. This pain will not ease anytime soon.

*Demand is essentially flat for many products
>MasterCard is reporting lower demand, while the DOE reports the smallest increase. I tend to side with the DOE. Demand is up .9 percent across the board, with a 0.3 increase in gasoline demand, a 4.3% increase in distillates, and a 1.5% decrease in jet fuel.

Bottom line: oil prices may climb today as traders digest this latest news, but they have to have bearish news on the top of their heads. Look for oil to trade higer, then come down as they realize that the all important gain in gasoline is the big deal. Today’s market will set tomorrow’s price, so stay tuned here for further updates.

I would hold off on filling up for now, I don’t believe this report is bad enough to warrant an immediate hike.

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DOE Report!

Last week brought an unexpected jump in gasoline stockpiles! Analysts were predicting a drop of 400,000 barrels while a jump of 1.3 million barrels actually occurred. Demand is flat over last year as prices remain high.

We may see oil continue to climb as we saw another drop in crude oil inventories. However, we’re still in the upper average of the range for this time of year.

Midwest PADD remained relatively flat at 47 or so million barrels.

We may see another hike depending on what oil does today.

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