Commentary by Eric Wilder – The EIA reported today that crude oil inventories recovered somewhat from last week’s 4.2 million barrel drop.  According to the agency, 2.7 million barrels were added to the nation’s inventory last week.

Crude oil prices on the New York Mercantile Exchange dropped briefly on the news but rose again over $60 per barrel by 10 CST.  This is partially because extremely cold weather is encompassing much of the U.S.  Morning temperatures in Oklahoma City fell to 11 degrees and snow is predicted.  There are other factors at work in the market.

Last week the EIA issued an ominous news release stating that domestic production of oil has fallen below 5 million barrels per day and imports below 10 million barrels per day — below the 15 million barrels per day needed by refineries to assure adequate production of gasoline and heating oil.  The agency did not say why imports had fallen but implied something less than 10 million barrels of oil per day was all that is available to purchase.

Last week’s EIA report was unusually pessimistic for an agency that almost always portrays the positive side of the petroleum market.  Like today’s weather, the report was chilling.

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