Tuesday Morning

Oil Inventory Forecast Boosts Oil. January crude is trading up $0.60 this morning to $59.40 but remains well withing its recently steepened downtrend. I’ll get more concerned if it can break $61. Bloomberg’s inventory survey is looking for crude supplies to build by 700,000 but for distillates to fall 1.1 million and for gasoline to fall 750,000 barrels.

—Analysts are pointing out that this would be the 7th straight week of declines in distillate inventories. I point out that inventories remain 6% above average and that the declines are a function of refiner maintenance cycles (which are dragging on and on this year but should end soon or refner’s are going to have a hard time making volume numbers) and higher than normal secondary and tertiary demand.

—CNBC should start hyping AAA reports that this Thanksgiving will see more people on the road than ever before. They say this just about every year and the increase is a last hurra of the year for gasoline and may cause a brief spike in prices. I’ve noticed prices around the pump in my corner of the world are up a nickel retail despite the recent plunge in crude and marketers get one last chance to offload pricey inventories.

Oil’s also rebounding due to:

—OPEC statements saying most members now favor additional production cuts in December.

—The Trans Alaska Pipeline System (TAPS) is operating at 75% of capacity due to bad weather. For the last 7 days NO offloading has taken place. Tankers are queued up for oil but no time frame for full capacity has been released. TAPS loaded 739,000 bopd on average in October so there’s 5.2 mm bls of crude (and growing) that hasn’t reached the market yet. BP, TAPS’ operator, should join Opec; they’d be at least as effective as those rebels in Nigeria.

— A Canadian high pressure system is expected to plunge into the nation’s mid tier early next week break cooler temperatures (however the east coast is expected to remain balmy)

Analyst Watch: Shhh. Don’t wake them. They’re dreaming of higher crude and a world without need for ratings changes.

Holdings Watch:  Took on small opening put positions in EOG and VLO yesterday and attempted to in REP. EOG being the least hedged, super independent with the largest exposure to natural gas and REP being simply overvalued and due for a comeuppance.