Central Valley Cooperative

The energy stocks report is being ignored for the most part today.

Energy futures continue to trade on any news coming out of the Middle East or Japan. As the refinery situation remains unstable in Japan, crude oil imports will likely continue to be turned away, but the demand for finished products will likely remain high.

Crude oil inventory was somewhat bearish with a build of 2.131 million barrels versus estimates for a build of 1.500 million barrels. Cushing, OK had a small build of 177,000 barrels. US refinery utilization was up 0.7% at 84.1%. The trade had estimated utilization to be up 0.4%. Distillate inventories were also bearish with a build of 7,000 barrels versus the expected draw of 1.500 million barrels. Gasoline inventories were very bullish (mirroring last night’s API numbers) with a draw of 5.320 million barrels versus estimates for a draw of 2.000 million barrels.

The inventory report was similar to last night’s API numbers with a bullish gasoline number and bearish heating oil and crude oil numbers. The market reaction was pretty muted this morning with continued strength in RBOB and a bit of surprising strength in crude oil. Heating oil is definitely the market laggard following the report. Demand improved for gasoline while distillate demand edged lower. Over the last 4 weeks, gasoline demand has averaged 9.1 million barrels which is a 1.2% increase from last year. Distillates have averaged 3.9 million barrels over the last 4 weeks which is a 3.6% increase over last year. The market continues to watch the Middle East for direction. Crude oil is the most bullish on a chart with the expiration of April futures yesterday. The market is looking to test the recent high at $106.95 on a continuous chart. Propane posted a draw of 0.4 million barrels last week and are now in the lower portion of the average range.