DOE Oil Inventory Trumped By Lower Refining Capacity (OIH, USO, VLO)

The DOE reported that crude oil stocks rose by 1.95 million barrels to 368.15 million barrels; Dow Jones had estimates of 800,000 gained and we were looking for up to 1 million barrels.  Gasoline supplies stored fell by -2.689 million barrels to 212.253 million barrels, far more than the -400,000 expected by Dow Jones and worse than our expected level of approximately flat.  Distillates posted the biggest decline of the lot at -3.568 million barrels to 164.874 million barrels.  Dow Jones was looking for roughly a drop of 1 million barrels.

The Valero angle comes from the refineries.  This capacity ran lower again at 81.8% versus 83.7% a week ago.  We were hoping for something to the tune of 83%, but Dow Jones listed the targets as 83.9%.

Oil Services HOLDRs (NYSE: OIH) is up 0.14% at $121.33; United States Oil (NYSE: USO) is up 1% at $36.63, and Valero Energy Corp. (NYSE: VLO) is up 1.3% at $18.23 this morning. On last look, NYMEX Crude was up $0.82 at $84.72 per barrel.

JON C.OGG