TOPICS: Crude Oil inventory reports, positive winter weather projections and more.
The API’s came out last night and showed a 2.4MB draw in crude stocks. Crude is stronger this morning because of it, but the EIA’s come out at 10:30a central and are always the more ‘trusted’ report.
Frankly, this is the time of year we should be seeing draws, but that time of year is coming closer to an end as the summer driving season has a few more weeks left and refineries inch closer to their annual maintenance shutdowns.
If the EIA’s have a supportive draw, crude could strengthen a bit and propane prices may firm up slightly, but this is small picture stuff we’re talking about. The big picture is still bearish, in my opinion.
Combine those domestic season factors with the uncertain Chinese economy, and there are reasons to remain skeptical of any short term crude oil rally.
WEATHER: Joe Bastardi of WeatherBELL.com (premium site) recently made a post saying that SST (Sea Surface Temperatures) computer model projections for November, December and January were ‘coming his way’ as it relates to his winter ideas. If you missed my post from April on Bastardi’s winter 2015-2016 projections, you can read that here.
The models continue to show a warm pool of warm water in the Pacific Northwest for that time of year, which if that happens means good news for the prospects of a colder winter east of the Rockies and would put things in a similar track to what we have experienced the past two winters.
A large warm pool there combined with a strong El Nino is not something we’ve seen, historically. There are a lot of weather heads out there who are saying we are entering ‘uncharted waters’ with respect to what this winter may hold.
If the SST’s stay warm in the Pacific Northwest, that’s a good thing for this winter as the propane industry is concerned. It gives us our best chance to offset the typical zonal flow (west to east) of the jet stream, which brings mild temps over the northern tier of the United States during many El Nino years. I’ll keep watching it.
EL NINO & CORN CROP: For those of you in the grain drying business, this is a much more detailed linkage between El Nino years and grain drying than I shared the other day. There is some interesting stuff in there and it’s worth some lunch hour reading.
Here is this week’s corn crop rating from Kevin Van Trump. The national Good to Excellent rating of 70% is unchanged from last week, and down just three percent from the same time one year ago.
I’ll be back mid-morning with this week’s EIA inventory numbers and any more nuggets I come across between now and then.
— Eric Blake 🌀 (@EricBlake12) August 5, 2015