crude oil

Crude oil stays stubbornly strong

Modern Day Record!

U.S. oil supplies hit the highest level since the Department of Energy has been keeping the highest level records or the highest level in 83 years. Copper hits the highest level since March after the Chinese currency hits a 16 month low as it appears the market expects more stimuli. Natural gas gets ready for another potential wake-up call as the Energy Information Administration releases its weekly supply data that will most likely show a below average injection into storage that is already at an 11 year low.

Oil pulled back after the Energy Information Administration as reported Bloomberg News showed that U.S. crude oil (NYMEX:CLM14) inventory hit the highest level in EIA weekly data since it began counting it in 1982 and monthly government data going back to 1920. Reports before 1976 were based on data from the Bureau of Mines, according to the EIA, and stockpiles of Alaskan crude oil in transit were included starting in 1981. The 3.52 million-barrel gain was the 13th in 14 weeks. U.S. production rose to a 26-year high of 8.36 million barrels a day.

Bloomberg reported that supplies on the Gulf Coast, known as PADD 3, increased to 209.6 million, the most since EIA began recording that data in 1990. U.S. oil demand slipped to 18.1 million barrels a day last week, the least since June 7. Refinery crude inputs rose to 16 million barrels a day, a three-month high!

That three month high and the fact that product supply came in better than expected seemed to suggest that Refiners are getting ready to build products at a record rate. Strong margins and decent demand both domestic and foreign should raise expectations that supplies will start to rise.

Yet oil is staying stubbornly strong in part because of the Ukraine. The Geneva accord is falling apart and Russian President Vladimir Putin is accusing Ukraine of using force against Russian citizens as a serious crime. Fears that gas supply in Europe may be at risk is keeping the risk premium in petroleum.

The BBC reports that Commandos have moved on the separatist stronghold of Sloviansk in eastern Ukraine days after a new “anti-terrorist” operation was announced. A number of casualties were reported among the separatists as the commandos, backed by armor, cleared barricades near the town. Separatists are occupying key buildings in at least a dozen eastern towns. It appears that pro-government forces have regained control of the city hall in another eastern town, Mariupol.

The rush to refill natural gas storage is on and it looks like it is going to be an almost impossible challenge, at least at current prices.

Copper (COMEX:HGM14) highest level since March as Chinese Juan hits a 16 moth low. The market looks like it believes that we will see better Chinese demand because of the possibility of more Chinese’s support for their economy.

Posted in Oil Gas and Chemicals.