Welcome back to the tenth edition of Thirsty Thursday, an inventory report from RARE PETRO! We at RARE PETRO are big on the classics. Atlas Shrugged. Willie Nelson. Pulp Fiction. Old Fashioned Cocktails. Speaking of cocktails, go ahead and click on that link to dress yourself up a classic Old Fashioned to go with this inventory report. As always, it’s never a good idea to read Thirsty Thursday alone, so be sure to send this report to a friend. Let’s get into some numbers!
The past few weeks have proven to be a consistent tug of war between drawdowns and builds. The bad news is that drawdowns won once again this week. The EIA predicted a 3.1 million barrel drawdown. They were only half a million barrels off… if we looked at the absolute value of the results. The resulting build was actually 3.6 million barrels. This is 1.5 million barrels greater than the build we witnessed 2 weeks ago so hopefully, this isn’t the beginning of an established trend.
The API expected a smaller drawdown of 2.9 million barrels, but they were a little bit closer to their estimate. They reported a tiny drawdown of almost 900,000 barrels.
It seems that the times of consistent drawdowns may have finally drawn to an end. While it is likely that this is a result of new COVID fears, there are plenty of other factors that could have forced this small build as well. Just going to have to wait until next week to be sure. Follow us on LinkedIn so that you never miss a Thirsty Thursday report.
Regardless of the cause, WTI prices reacted very poorly to the news. Prices took a nasty dip to the $68 territory, but are already (seemingly) on the come up. WTI prices can tend to be a huge diva when news like this emerges, but have no fear, the long-term price action suggests triple-digit prices in the not too distant future. Don’t believe it? Read through some of the periodicals we publish to support our claims.
Sometimes taking it week by week can make things seem more negative than they really are. Expand your time frame, and we’ve come a long way from the past and have great roads into the future.
In far better news, gasoline inventories saw a 5.3 million barrel drawdown on the week. If this trend carries through next week it is likely we will set new 5-year lows.
Still, we’ve been reporting near record-setting lows for weeks in multiple areas and it always pulls up right before that can happen, so don’t get your hopes up.
We can already hear some of you saying: “Well gee… gasoline inventories falling that low would surely push prices even higher!” Congratulations! You are correct, and your prize is… more expensive gasoline.
Prices are on a mad dash to the top as it increased 2.4 cents per gallon in just a week. This puts gas at more than $1 more expensive than it was a year ago. Soon it will be more cost-effective to replace your car with a steam engine and power it will actual dollar bills.
Prices may be high, but refiners aren’t making much money. They are having trouble sourcing cheap crude, and are turning about 1/10 of the net income they had in 2020. If you’d like to learn more about that, you can listen to Tavis’s angelic voice explain the situation on this week’s Monday Madness.
We wish we had more to say about distillates and propane, but they continue to stay in their 5-year historical lanes. Propane keeps teasing to dip below the bottom threshold, but at this point it would take a major event to make it do so.
This week tallies up to a decent one. Sure, some decent crude builds, but even bigger gasoline draws to balance it out. We hope you have enjoyed this inventory report, and if you learned a little something you can explore the rest of our website where you can find more enriching and entertaining content. Thanks for stopping by. Cheers!
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