DOE Inventory Drawdown Only Highlights More $90 Oil (OIH, USO)

The Department of Energy issued yet another large drop in crude oil inventories in the U.S. for the latest week.  We are watching the key ETFs of Oil Services HOLDRs (NYSE: OIH) and the United States Oil (NYSE: USO) on the news.

Crude Oil Stocks fell yet again by a sharp -5.333 million barrels and ended at 340.685 million barrels.  Dow Jones was expecting only a drop  by -2.3 million barrels.  This brings the total down close to 20 million in recent weeks.

Gasoline Stocks rose by 2.4 million barrels to 217.173 million barrels against a Dow Jones estimate of +900,000 barrels.  Distillate stocks -589,000 barrels to 160.716 million barrels, in-line with a Dow Jones target of -600,000.

Refineries came mostly in-line with targets at 87.7% run rates, which compares to 87.8% expected from Dow Jones and versus 88.0% the week before.

NYMEX crude is still up this morning and trading up $0.67 at $90.49. Keep your eye on this $90 level.  If it gets much higher, the calls for $100 oil will begin to pick up steam faster than experts predicted.

The Oil Services HOLDRs (NYSE: OIH) have climbed mildly on the news to up 0.3% at $138.77 but investors may start watching that 52-week trading range of $89.48 – 139.99.  The United States Oil (NYSE: USO) is still up but has already come off highs.  The USO is trading up 0.76% at $38.58 after the news.

JON C. OGG