OIL Considering how many times the API inventory has not been close to what the EIA reports algo bots must be on high alert waiting to see if the huge draw is confirmed. I award myself 2 points for saying earlier that all the potential hurricanes can wreak havoc on shipping schedules making this a particularly volatile time of year for inventory numbers.
My bottom line remains that any prices above $50 will be met with substantial increases in shale oil production. Continuing reports that shale is a flash in the pan may eventually prove true but like the airline executive said "in the long run we're all dead anyways". My wife's monthly royalty checks from conventional gas wells continue to prove that shale gas has not gone away yet.
OPEC has proven that they haven't changed, the difference this year is that a new crop of 28 year old Ivy Leage history magers running other peoples money have learned that it isn't different this time.
Inventory levels are coming down because the US refineries are filling the gap in Latin America. I don't know how long that will continue. I don't know if a Dollar rally will kill that trade. If it slows down US gasoline inventories will go straight up and panic the market.
I do know that Hurricane season will end and the US refineries will turn off and switch over to winter blend which also opens the door for imported gasoline from other continents. EPA (as far as I know) allows a single blend to be sold throughout the country in the winter, as opposed to the 20 or so blends they mandate during the summer. So we will see what the low is this winter.