So what was the net effect of that inventory report? Here's what I got from it:
(1) This is normally a big travel weekend, so the refineries have to have enough gasoline stock. But people didn't actually travel this weekend (and, in fact, have been conspicuously reducing gasoline consumption every way they can as quickly as they can for weeks/months now). Gas inventories were up.
(2) The refiners are apparently in a lot of pain right now, since their inputs are so expensive and maybe partly because demand for gasoline has dropped. The only thing they are excited about making right now is heating oil. This may explain why crude supplies dropped.
(3) The ECB did, in fact, raise rates (.25) but probably that was already figured into everything and comments associated with the rate hike did not indicate any direction (like, that this was either a lone hike, or the first in a trend, or whatever).
(4) Why we are having trouble staying on track building natural gas inventories for the heating season is mildly mysterious to me.
Apparently, prices for crude are so freaking high, Middle East nations are importing coal and using it to run their power plants, so they can sell all of their oil and gas because we're paying _that much_ for it.
This is a bit dense, but my primary source:http://www.ogj.com/display_article/333516/7/ONART/none/GenIn/1/MARKET-WATCH:-Crude-price-climbs-above-$144/bbl/
There are some interesting aspects to the heating oil problem. Sensible folk in the Northeast generally set up a contract to spread payments over a longer part of the year, and to even them out. Often there's either upside (not matter how high spot gets, we're only charging you $X/gallon of whatever we're selling you) protection or downside (if it drops, we'll charge you what the market is charging, or somewhere between what we guaranteed not to go over, and what the market is charging) or both. Fuel suppliers can supply upside protection by buying futures for delivery. To supply downside protection, they have to find an insurer who is willing to take on that risk for a price, which the supplier than passes along to the customer as part of the cost of the fuel. Normally, insurance is pretty cheap. Needless to say, right now it's crazy expensive, because no one knows if fuel is going to continue to rocket to the moon, bounce along at the current level, or drop like a rock.
The refiners are reluctant to produce much in part because the suppliers are having trouble setting up contracts. And then to aggravate things, Sensible Folk in the Northeast are so uncertain as to what the Sensible Thing to Do is, that they are actually _not_ flocking to the contracts even at their usual rate, much less en masse.
Yes, Virginia, all my neighbors (in the multi-state sense) are essentially participating as oil speculators. With their heating season budget. Fun!
_We_ signed up. We don't believe in this speculation theory. We think supply has maxed out and demand is resistant. And _we_ don't like upside surprises.
However, I like social disruption even less, so my worries are not at an end, and here's part of why. A lot of fuel suppliers went out of business in the region during the last season. There are laws that say they have to keep delivering, even when people aren't paying, during the heating season. And a lot of people weren't paying because they couldn't afford to. Worse, all the assistance (government and NGO) for people who can't afford their fuel bill has been used up not just for last season, but in some cases people have used next season's allotment to pay (part of) last season's bills. In Seattle, you can get away with just not turning the heat on; odds on, the house won't drop to freezing many days out of the winter; maybe not ever. That's not true out here, which means at a minimum you have to drain everything (including the toilets) and anyone who has ever tried camping in many degrees below freezing weather should have a pretty good idea of how not-an-option that really is.
I'm betting we see a lot of doubling up happen this heating season when reality strikes (unless we're wrong, and the cost of heating oil/natural gas drops like a rock and other miracles occur). And a lot of damaged abandoned housing where the pipes were inadequately drained. Before the pipes and wiring were looted. Or whatever.
I'm still totally unable to find decent analysis on the kinds of inputs refineries are capable of taking, and how that means that when you can't get light sweet, but you can only get the thick and sludgy from Iran (even heavily discounted), you can't buy it anywhere because you'd have to retool, not unlike all those dedicated GM and Ford and Chrysler plants that are being shut down while they try to move the one plant that builds Focuses (Foci?) to three shifts because it can't keep up with demand (one assumes there's an Aveo plant doing something similar, but I haven't heard about it).
This has some discussion of payment plans spreading the pain out over the year, and also about the scarcity of upside protection currently.http://www.boston.com/business/articles/2008/07/04/heating_fuel_costs_a_year_round_worry/
ETA: Suppliers are highly local, and we have propane (a "distillate", if you're trying to match terms with the oil and gas producers). R. would really prefer not to buy a house heated with oil in part because of this issue; he'd rather have natural gas.
ETA2: "That means consumers will be paying for their heating with money originally saved for things like swimming lessons for the kids, Friday night dinners out, or vacations, he said."
Those would be the relatively prepared ones. Judging by the bitching and wailing going on on the town e-group, a lot of people are spending their heating budget on the increased property taxes (yay, purchase of Infant Jesus of Prague chapel. Not.) and don't have any mortal clue how they will be paying the heating bill. I kinda suspect a lot of people's swimming lessons/dinner outs/summer vacations got eaten by the high cost of gasoline. It'll be interesting to see the impact on Back to School season this year. I see some teen-oriented retailers going out of business sometime shortly after the middle of August or so.