Petroleum Inventory Data Show an Interesting Trend

Source:

"Consensus estimates were fairly accurate for various forms of refined crude, but raw crude inventory continues to pile up faster than analyst predictions. . ."

The petroleum numbers seem to be showing an interesting trend developing. Consensus estimates were fairly accurate for various forms of refined crude, but raw crude inventory continues to pile up faster than analyst predictions would indicate.

My take on this phenomenon is that the refiners have a much more keen sense of and concern for market demand and have adjusted production accordingly while crude producers who are feeling the double pinch of drastically lower prices and significant reduction in demand continue to oversupply in a desperate attempt to maintain historically abnormal levels of cashflow.

If this trend continues I would expect crude to have serious trouble breaking out past the $50 resistance which it has failed to breach so far this year. At the same time this seems to bode well on a relative basis for oil refiners as they seem to be in line with market demand and should be the first players in the energy sector to see a return of pricing power once demand begins to recover.

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