After the market closed, the American Petroleum Institute said crude inventories as of the week ended Jan. 11 rose by 4.1 million barrels. The market expected a drop of as much as 2 million, according to Victor Yu, director of consulting at MV Energy.
Gasoline supplies also rose by 4.2 million barrels, the API said, compared to expectations for a rise of as much as 2 million.
"This is a bearish bonanza," said Phil Flynn, a senior energy analyst at Alaron.com in Chicago, emphasizing that it's bad news for the market investors, but also good news for the consumer.
"The one hope we had the last couple of weeks was good gasoline demand," but that appeared to fall last week, he said. "There doesn't seem to be a lot of hope near-term with these types of numbers."
Hopefully the big sell-off this week somewhat priced in these numbers, he added, but warm weather and slow demand are starting to show up in the numbers.
Still, in the longer term even with the bad news, Flynn said, prices won't likely reach down much below $17 a barrel.
The API also posted a 875,000-barrel decline in distillate inventories, which include heating oil and jet fuel, for the latest week, despite analysts' predictions for a drop of as much as 3 million barrels.
Refinery production capacity fell to 89.4 percent from the prior week's 90.9 percent, according to the API's data.
In after-hours trading shortly after the data were released, February crude fell 54 cents to $18.36 a barrel. February gasoline dropped 1.7 cents to 53.5 cents a gallon and February heating oil declined 0.9 cent to 51.17 cents a gallon.
About the Rydex sentiment data: the nasdaq otc ratio is still 7.2:1. Perhaps we are entering a time when the dart throwers will be right on the short side <ggg>, just as they were once correct on the long side. Perhaps someday the OTC ratio will look more like the S&P fund numbers now (nearly even). Anyway, who is short? I still read mostly people who are buying the dip. Not too many LTBH shorters <ggg> (except Anthony et al). Also, I don't buy into the decelaration argument from the bureau of labor stats, suggesting a diminution in the rate of unemployment implies an end to the recession. We could, just as likely, continue to see a constant bleed down of jobs as the slowdown worms its way through the entire economy. The big picture points to a global recession, IMO. Slower rollout of 3G, slower upgrade cycles for new computer equipment and software. I think there will be plenty of time to enter positions before the market moves. So, take on risk very slowly. If people really believe the market is going to run just buy some stock. I think a low allocation to stocks is prudent. But, always be on the lookout for a gem! |
