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Author Topic: Refineries ramp up production, leads to massive decline in crude inventories Back to Topics
PD

Moderator
Message Posted: Jul 3, 2013 10:42:10 AM

The Energy Information Administration released its weekly report on the status of petroleum inventories in the United States today.

Here are some highlights:

CRUDE INVENTORIES:
Crude oil inventories decreased by 10.3 million barrels to a total of 383.8 million barrels. At 383.8 million barrels, inventories are 0.9 million barrels above last year (0.2%) and are above the upper limit of the average range.

GASOLINE INVENTORIES:
Gasoline inventories decreased by 1.7 million barrels to 223.7 million barrels. At 223.7 million barrels, inventories are up 18.7 million barrels, or 9.1% more than last year. Here's how individual regions and their gasoline inventory fared last week: East Coast (-0.8mb); Midwest...

Visit GasBuddy Blog for full article
REPLIES (newest first) Post a Reply
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kiatoindos
Champion Author Chicago

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Message Posted: Jul 10, 2013 7:23:30 AM

First not enough refining capacity now not enough oil more B.S.to get prices up!!!!
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cobey24
Sophomore Author New York

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Message Posted: Jul 8, 2013 7:50:23 PM

Cut/Past from the OPEC World Oil Report. It is online and published by OPEC themselves. Even THEY know what Wall Street is up to!!! If you have ever questioned WHY energy prices are what they are today,,, this will answer your questions and leave little doubt. Its not politics, its EXTORTION right in our own back yard! Chapter
1

Regulatory reform: swap derivatives market beginning to take shape
Since the emergence of oil as an asset class in 2005, speculative activities on the financial markets have become a key factor behind the increased volatility of crude oil prices. The resulting influence of excessive speculation has, at times,decoupled price movements from fundamentals and thus sent confusing signals to the market.
Policymakers at the highest levels have recognized the need for oversight and regulation in the financial derivatives markets. This includes the organized futures exchanges, such as the New York Mercantile Exchange (Nymex) and the
Intercontinental Exchange (ICE), as well as the over-the-counter (OTC) derivatives markets. The previously unregulated OTC derivative market is receiving particular attention.
The OTC market is massive and includes not only commodity derivatives,
but also foreign exchange, interest rate and equity-linked derivatives, as well as credit default swaps. At end-2011, the total amounts outstanding amounted to $648 trillion. Oil-based derivatives represent only a tiny fraction of the overall OTC market - less than 1% in terms of outstanding amounts. However, relative to the crude futures market, the swaps market for oil is considerably larger.
As in other commodity markets, swaps are used in the crude oil market to hedge against price risk. The buyer of the crude swap contract typically pays to guarantee a fixed price for either the buying or selling of crude, while the seller of the contract assumes exposure to the future price risk at the expiration of the contract by agreeing to make up the eventual difference, if any. If, however, the market moves in the other direction, the seller keeps both the resulting profits and the fee for writing the contract.
There are two distinct yet interrelated sets of drivers behind on-going efforts to strengthen regulation and oversight in the financial markets. The first are regulatory initiatives to address commodity price volatility, particularly high oil prices.The second are initiatives aimed at addressing the considerable shortcomings of the existing regulatory framework as revealed by the 2007/2008 financial crisis.
Before 2006, regulators had almost no information about activities on the swap derivatives market. Data from the Bank of International Settlements was of limited use as it was only provided twice-yearly and with a considerable time lag. It also had little disaggregation.
During the 2007/2008 oil price spike, it became clear to policymakers that in order to understand the factors driving oil prices, it was necessary to know what was going on in the swap derivatives market. Regulators were also concerned that the lack of oversight in the swaps market could allow market manipulation and a distortion of the price discovery process. This led to a push on the commodity side for improved transparency and oversight.
On the financial side, the risks associated with widespread ignorance about swaps activities were even more dramatically illustrated during the financial crisis with the near-bankruptcy of insurance giant AIG. A division of the company had been a major seller of credit default swaps in the OTC market. When the downturn in the US housing market led to widespread defaults, the insurer’s collateral obligations
and debt losses mounted, and the US government was forced to step in with a
massive $182 billion taxpayer-funded bail-out to prevent AIG’s collapse. Therefore, another central driver behind efforts to regulate the swaps market is to prevent a repeat of a systemic, AIG-like event.
At their Pittsburgh Summit in 2009, the G-20 industrialized and emerging economies committed to implement reforms in the OTC derivatives markets. The Pittsburgh Communiqué3 states that “all standardized OTC derivative contracts should
be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest.” G-20 leaders further agreed that all OTC derivative contracts would be reported to trade repositories,which would allow the data to be made available to regulators for oversight,as well as released in aggregate form to the general public, similar to the existing reports on trader’s activities issued by the US Commodity Futures Trading Commission(CFTC).
In response to these commitments, regulators in the world’s derivatives trading centres have been busy establishing the necessary rules and guidelines to facilitate the shift in swaps trading from private, bilaterally-negotiated deals to standardized agreements executed on electronic platforms, with established clearing houses and trade repositories.
Extending regulation and oversight to the swaps market is likely to impact the commodity markets in two ways: enhancing transparency and increasing costs for speculative activity.
With regard to transparency, for the first time, regulators will have detailed data on the activities of financial firms in the swap derivatives market for oil.
For example, the large financial firms active in swaps trading will be required to maintain a daily record of swaps, as well as a complete audit trail, to allow for a reconstruction of any trades.
Such data will give regulators the necessary tools to pursue cases of suspected market manipulation. Moreover, since it is planned that some of this data will be published in‘commitment of trading’ reports similar to those published for the futures exchanges,the market as a whole will have a more complete picture of swaps activities in the oil market and, thus, a better understanding of the factors driving crude oil prices.
In terms of speculative costs, increased capital and margin requirements will make speculative activities more expensive. In addition to other costs associated with investing in commodity markets, this could diminish some of the attractiveness of commodities as an asset class (relative to other asset classes) and it could thereby dampen some speculative inflows. Some critics of the new regulatory push warn that this would lead to lower liquidity and therefore unintentionally push up hedging costs.
It bears remembering that the development of a spot market for crude oil and products historically led to increased volatility. This, in turn, increased the need for financial instruments to hedge against the resulting price risk. Combined with financial deregulation and the emergence of oil as an asset class, the sharp increase in investment flows into commodity derivatives markets further exacerbated oil price volatility.
The current push to strengthen the regulation and oversight of the paper markets is, therefore, a clear recognition of the harmful impact that excessive speculation can have on stability in the commodity markets, including oil. Regulators are working at both national and international levels to put these new rules in place by the end of 2012. However, given the evolving developments in investment flows, regulation and the continued role of oil as an asset class, the impact of financial markets on the oil price is likely to remain a key uncertainty in the years ahead.
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honda0105
Champion Author Tallahassee

