Headline Story Today: Crude Oil Supplies in US Drop for Second Week In a Row

Link here.

I did not post my observation yesterday that the mainstream media failed to report what I thought was the biggest unreported story of the day: the increase in oil price yesterday -- I thought it remarkable that oil was up as much as it was yesterday after a recent run-up, despite the SPR release, and yet mainstream media did not report yesterday's price increase as a headline news story. It looked to me like mainstream media was missing a big story yesterday.

Today, another price increase, related to drawdown in US crude oil supplies, and now it's a headline story. One has to assume the President was provided this outlook when he made the decision to open the SPR.

The American Petroleum Institute said late Wednesday that crude inventories fell 3.2 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.5 million barrels.

Inventories of gasoline dropped 1.9 million barrels last week while distillates decreased 1.6 million barrels, the API said.

I believe that crude supplies in US remain at historical highs, however.

This is what I found most interesting in the article:

Some analysts said falling U.S. supplies will likely spark crude producers to boost output, cutting into extra production capacity and supporting prices.

"We expect inventory draws will prompt OPEC to increase production, at the expense of spare capacity," Morgan Stanley said in a report. "We remain bullish oil, particularly in the second half."

Translation: OPEC has little to no spare capacity.