With apologies to Michael Jackson, Phil Flynn describes an apparent Zombie like crude oil build report from the EIA.
It’s close to midnight and something’s selling oil in the dark. Under the moonlight, you see a drop that almost Stops Your Stop. You Try to Scream, but the computer takes the trade before you change It. You Start to scream, as oil tanks right before your eyes. You’re Paralyzed!
Cause this is thriller. Thriller night. And shale oil is dying and the Fed can’t save you. Oil is going to spike because it’s a Thriller night. Bulls will be fighting for their life. Inside a kill thriller sell-off tonight. They’re Out to Get You, while gas supplies are tightening on every side. They will possess you unless you change your position trading style. Now Is the Time for you and me to start to buy, my dear. All Thru the Night, It’ll Save You from the Terror on the Screen, I’ll Make You See. Markets rise across the Land; the trading hour Is close at hand. The Foulest Stench Is In The Air, The Funk of those oil spending cut back years and Grizzly Ghouls from cartel are Closing in to Seal Your Doom And Though You Fight To Stay Alive Your oil Starts To Shiver For No Mere Mortal Can Resist trading this oil thriller! Ah ha ha ha ha.
Back, by ghoulish demand, the oil thriller became an oil nightmare. The Energy Information Administration (EIA) reported an ungodly 5.7-million-barrel oil build and buried the oil bulls. The report was enhanced by a 698,000-barrel released from the Strategic Petroleum Reserve as well as a 700,000 barrel a day upward adjustment. Where does that adjustment come from? As far as the EIA knows, it may have come from the deepest recesses of hell. These upward adjustments of ghostly barrels continue to defy explanation, from the EIA, and strikes terror in oil traders and analyst that can actually do the math.
Which reminds me...What do you get when you measure the circumference by the diameter of a pumpkin? Pumpkin Pi!
You see the crude build happened as U.S. refinery runs snapped back to 87.7% of capacity as refiners, scared out of their wits, would not have enough distillate supply to meet an early cold blast and the new International Maritime Organization (IMO) 2020 diesel rules, focused on maxing out production increasing output to a hefty 5 million barrels a day. Even with their best efforts, distillate supply failed to build as the EIA reported a drop of one million barrels. Still, the drop was less than expected and the market tanked as they got the sense that the danger has passed. Boo ha, ha, ha.
Yet the distillate build was like a vampire sucking the blood out the refinery leaving gasoline vulnerable causing a much larger than expected 3 million barrel drop in gasoline. This came as petroleum consumers consumed like they were possessed with an insatiable desire to suck down anything petroleum. The EIA reported the demand, based on the product supplied, was up a startling 21.3 million barrels per day. That’s up by 3.4% from the same period last year.
Gasoline demand averaged 9.5 million barrels per day, up by 3.6% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels per day over the past four weeks, down by 0.7% from the same period last year. Jet fuel product supplied was up 9.6% compared with the same four-week period last year. Yet despite that, the market is lulled into this bearish sense of false security because they believe the global economy is going to drop over dead and that there is no hope for oil redemption.
They put their faith in U.S. production that is stuck at 12.6 million barrels a day for months and act like zombies that fail to question why that number hasn’t changed in a month while there are clear signs of production problems in the U.S. shale patch. Despite near-record demand in the United States and a Federal Reserve that is so scared of low inflation that they have told you that they will not raise rates until they see inflation rise sustainably, based off a question by Fox Business Networks, Edward Lawrence, or until hell freezes over. Whichever comes first. Boo ha, ha. Wait it’s snowing here! Noooo!
Liquefied Natural Gas (LNG) may be one way to fight the diesel shortage. Trade Winds reports that Tanker players are more likely to favor LNG as an IMO 2020 solution than those with exposure to the container and dry bulk shipping sectors, according to a Tradewinds Knowledge survey. Of the respondents who identify themselves as tanker market participants, 33.7% prefer LNG as a marine fuel to meet the IMO’s new bunker regulations that will be effective from January. In comparison, 16.7% in the container sector and 16.8% in dry bulk have the same preference.
Natural gas could get a real scare if the injection comes out less than 89 bcfs today.
Have a ghoulishly delightful trading day today!
Trade strategy may be key to ride out the crazy moves that will come with the headlines so keep in touch with our daily analysis. We had a great response to our Money Show in San Francisco! Watch for our Videos! Thanks to all. Makes sure you are getting my Daily Trade Levels! Read Phil’s energy report at Price Futures Group. Twitter: @energyphilflynn | Facebook: Phil Flynn
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