Time to "OIL" that creaky portfolio before the opportunity "SLIPS" away!
THEME: LONG U.S. ENERGY
For MRP's original U.S. Energy theme report contact Rob (see below)
EIA inventory data this week showed a very large drawdown of -14.5 million barrels (bbl) in crude inventories. The news, although portended by an API (American Petroleum Institute) inventory report showing inventories had decreased by 12 million bbl -- the largest drop since 1999, nevertheless came as a shock to the market. According to some sources, the drawdown could be the result of the latest severe weather disruptions in the Gulf of Mexico. Notably, production only decreased in Alaska and rose in the lower 48 states. Perhaps also, the overall low rig count (+1 last week) and its effects on the oil market is finally rippling through. Either way, the drawdown sent crude prices from $45.47/bbl before the API to $47.54/bbl after confimation from the EIA report -- a 4.5% jump. Refiners and oil producer stocks responded positively. A continuation of this trend next week could send crude prices back over $50/bbl, as the market interprets the data as a signal that the oil imbalance is correcting faster than expected. Weakness in the USD has also stoked bullish sentiment.
