From your article:

"Second, we need to evaluate crude oil inventories based on Days of Supply in excess of Minimum Operating Level (MOL). In the US, the MOL for crude oil is probably about 270 million barrels (mb). At about 322 mb, US crude oil inventories are probably best characterized by Hours of Supply in excess of MOL (about 80 hours). In my opinion, recent fluctuations in US crude oil inventories merely reflect minor changes in a thin margin of supply in excess of MOL.

Refiners are unlikely to let their inventories drop below certain critical levels, and given the expectation of declining world oil exports, refiners will have two choices: (1) Bid the price up enough to keep their inventories up and/or (2) Reduce their crude oil input, thus reducing product output.

My contention is that instead of focusing on crude oil inventories, we need to focus on world net exports, crude oil prices, refinery utilization, product prices and product inventories.

I expect to see crude oil exports trending down, crude oil prices trending up, refinery utilization trending down, product prices trending up, and product inventories trending down."

I'm focused on crude and gasoline inventories in the US.

$2.75 gasoline is impossible with $88 crude.

And locals are still competing with "cents lower/sell more gas" prices in my area.

Like $2.50 bread with $10 wheat.

And yet we have it.

Even as China continues to import more.

Like the SIV derivatives debacle, someone is hurting now.

The EIA Inventory numbers must be wrong.

Thank you for replying.

Yours,
James

Arkansaw of Samuel L Clemens