Even the most bullish analysts could not ignore the huge inventory builds for crude, gasoline and distillate. Facing falling demand and a rising dollar, the market went all the way the other way expecially gasoline. For the second time in four trading sessions, gasoline fell more than 25¢. Gasoline was falling all morning. Around noon CME called a 5 minute trading timeout for crude and both related products. When trading resumed gasoline stayed 25¢ below yesterday's settlement price. WTI and distillate also had significant price drops.
Previous to today, everyone was assuming that with the floods about to inundate the Mississippi River Delta's refineries, there would be product shortages. The EIA inventory figures released today, however, showed continued demand deterioration and inventory builds. You can only spin supply and demand for so long and sooner or later you have to face reality. Despite all the natural disasters and the North African political unrest, the world has more than abundant supplies of crude at this time. The refiners can cut back production to adjust for falling product demand but the historic build at Cushing only means that demand has not caught up with supply.
Today, WTI -$5.60, $98.23; Brent -$5.07, $112.59; RBOB -25.55¢, $3.123; HO -10.37¢, $2.8981.
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