Oil Supply Could Increase but Don’t Expect Price Change: Iaccino

Oil supply could increase but that doesn’t necessarily mean lower prices in the short run, says Bob Iaccino, editor of the Stock Think Tank.

“We got our first refinery utilization number with an 83 handle on it since March 20th of last year,” he told TD Ameritrade in an interview.

“That’s the last time we had it above let’s say 82.8 and it was at around 87. If you looked the absolute price of where crude was that it was a lot lower than here, but that’s not really what you want to look at,” Iaccino said.

Rather, you want to look at oil relative to actual inventory, he said.

“And we’re basically flat in terms of gasoline inventory. We’re 2 percent above the five-year average in terms of crude oil inventory. So we’re still we’re tight. We’re tight versus the way that demand is growing,” he said.

Jet fuel demand is back to between 65 percent and 75 percent of record demand in 2019. But only about four gallons of that fuel comes from each 55 gallon barrel of crude.

“So that’s going to have a short-term effect on where supplies are at as well,” Iaccino said.

“They’re pumping crude oil out to get jet fuel and it’s not being used in gasoline, which is the main sort of product distillate that comes out of those barrels,” he explained. “You might start to see the inventories increase and it won’t necessarily be a bearish indicator.”

Price target

In terms of price, Iaccino says he is targeting $59.62 per barrel, though he is not currently long oil. “I’d still probably get out of those round numbers because they tend to work,” he said.

Nevertheless, the rapid changes in the number of new cases of Covid-19 and vaccination rollout on the upswing indicated the potential for a demand spike.

There a few factors to supply on the OPEC side, he said. “Number one is that they’re analyzing every month now whether they should up production. Saudi Arabia can reintroduce the million barrels that they decided to cut on their own pretty quickly.”

Recommended Articles

6 Exotic Vacation Spots Where a Dollar Goes Farthest

The average cost for an American to go on vacation is just about $1,200. Depending on where you go, that cost might barely cover the airfare. That’s the thing about

4 Safe Ways to Earn Steady Retirement Income

Retirement should be a time to relax and experience the good things of life that you probably missed when you were working full-time. However, to have a truly good time

Restless Leg Syndrome — Is It All in Your Head?

If you’ve ever felt tingling, crawling or tugging sensations in your legs, seemingly for no reason at all, you might have thought you were going crazy. These feelings may keep

11 Money-Burning Impulse Buys You Must Resist

The average American spends over $5,400 every year on unnecessary impulse buys. Think about what you could do with an extra $5,400. Setting aside that amount in a retirement plan

5 Questions to Ask Before You Take Money from a 401(k)

Sometimes even the most financially prudent individuals may go through an unforeseen emergency that forces them to consider making an early retirement withdrawal. However, while in your moment of difficulty

10 Ways to Spend and Live Well With No Cash

Living a healthy lifestyle isn’t always easy, and it can weigh heavily on the wallet. Organic food can cost a pretty penny and holistic healthcare models are often paid out

Save Hundreds by Being Your Own Pest Control Service

The average cost of a pest control visit can be anywhere between $150 to about $1,500, depending on the severity of the problem. Most new homeowners don’t appreciate that when

How to Protect Your 401(k) in the Event of a Market Crash

It's normal for investors, especially those close to retirement age, to worry about fluctuations in the market and how it will affect their 401(k) plans. And while there's no way

Would You Eat Ugly Carrots to Save Money?

“Ugly produce” a is term for aesthetically unpleasing food that usually goes unsold in lieu of more cosmetically appetizing fruits and vegetables. Bruised, blemished, or misshapen apples, double-headed carrots, or

credit score boost

Credit Score Boost: How Your Behavior Affects Your Credit

A credit score is a lot like your personal economic statement. Getting a credit score boost improves your money life immediately. Any time you apply for a loan, a mortgage,

Retiring? Here’s 4 Cities Where You Can Live on $1,500 Monthly

Retirement should technically be a wondrous time of life where you stop living to work and start working on living. However, retirement in real life is nothing like the pop-culture

8 Things to Do the Moment You Start Feeling Sick

Some days, you just know something’s got you. When you feel that heaviness in your head, an aching in your joints or scratching in the back of your throat, it’s