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Message Posted: Jul 7, 2013 6:49:14 AM

I understand "massive" to mean a bit more than a percent or two. Massive is more like 20% and even the 9.1% is not that big, since last year is done 'n gone... trends in inventories now are more important, if any...
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LJGP_MO95
Champion Author Missouri

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Message Posted: Jul 6, 2013 8:39:01 AM

Don't believe it
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honda0105
Champion Author Tallahassee

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Message Posted: Jul 6, 2013 7:54:30 AM

moen: you got that right.
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DanMtz
Champion Author Oakland

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Message Posted: Jul 4, 2013 10:27:13 AM

That will be temporary, for sure.
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bston
Champion Author Oklahoma City

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Message Posted: Jul 4, 2013 9:45:23 AM

No worry; there's more to be had underground.
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kyjlh
Champion Author Kentucky

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Message Posted: Jul 4, 2013 9:25:54 AM

ok
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speedys
Champion Author Utah

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Message Posted: Jul 4, 2013 6:05:37 AM

The holiday increased prices.
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ponyNJ
Champion Author New Jersey

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Message Posted: Jul 4, 2013 6:04:11 AM

Doesn't sound like either inventory level should set off any alarms.
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Stos1946
Rookie Author Atlanta

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Message Posted: Jul 4, 2013 6:02:11 AM

Got in on a promotion at BJ's yesterday and filled up for $2.50/gallon.
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cheapertvs
Champion Author Richmond

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Message Posted: Jul 4, 2013 6:00:44 AM

We could use some of those massive declines at the pump here in Virginia.
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getalong
Champion Author California

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Message Posted: Jul 4, 2013 5:58:29 AM

just collecting points
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tco0102
Champion Author Charleston

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Message Posted: Jul 4, 2013 5:57:55 AM

interesting.
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mygaz
All-Star Author Illinois

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Message Posted: Jul 4, 2013 5:57:06 AM

Good news..Happy Fourth!!
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Luckylindy
Champion Author Milwaukee

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Message Posted: Jul 4, 2013 5:56:42 AM

Just when I thought we were going to get a break. Guess not.
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livedream
Champion Author Michigan

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Message Posted: Jul 4, 2013 5:56:24 AM

Gas prices jumped up here .20 cents two days ago. No change since then.
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bassakwards007
Champion Author Orange County

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Message Posted: Jul 4, 2013 5:55:29 AM

It will go up regardless of what they say.
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WilW
Champion Author Atlanta

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Message Posted: Jul 4, 2013 5:54:12 AM

Old news, but still, GOOD FOR POINTS!!
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drawee
Champion Author Texas

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Message Posted: Jul 4, 2013 5:52:50 AM

old news
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jeff95519
Champion Author California

