I don’t think I have ever seen the forecasters miss the estimate this badly. They were forecasting a 300,000 barrel decline in gasoline stocks, and instead got a 5 million barrel decline. For the first time in a long time, inventories are now in the lower half of the normal range.
Here was CNN’s take on it:
In its report, the Energy Information Administration said gasoline stocks, closely watched ahead of the summer driving season, plummeted by 5 million barrels. Analysts were looking for a small drop of just 300,000 barrels, according to Reuters. The fall in gasoline supplies pushed gasoline stocks to the lower end of their average range, the first time in several months the supplies have dipped below average.
One analyst noted that the Iran situation had pushed up oil prices $2 to $3 over the last couple of weeks, and credited the big fall in gas stocks with preventing a similar selloff.
“We’re nowhere near where we should be in terms of inventories,” said John Kilduff, an energy analyst at Fimat in New York, who also pointed to strong gasoline demand numbers in the report. “We’re seeing the kind of numbers we only see during the peak summer season.”
Kilduff also noted the relatively low rate of refinery operation, which EIA said was at 87 percent capacity last week.
“The failure of the refinery rate to go to 90 percent is spelling lots of trouble for us,” he said.
Crude inventories were up more than expected, and crude imports are running at a higher level than at this time last year:
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 4.3 million barrels compared to the previous week. At 332.7 million barrels, U.S. crude oil inventories are above the upper end of the average range for this time of year.
U.S. crude oil imports averaged over 10.2 million barrels per day last week, up 613,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged over 10.0 million barrels per day, or 196,000 barrels per day more than averaged over the same four-week period last year.
If gasoline inventories don’t turn upward within the next week or so, expect to see them make another strong run past $3.00/gallon.