Got Gas? There's Less Now
Source: Seeking Alpha, Hard Assets Investor (2/25/09)
"Oil's contango was trimmed by a third over the past week. . . "
The U.S. Energy Information Administration report revealed a 700,000 build in crude stocks despite a consensus forecast among analysts of a 200,000-barrel drawdown.
Calls for a steadying in refinery utilization among the sell-siders were also off base. Instead, EIA says capacity usage declined nearly a percentage point to 81.4%.
Gasoline stocks, says the EIA, declined by a larger-than-expected 3.4-million barrel margin. Traders' expectations of a substantial draw on supplies were reflected in Tuesday's NYMEX action. Unleaded gasoline futures rose 3% by the close of Tuesday's floor session.
Overall refining margins have now declined to levels not seen in a month and seem to be testing the steep uptrend line established late last year.
Oil's contango was trimmed by a third over the past week, paring the quarterly carry to 10.5%. That's still plenty of incentive to hoard oil for later delivery.
Crude's technicals hint of a short-term low, but closes above $40.40 in the nearby April contract would confirm the market's strength.
Meantime, the $34 level remains the bull's-eye for shorts.