Petroleum Inventory Report 9-24-08

Crude Oil down 1.5 million barrels
Gasoline down 5.9 million barrels
Distillates down 4.2 million barrels
Refinery Utilization 66.7%

Short Covering Leads To Record Jump In Oil

Crude oil futures contracts rose more than $25 a barrel during trading on the Nymex. Oil settled at $120.92 a barrel, up 17 percent for the day.

"Some folks got caught short," said James Williams, an economist at WTRG Economics. "The stocks at Cushing [Okla.], which is the delivery point for Nymex, will be low because they have been drawn down because of the hurricane."

So "if you are short on the last day of trading you have to either buy back the contract or make physical delivery and it is probably difficult to get spot oil at Cushing to make physical delivery," he explained.

Oil Production Update

PORT ARTHUR, Texas (Reuters) - Twelve of the 15 Texas oil refineries shuttered ahead of Ike showed no visible signs of flooding or damage in the storm's wake, although fewer than half of them appeared to have power, a Reuters eyewitness said on Sunday.

The assessment was in line with reports from emergency management officials that the state's refineries appeared to have escaped serious flooding -- a sign fuel production could resume more quickly than initially thought.

"Even though there is little indication of serious damage, I think it will be difficult to restart these oil refineries because of the power issue," said Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, New Hampshire. "Parts of the power system took a devastating hit."

Petroleum Inventory Report 9-04-08

Crude Oil down 1.9 million barrels
Gasoline down 1 million barrels
Distillates down 400,000 barrels
Refinery Utilization 88.7% up 1.4%