The Energy Information Administration (EIA) reported quite clearly the impact that Hurricane Harvey and Irma had on gasoline supply. They reported the biggest gasoline drawdown in history, 8.428 million barrels, putting gasoline supply back to a three-year low. Yet at the same time, it showed what the US refining community is going to have to do and it basically means that they will demand more crude oil as they look to rebuild supply. It also means that the normal seasonal slowdown for crude in maintenance season on will be out of kilter; the shutdown and restarting of refiners means that their maintenance is already done and other refiners may put off maintenance as there is pressure to try to build ample supply as we are still seeing gas shortages in Florida and the margins are still strong.

For crude bulls, you still have that upper Bollinger Band resistance that has proven to be a ceiling for oil all year. So today could set the stage for a major upside breakout if they can break above that band and stay there. A pullback from that level would mean more of the same range trading that we have been in and we would pull back to support. We expect that we have a good shot to break out because global demand figures and expectations have been on fire but weak demand from China overnight is giving hope to the bears that we can go back to trading the range in a zombie like state.

Crude bears also hoped that the biggest crude build in 6 months, coming it at 5.888 million barrels, and a huge jump in U.S. oil production from 8,781 million barrels a day to 9.353 million barrels a day, would send oil falling. But the crude rise was smaller than some had thought and came as refinery runs fell by 2 percentage points to 77.7 percent, the lowest rate since 2008 to 394,000 barrels per day. As refineries ramp up they will have to build up distillates which fell by 3.215 million barrels a day, the biggest draw in 6 months. Yet they rallied right back to the resistance and are trying to see if we can breakout. 

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