Energy Bears Have Edge Today
Obviously, the EIA report overall sunk crude oil prices with the July contract at times trading $0.75 below the level where prices were ahead of the report release. However, the information on the crude oil market from the EIA should have been fundamentally supportive to crude oil with a crude stock decline much larger than expected and the US refinery operating rate jumping to 91.3%.
Despite seeing a significant jump in the US refinery operating rate (which ramps up product production), the gasoline market showed signs of standing up to the negative product inventory readings in the EIA report. In the end, the report was patently bearish to all products as the ramping up of US refinery activity should begin to put more normal supply flow through the pipeline.
Apparently, active maintenance in the Gulf export areas dampened demand for natural processing into LNG. On the other hand, maintenance in the US and other production areas did prompt surging LNG prices in Asia and other areas. However, high prices in Asia and the end of maintenance have resulted in a pickup in US export activity and that combined with warmer weather for the US West Coast has resulted in a trade above yesterday’s high early today.
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