Energy

Oil Inventories Plummet (USO, OIH, VLO)

The Department of Energy has just released what may seem like a shocking drop in its weekly report on oil inventories.  This morning’s data has a potential impact on the key ETFs of Oil Services HOLDRs (NYSE: OIH) and the…

By Jon C. Ogg
Published December 15, 2010, 10:43am ET · 2 min read

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The Department of Energy has just released what may seem like a shocking drop in its weekly report on oil inventories.  This morning’s data has a potential impact on the key ETFs of Oil Services HOLDRs (NYSE: OIH) and the United States Oil (NYSE: USO); and are watching Valero Energy Corp. (NYSE: VLO) as a pure-play for the refining angle.

The DOE reported that crude oil stocks fell by a sharp 9.854 million barrels in the last week to 346.018 million barrels.  Dow Jones was looking for a drop of -2.7 million barrels, and we were only expecting a drop of -2 million to -3 million barrels.

Gasoline supplies did manage to grow by 809,000 barrels to over 214.7 million barrels, but Dow Jones was calling for a gain of 1.9 million barrels. Distillates rose by 1.094 million barrels and Dow Jones was calling for -200,000 barrels as the reading.

The Valero angle comes from the refineries, which ran at 88.0% industry-wide per the DOE data.  That compares to Dow Jones estimates of 87.2% and a reading of 87.5% last week.

Oil Services HOLDRs (NYSE: OIH) was in negative territory, but that shot up to up 0.6% at $138.00 right after the news this morning.   United States Oil (NYSE: USO) was negative before the news and its shares have popped to up 0.6% at $38.11.

Valero Energy Corp. (NYSE: VLO) is still negative on the day as the refining play and its shares are down 0.3% at $21.33.

JON C.OGG

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Jon C. Ogg

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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