Ethanol Blog

Gasoline Stocks Change Direction

Rick Kment
By  Rick Kment , DTN Analyst

Sometimes there is much focus on the numbers in reports, and just how much change is or is not seen in either production levels or inventory levels, especially over the last two months in the gasoline and crude oil markets.

But it is important not to overlook a market shift that can be hidden in the numbers like seen Wednesday in the latest EIA report. Even though inventory levels haven't changed significantly at the end of last week compared to the previous three weeks, the break from eroding supply levels is the most telling and likely the most important shift in the entire report.

After inventory levels of gasoline have fallen for the last four weeks, three of those showing major inventory reductions, stocks grew at the end of last week. Although it is too early to call this a trend, the market is quickly reacting to the morning report with sharp 7- to 9-cent losses in RBOB gasoline futures markets during morning trade. Traders are still looking for increased demand to be seen over the coming months, but the recent increases in refinery run rates and consistent growth in crude oil supplies is pointing to the potential that gasoline supplies may have seen seasonal lows.

Rick Kment can be reached at rick.kment@dtn.com

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Rick Kment