Crude oil invenentory up but gasoline inventory down

Yesterday, the U.S. Energy Information Administration reported that crude inventories sank by 4.6 million barrels for the week ending June 6th. Analysts had projected only a 900,000 drop. But gasoline inventories increased by 1 million barrels, just under analysts' expectations of a 1.1 million gain. Add to the mix that refineries used less oil for the week and oil imports are down to 9.7 million barrels a day from 10.1 million barrels a year ago. The high price of gasoline is reducing demand - people are driving less.

The price of crude has been in a bullish trend since it was $7 a barrel in 1998 and only $84 in February. Crude made an historic high (so far) of $139.12 on June 6th. This bullish trend is going to end and a bearish trend will begin. Commodities have no bullish bias as do stocks.

Consider what happened to crude before late 1998 when it was $7. Only 2 years earlier, in January 1997, crude made a high of $27.64. Going back to the winter of 1994 crude was all the way down to $2.65. Of course, these price points don't take inflation and the value of the U.S. Dollar into account. But nevertheless, the history of commodities shows a balance between prominent bearish and bullish trends.

Just as it was unthinkable that gasoline would be $139 in 1998 when it was $7 - it was just as unthinkable that gasoline would be $7 when it was $27 in 1997.