The Department of Energy released its weekly report on oil inventories this morning and had some surprising numbers to look at.

The first item mentioned in the report was oil inventories. They dropped 1 million barrels, but stocks remain cushy for this time of year. Oil inventories are nearly 11% higher this year than last. More concerning was that oil demand is again nearing 19 million barrels per day, up 5% over the same week last year.

Next up were numbers on gasoline inventories. Gasoline in storage increased nearly three million barrels last week, a number that definitely was a surprise given last week's tumble and looking over the number of refineries that are doing maintenance work. I was expecting a fall of 500,000 barrels for gasoline in storage. Demand for gasoline was a bit more concerning. While demand for fuel in autumn typically is lower than Summer, this week's numbers showed that demand is slowly increasing. Demand was up 6.2% over the same week last year for gasoline.

Distillate fuels also rose unexpectedly, posting a gain of 700,000 barrels last week. I had expected a fall of 750,000 barrels. An important factor continues to be the lack of demand for distillate fuels. Compared to the same week last year, demand is down 9.5%, but I estimate that to be conservative and that demand is down over 10%. We may have seen the worst days for distillate fuels, but that remains to be proven.

All said, stockpiles of all fuels are healthy for this time of year, but I can't help but look at demand and forecast prices to bottom out (if they haven't already) very soon.