Inventories up and inventories down. Oil prices are conflicted about rising U.S. oil inventories versus a dramatic drop in global oil inventories. While the Energy Information Administration (EIA) reported a 2.8 million barrel increase, a report by Bernstein Energy is showing that global oil inventories have fallen by 24 million barrels to 5.7 billion barrels in the fourth quarter of last year from the previous quarter or 60 days of global oil consumption. It is obvious that we are seeing rising global oil demand against a backdrop of record compliance to OPEC production cuts. With the Dow breaking 20000 after an extreme period of sideways movement, the odds are high that both the stock market and demand expectations for oil will move substantially higher.

While we have not yet seen $60.00 on WTI because of a strong dollar and a seasonal drop in U.S. refining runs, we are still on track to target that lofty level and longer term even higher. The decline in global oil inventories, as well as an upside breakout in the stock market, gives me more confidence repeating the point that crude oil prices have probably seen their low for this year. While black swan events can always change that outlook, from what I can see on the rising demand and shirking supply picture, this market should move higher.

So while the EIA headline oil number was up, we continue to see supply in Cushing, Oklahoma go down There was some concern about the increase in oil products. A big 6.8 million surge in gasoline supply have some worried about exchanging an oil glut for an oil glut. I would not be too concerned about that as the upside breakout in the stock market should mean that record demand for gasoline will continue in the new year. The distillate inventories were actually a bit supportive as they increased by only 75,999 Barrels.

I had a lot of response to my Ketone/Dakota pipeline report from yesterday and I thank you. Many share my views including the U.S. Chamber’s Institute for 21st Century Energy who applauds the long-awaited attention to American energy infrastructure. Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy, issued the following statement today regarding President Trump’s announced Executive Orders on accelerating infrastructure: “For too long, private infrastructure investment has been held hostage by government interference driven by fringe interests. Today’s Executive Orders on the Dakota Access pipeline and Keystone XL pipeline demonstrate that we finally have an administration that is serious about putting American energy to work for the entire economy.”