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Is the Economy Awakening or Still Weakening?
Let’s dispense with last week’s U.S. inventory report, which has been carrying less and less clout lately as a means of crystal balling short to medium term price movements. A huge jump in crude inventories was offset with a drop in levels of gasoline and distillates, giving us a net neutral image of short term price trends. Gasoline is normally imported into the U.S. northeast at a rate of 1,200,000 bpd but this fell to 608,000 bpd, which somewhat accounts for the lower overall inventories.
There was a minor increase in refinery runs of 0.5% and with the annual refinery maintenance programs more or less over it makes you wonder, when these refineries kick into gear, where all the extra gasoline is going to go. With U.S. unemployment stubbornly holding, we can’t see an increase in demand that would allow refineries to run anywhere near their traditional 95% level this summer.
In fact, all we can see is further refinery closures or at least long term mothballing as the only means the oil industry has to improve or restore their margins to justify their very existence.
What are the numbers indicating industrial production is gradually coming back and what does it mean in the midst of an awakening economy? Find out in this week’s Energy Report. Sign up by sending your email to info@en-pro.com.
By: Roger McKnight, Senior Petroleum Advisor