Thursday, September 17, 2015

A Quick Note On the Petroleum Complex

We got nuthin' cookin'.
Since we posted The Shortest Oil Post Ever* on Sept. 3, at $46.10, WTI traded as low as $43.36 on the 10th and as high as $47.35 on the 16th.

Today, $47.45 up 30 cents, last. Yawn.

I'm not saying there wasn't any excitement at all, for example I felt for the shorts during yesterday's 6% upmove.

Which brings me to an oddity of yesterday's action: Most market participants focused on the drawdown of crude in storage but not so much on where the oil went.
Here's Platts:

US Data -- Gulf Coast gasoline production jumps 9.2% week on week: EIA
US Gulf Coast gasoline blenders and refiners' production of finished gasoline increased 190,000 b/d or 9.2% week on week to 2.249 million b/d in the week that ended September 11, posting a five-year high for the second week of September as refineries continue to run at high rates.

Gulf Coast refiners bumped up production to utilize 92.3% of their refineries' operable capacity, recovering from a spate of production issues in the previous week, when capacity utilization was 87.6%.

US gasoline demand, however, did not live up to the market's high expectations for the last major US driving holiday of the year -- Labor Day.

US product supplied, which is commonly used as a proxy for nationwide gasoline demand, was largely unchanged week on week, falling 34,000 barrels to 8.983 million b/d....MORE
Here are the last few lines of Reuters' report:
...Gasoline stocks rose by 2.8 million barrels, compared with analysts' expectations in a Reuters poll for a 21,000-barrel decrease.

East Coast gasoline inventories rose 3.371 million barrels to 60.78 million.

Distillate stockpiles, which include diesel and heating oil, rose by 3.1 million barrels, versus expectations for a 1.0 million barrels increase, the EIA data showed.
That is not sustainable.
We still have no positions but the siren call of the short side is starting to enchant.
For reference, our last short suggestion was Aug. 31:
Sorry about the paucity of posts, reality keeps intruding. All things being equal, and of course they never are, $50 would be a bit pricey for the immediate supply/demand picture and a dandy spot to get short again. Maybe even a lower entry but see second piece below.October WTI $48.86 up $3.64.
It top-ticked at $49.33 before turning.

*"Trading position (short-term; our opinion): No speculative positions are justified from the risk/reward perspective." -SafeHaven