Highlights
Refineries are cutting back production sharply, operating at only 81.4 percent of capacity going into the spring driving season. This is the biggest headline out of a weekly inventory report that is very likely to drive oil prices yet higher. Stocks of gasoline fell 5.5 million barrels in the April 11 week to 215.8 million. But the slowing in production and declines in stocks are understandable given light demand for gasoline, up only 0.8 percent year-on-year, and high supplies, up 8.0 percent year-on-year. Stocks of crude fell 2.3 million barrels to 313.7 barrels. Imports of crude are off 1 million barrels a day vs. last year. Slow demand or not, the decrease in petroleum stocks and the onset of the driving season are very likely to lift prices at the pump leading in turn to new records for gas prices and further gains in inflation expectations and actual inflation as well.