Gasoline stocks at all-time high ahead of US driving season
on May 6, 2010

US gasoline May10.pngThey say that you learn more from your mistakes than your successes. In the blog’s case, it will never forget the mistake it made when it began to build a long position in early May, soon after arriving in Houston, Texas. It was expecting product to go tight as the US gasoline season began on Memorial Day, at the end of May.
This was a completely wrong judgement. The scale of the US market means refiners have to move gasoline out of their systems before Memorial Day, if it is to reach the service stations in time. Luckily, a few kindly souls from the industry taught the blog the error of its ways, and little harm was done to ICI’s P&L.
The memory of that near-miss was triggered this morning when looking at the above chart from PetroMatrix’s valuable report. They note that US gasoline stocks (red line) are now “at an all-time record high” for this week in the year. Equally, stocks are actually building, rather than falling. I doubt this has ever been seen before in May.
The reason, of course, is the demand destruction being caused by today’s high prices. US oil stocks have been building at 1.1mbd for the past month, whilst the Mastercard survey is showing a 1.1% decline in gasoline demand versus 2009. If the blog was trading now in Houston, it would be very nervous indeed about holding a long position.

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