Oil: Bark Melek
Bart Melek, senior economist, BMO Capital Markets
Oil Inventories
fairly bullish numbers, especially on gasoline, looks like decline of 5.5 million barrels..at same time we were looking at 1.7 million barrel increase in oil inventories; it came in below expectations..this will certainly rally the gasoline market, this will be yet another week of inventory decline, and at the same time oil inventories not increasing to extent that we thought so, fairly bullish conditions..I am afraid we will be paying higher gasoline prices for a while longer..add to that geopolitical instability in Middle East and now Nigeria potentially after the election and we have makings of higher energy prices for weeks to come.
Refineries
With a lot of capacity on the refining side down throughout North America, those spreads going to grow, oil will strengthen but not as much as gasoline..we are headed to driving season, those supplies need to grow..but for the meantime, can see much better cash flows for refiners..virtually no excess capacity in refining..in US less refining capacity than consumption, need to import..more importantly for refining revenues we see differences in what they are paying and what they are charging
Price
Based on last year, does not seem to be too much to worry about demand..this is at a time when US economy undergoing some hard times..I suspect oil price might head higher in the summer, geopolitical tensions can ferment..OPEC is being disciplined in reducing output and they say they will have full compliance, at this point I do not see major reason not to believe them
Oil Inventories
fairly bullish numbers, especially on gasoline, looks like decline of 5.5 million barrels..at same time we were looking at 1.7 million barrel increase in oil inventories; it came in below expectations..this will certainly rally the gasoline market, this will be yet another week of inventory decline, and at the same time oil inventories not increasing to extent that we thought so, fairly bullish conditions..I am afraid we will be paying higher gasoline prices for a while longer..add to that geopolitical instability in Middle East and now Nigeria potentially after the election and we have makings of higher energy prices for weeks to come.
Refineries
With a lot of capacity on the refining side down throughout North America, those spreads going to grow, oil will strengthen but not as much as gasoline..we are headed to driving season, those supplies need to grow..but for the meantime, can see much better cash flows for refiners..virtually no excess capacity in refining..in US less refining capacity than consumption, need to import..more importantly for refining revenues we see differences in what they are paying and what they are charging
Price
Based on last year, does not seem to be too much to worry about demand..this is at a time when US economy undergoing some hard times..I suspect oil price might head higher in the summer, geopolitical tensions can ferment..OPEC is being disciplined in reducing output and they say they will have full compliance, at this point I do not see major reason not to believe them
posted by Spelunca at 5:28 PM
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