Phil Flynn on Oil and Dysfuntion in Washington, DC

[dan_s]

This is the first time that I've see Phil get so political. The July WTI contract traded down to $57.33/bbl today, but did rebound to $58.13/bbl in after-hours trading.

Phil Flynn, 5-23-2019

Not only did oil bulls get hit with a bigger than expected crude oil supply increase on Wednesday, it also got hit by reports that President Donald Trump stormed out of a meeting that was supposed to lay the groundwork for a bipartisan 1.5 trillion-dollar infrastructure plan. Of course, this came after House Speaker Nancy Pelosi accused the President of a cover up, angering the President that continues to get hassled by a partisan attack. You see the Democrats must keep collusion alive because other than hating Trump they have no real agenda to help the American people.

They also must keep collusion alive because the best defense is an offense as the truth is coming out that the entire Russia investigation into the Trump campaign was orchestrated by the Obama and Clinton camp in an attempt to thwart the Presidential ambitions of President Trump.

So, before the indictments come against the Democratic cabal, and they are coming, the best thing the democrats can do is to fish, hope, and pray that they can find anything on Donald Trump that will deflect from the fact that they used illegal warrants and a fake dossier to take away the constitutional rights of U.S. citizens like Carter Page, George Papadopoulos and others to remain in power.

While they have pretty much given up on collusion, they are now pinning their thin hopes on obstruction of justice. The Democrats of course have a funny way of defining obstruction of justice. For example, if your illegal email server is subpoenaed by the FBI and you wipe it clean trying to destroy the evidence, that according to Democrats is not obstruction of justice. Hey, but you blow off steam in a meeting and scream and yell to fire everybody before calming down; that is obstruction.

Why this is important for energy is because when you figure out the amount of energy it will take to feed the 1.5 trillion dollars of infrastructure, it is absolutely enormous. Already the market had to start to price in those possibilities to assure that those barrels could be met. < I think this is the primary reason for Thursday's selloff of oil - Dan.

The Democrats, of course, signed a letter to do whatever they can to bring down Trump, as opposed to legislate, which is a real blow for the American people. If you don’t think this Democratic investigation thing is a witch hunt, then you can’t believe the Democratic pact.

In fact, it is widely known that Democratic Representatives Elijah Cummings, Maxine Waters and Adam Schiff signed Secret “Memos of Understanding” To “Target” Trump with partisan Investigations into his finances. This of course is not about oversight, but a real abuse of power by Democrats that must run for cover as their own corruption becomes exposed.

In the meantime, because they chose to blow millions of dollars on partisan investigations, our roads and bridges and airports continue to deteriorate. The jobs that would be created are not being created. But the Democrats have to keep collusion alive, because other than that they have nothing that will actually help the average American trying to make a living.

In fact, if it were not for the breakdown of the infrastructure report, I really believe that oil would have shook off the bigger than expected crude oil build like they did last week. The EIA reported another crazy 4.7-million-barrel crude oil build that was enhanced by a 1.1-million-barrel release from the Strategic Petroleum Reserve from the previous week. At 476.8 million barrels, 4% above the five-year average. The build also was caused by continuing bottlenecks in the Houston Shipping channel, as well as refiners have issues staying online.

Much weaker than expected refinery utilization was another culprit in the crude build. U.S. crude oil refinery inputs averaged 16.6 million barrels per day during the week, which was 98,000 barrels per day less than the previous week’s average. Refineries operated at 89.9% of their operable capacity last week.

Because of that, gasoline production decreased last week, averaging 9.9 million barrels per day and distillate production decreased last week, averaging 5.2 million barrels per day. But despite that slowdown in production, imports helped get gasoline supplies back to the average range.

The EIA reported that total motor gasoline inventories increased by 3.7 million barrels last week and are at the five-year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories increased by 0.8 million barrels last week and are about 4% below the five-year average for this time of year. Propane/propylene inventories increased by 3.1 million barrels last week and are about 22% above the five-year average for this time of year. Total commercial petroleum inventories increased last week by 16.8 million barrels last week.

While the weekly demand numbers remain strong with a bullet, bad weather is slowing distillate demand as farmers can’t get into the field.

The EIA implied demand for total products supplied over the last four-week period averaged 19.9 million barrels per day, down by 2.7% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.4 million barrels per day, down by 1.1% from the same period last year. Distillate fuel product supplied averaged 4.0 million barrels per day over the past four weeks, down by 4.0% from the same period last year. Jet fuel product supplied was up 2.5% compared with the same four-week period last year.
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Americans are going to burn up a lot of gasoline during the Memorial Day weekend and demand for transportation fuels will exceed supply all summer if the refiners don't ramp up quickly to meet demand. - Dan