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Message Posted: Jul 4, 2013 5:51:37 AM

don't think so
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gaspumpin
Champion Author Indiana

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Message Posted: Jul 4, 2013 5:51:10 AM

Need a pipeline to get the crude to the refineries!!!
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Petrock
Champion Author Lexington

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Message Posted: Jul 4, 2013 5:50:02 AM

So when the new refinery units come online, instead of a drop in gas prices they notice a drop in crude oil inventories. And this leads to an increase in gas prices! Twenty cents a gallon around here yesterday!
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Foxt
Champion Author Minnesota

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Message Posted: Jul 4, 2013 5:49:40 AM

Didn't make a difference, if anything prices went up.
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2parrots
Champion Author Massachusetts

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Message Posted: Jul 4, 2013 5:49:30 AM

WOW , Increased production & higher prices at the same time .Happy 4th of July to all Gas Buddies & their families.
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djp071158
Champion Author Detroit

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Message Posted: Jul 4, 2013 5:43:28 AM

And since today is a holiday (Happy Birthday, America), gas prices went up 25 cents a gallon Tuesday. For no other reason, than this is a holiday.
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pepinoNC
Champion Author Raleigh

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Message Posted: Jul 4, 2013 5:42:48 AM

Another massive conspiracy.
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raccoon2011
Champion Author Massachusetts

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Message Posted: Jul 4, 2013 5:36:50 AM

ok
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smqua
Champion Author Cleveland

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Message Posted: Jul 4, 2013 5:34:39 AM

Duh
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mark1962
Champion Author Albany

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Message Posted: Jul 4, 2013 5:33:46 AM

Good
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floridakeys
Champion Author Columbus

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Message Posted: Jul 4, 2013 5:33:40 AM

Just playing with numbers seems to me .
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w4kh
Champion Author Tennessee

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Message Posted: Jul 4, 2013 5:33:07 AM

Somehow I do NOT see a 2.6% decrease in inventories as "massive", nor would I consider a 7/10 of 1% change in gasoline inventory sdomething that is newsworthy... the use of a pejorative term like "massive" is speculator talk for "get ready to be screwed at the pump"
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billy44bo
Champion Author Mobile

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Message Posted: Jul 4, 2013 5:28:25 AM

Greed runs the oil market and this is nothing more than a numbers game to try to hide there greed.
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hockey_24
Champion Author KW

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Message Posted: Jul 4, 2013 5:28:12 AM

no change at pumps..so ...?
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LeeFree
Champion Author Pittsburgh

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Message Posted: Jul 4, 2013 5:21:53 AM

Pump prices actually went down here this week. But with crude oil going over $100/bbl yesterday that will not last for long.
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wkb03
Champion Author Georgia

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Message Posted: Jul 4, 2013 5:18:24 AM

Just a numbers game...
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moenkopi23
Champion Author Chicago

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Message Posted: Jul 4, 2013 5:16:28 AM

As always, Big Oil is playing with the numbers and rigging the game at the detriment to the consumer.
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oweno1
Champion Author San Diego

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Message Posted: Jul 4, 2013 5:14:31 AM

bodes poorly for the cinsumer
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jcdakota
Champion Author Baltimore

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Message Posted: Jul 4, 2013 5:08:56 AM

Gas production is up but prixes are not going down very fast.
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turbodog
Champion Author Mississippi

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Message Posted: Jul 4, 2013 5:03:37 AM

Summer coming
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friday21
Champion Author Toronto

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Message Posted: Jul 4, 2013 5:02:04 AM

Whatever
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ovillaone
Champion Author Dallas

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Message Posted: Jul 4, 2013 5:00:53 AM

and back come the increases
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twt
Champion Author Virginia Beach

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Message Posted: Jul 4, 2013 4:59:29 AM

Gee, I wonder why. Big money and crooked politicians.
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Leamer
Champion Author Ontario

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Message Posted: Jul 4, 2013 4:55:45 AM

nice
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johnpuh
Champion Author Ohio

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Message Posted: Jul 4, 2013 4:54:32 AM

Prices jumped here an averave of 36¢ a gallon right before the holiday. Imagine that!
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DrivingFool2
Champion Author Appleton

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Message Posted: Jul 4, 2013 4:51:35 AM

manipulation at work
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robmschn
Veteran Author Oklahoma

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Message Posted: Jul 4, 2013 4:51:31 AM

Ah! So that's why crude oil is rising at the same time gasoline is falling!
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duane7810
Champion Author Illinois

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Message Posted: Jul 4, 2013 4:43:50 AM

Gas is "only" slightly over $3.00 in Normal, IL.
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Beau2140
Champion Author New York

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Message Posted: Jul 4, 2013 4:43:43 AM

And up goes the price again.
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Gil43
Champion Author Florida

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Message Posted: Jul 4, 2013 4:42:03 AM

there goes any decline in prices
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