I am not willing to call a bottom to Crude going into the "shoulder period", but I would not be short either.
From yesterday's report:
Total products supplied over the last four-week period has averaged nearly 20.2 million barrels per day, down by 2.4 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged nearly 9.4 million barrels per day, down by 2.4 percent from the same period last year. Distillate fuel demand has averaged about 4.2 million barrels per day over the last four weeks, up by 4.0 percent from the same period last year. Jet fuel demand is 6.8 percent lower over the last four weeks compared to the same
four-week period last year.
Total products supplied went from 20,655k barrels per day during the same 4 week period in 2007 to 20,156k barrels per days in 2008. That is the 2.4% decline in total products the above quote mentions. OK so far?
Ahhh... but the devil is always in the details, isn't it.? Click the link above to the EIA report, scroll down to Table 1. Do you see a line item for Ethanol? Nope. Yet it IS factored into the 20,165k supply number. Now, in Table 1, search for the line "Other Liquids New Supply" 428k barrels per day. Notice this category had no contribution to supply in the year earlier period? Although the EIA has been less than helpful when I called to get a breakdown, this appears to be where Ethanol is accounted for.
(Why do I say "appears"? Because Ethanol was being produced in the prior year period, so the year over year number is not accurate. Further, Ethanol is counted as a "Blending Component" for Gasoline, and when you break ll products down, including blending components, you get back to the 20,165k number, hence ethanol has been included. Still, those F%$#!!! numbers don't add up, either. Here is a link to EIA Ethanol production data. If anybody out there has a better read on this, I am all ears.)
Well... we all know the BTU content for Ethanol is about 35% less than that of Gasoline, by volume. And since we are measuring in BARRELS, which is a volume measurement, if we did an apples to apples "BTU adjusted" year over year comparison of supply we would need to remove 35% of the "BTU Barrels from the 428k or 150 barrels.
BTU availability declined 3.1%, not 2.4%.
The retail gasoline buyer's market is responding to a drop in total volume supplied, and a decrease in MPG because of the ethanol blending component. And the cash and futures market is responding to that.
Yours for a better world,
Mentatt (at) yahoo (d0t) com
3 comments:
For those of us that are "a few bricks short of a full load," can you include your "maybe/possibly" conclusions in with your data observations and elaborations, so we can fully digest what you are saying & apply it to our knowledge of "what is really happening here." You don't have to give any investment advice to do that. Just pretend we are 3rd graders, please. Call me "Scooter."
(From the bureaucrat):
Hmmmm, oil fell back to $124 on Thursday. If the buying of oil starts up again right after the Chinese Olympics finish, it will be one of my greatest predictions.
For America, the easy demand reduction is now behind us. From now on its going to hurt so no recession will do the trick. We are going to need a depression to make further reductions in Miles Traveled. A depression we are going to get but my guess not until the oil pops over 200-250. After that we are going to get a real humdinger of a recession.
So my bets are on $200 oil before the next Summer. I am betting my dollars on it.
Best,
Chuck H.
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