Although I suspect much of this production will simply be deemed uneconomic and abandoned it yet is not a lot of production in the grand scheme of thing.
- CNBC Watch: CNBC has taken to pointing out the fact that the market has ignored Iran, Russia, Nigeria and other bullish factors for the last two weeks. As they are spoon fed their "deepest thoughts" by the traders standing behind their anchor in the pitt we may be seeing the first inklings of a sentimet turn for oil.
Oil Inventory Preview (estimate from the Reuters survey)
Production Impact From Gus and Ike: Just a chart before I get into comments on this week’s inventory report. The small table at the bottom is for the weekly reporting period covered by the EIA so you can see the impact on inventories in last week’s report and the for today.
ZComment: The numbers the Street is using are as good as any others. We have another week of crimped production similar to the one last week. Imports are unlikely to have improved in the week between the two storms so numbers are likely to be similar to last week except that more refining capacity should have been offline so demand for crude was likely a bit weaker leading to a slightly smaller draw on crude stocks than we saw last Wednesday (a drawdown of 5.9 mm barrels). The numbers today will of course take a back seat to AIG, JPM, the Fed, etc but I would point out that if the consensus draw on gasoline occurs it will drive gasoline inventories to the lowest levels since the EIA has been tracking weekly inventories (that’s 18 years folks), something that may in fact get noticed. (VLO) reported a delay this morning in re-opening its Houston refinery due to a malfunction and I suspect we will see more of this, exacerbating the gasoline inventory situation in coming weeks although the U.S. is likely to see a surge in gasoline imports from Europe which should help alleviate some of the pain to consumers. Distillates will also start to get interesting soon.
Natural Gas fell $0.09 to close at $7.28 in very boring trading. Boring is actually a good thing. No big swings in price and no crude matching sell down. Feels like a bottom. Time will tell. This morning gas is trading up $0.20.
- Imports: off about 1 Bcfgpd from last week.
- Canada came in 8.7 Bcfgpd, down 0.8 Bcfgpd
- LNG saw imports rise to 1.1 Bcfgpd, up 0.2 Bcfgpd. This is the first significant rally in LNG volumes since early Spring.
