TechnoMeter

Are you confused why Oil is trading lower after an encouraging EIA Crude Oil Inventory Report that showed a draw of 5.39m barrels and had refiners processing 1m bpd more than last year’s record refining activity? In a word, or name, Harvey is why Oil is trading lower, and you can see the confusion through derivative markets such as time spreads of Oil and the Brent/ WTI spread.



Either way, the supply chain component of the energy market that was hurt by Harvey was refiners. What you need to know is that refiners were the demanding so much Oil from producers that the massive amount of production, the production that has thwarted OPEC’s best-laid plans to bring global stock pils back to the five-year average, and now that demand is stemmied. Even last week, as evidence was building that hurricane Harvey was going to be a force unlike Texas and refiners along the Gulf of Mexico had seen in a while, refiners were processing record amounts in order to put as much into inventory as possible for when they may be forced offline for prepares.

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