Energy Inventory Preview from Hornsby & Company, Inc. December 29th.

Published on 29 December 2011 by cwhornsby in Hornsby Energy Trading

API reported that for the week ending December 23 crude oil stocks rose a hefty 9.57 million barrels to 339.597 million barrels in contrast to expectations of a draw, reflecting a recovery in gross imports by more than 500 MB/D. Distillate stocks gained 554,000 barrels to 140.158 million barrels, while gasoline supplies increased by 1.859 million barrels. While we would not look for the DOE data to reveal as large a magnitude of build as the API, the numbers probably reflected the recovery of booked volumes that were delayed due to weather problems in the Houston Ship Channel the prior week. Thus, last week’s numbers to be released later this morning may show a large recovery in imports leading to a temporary build, to be followed next week by a sharp drop in imports for tax reasons, leading to the customary net draw in crude stocks for December as a whole. In terms of products, last week we indicated that the bullish data for the week ending December 16 reflected the combination of lower supply and higher demand occurring simultaneously. For the week ending December 23 we have suggested a retracement in both gasoline and distillate implied demand, which would lead to product stats somewhat less constructive than consensus expectations. Part of our reasoning on gasoline was that pre-Christmas secondary stocking would essentially be offset by weaker underlying consumption, but we shall see.