A historical diversion as today is the 438th anniversary of the Battle of Lepanto when the greatly outnumbered Spanish, Venetian and Genoese forces defeated the Ottoman fleet. The Spanish general Don Juan of Austria was actually German (his mother was Bavarian) and was only 24 years old, having been appointed to his post mostly because his half brother was the Spanish king, Felipe II. Following up on the unsuccessful siege of Malta where the last of the knights made their great stand, this meant that the Mediterranean would remain open to European commerce. However, the cross-Atlantic trade was already more valuable to Europe than the trade routes going through Asia.
Crude fell more than $1 while gasoline dropped 4 cents and distillate declined 3.25 cents. Crude inventories decreased significantly but gasoline inventories were triple the forecast and distillate stocks are higher than they have been for over 26 years. The fall was actually $2/bbl as the early trading drove prices up to $71.76.
Refinery utilization was up slightly and seemed to indicate that refiners thought demand would be greater than it was. Even the technical analysts were saying that the trends pointed downward. The contango situation also encourages holding on to stock but there is a cost to holding inventory.
Not sure if EIA is being optimistic or unrealistic as they issued an upward revision to the demand forecasts for the remainder of 2009 and for 2010.
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