Crude oil was the one thing not in short supply. What the U.S. lacks is oil products, especially gasoline, and it lacks the spare capacity to refine more crude.
The release of strategic reserves contains a very large component of unneeded crude oil and does little to directly impact on the actual supply gap of U.S. oil products.
We believe the rise in Chinese crude oil imports in October signals a period of stronger Chinese apparent demand figures over Q4 2005 and Q1 2006.
The dichotomy in the US market between tight products and flush crude has become more pronounced.
The current high levels of U.S. inventory is of little comfort given that it is the product of an unusually high level of seasonal maintenance. Although crude stocks are rising, product stocks are falling and U.S. oil demand is growing strongly.