Weekly Inventory Numbers Show Steep Loss in Gas Stockpiles
Posted on Apr 12th, 2007 with stocks: USO, XLE
Colin McCabe submits: Wednesday mornings in the energy pits are usually met with a flurry of action as traders furiously digest the Energy Information Administration weekly gasoline and crude oil inventory numbers before placing their bets on where oil prices will head in the short-term.
This week was no exception as gasoline inventory numbers came in well below expectations, declining 5.5 million barrels from the previous week to hit 199.7 million barrels.
The loss marks the first time this year inventories have dropped below the 200 million barrel mark and is the lowest level since October 28, 2005 - shortly after Katrina ravaged refineries along the east coast.
At 199.7 million barrels, inventories are now below the lower end of the average range for this time of year. With the summer driving season just around the corner, low inventory numbers spark fears of rising gasoline prices in the coming months – not exactly something consumers want to hear as the average price for a gallon of gas already exceeds $2.80. Compacting matters is the National Weather Service who predict a warmer than normal summer. This could translate into more cars on the road, using more gasoline to fuel power-hungry air conditioners.
On the bright side, historically April marks the end of draw-down season for gasoline inventories which means we should see stockpiles start swelling again soon. However, inventories will need to rise quickly if we are to see any relief at the pumps..
In short, the next few weeks should prove to be very interesting for gasoline prices and, ultimately, crude oil. Keep an eye on inventory numbers as they will set the tone in the short term.
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