Real-time Monetary Inflation (per annum): 8.3%

By the way traders took crude oil down $1.23 a barrel, or 1.8%, this week, you'd think there was too much oil sloshing about.

Analysts, though, were looking for commercial inventories to decline by 1.3 million barrels. U.S. Energy Department data showed the week's actual drawdown - 3.8 million barrels - matched the previous week's off-take. At 353.9 million barrels, supplies are still above the average range for this time of year.

In another surprise to barrel counters, refinery usage shot up more than 1%, to 87.1%, of operable capacity. The consensus forecast on the Street was a marginal 0.1% uptick.

That capacity was put to work cranking up average daily gasoline production to 9.2 million barrels. The 1-million-barrel increase in gasoline stocks expected by analysts was blown out by the 3.9-million-barrel build reported by the Energy Information Administration. Still, gasoline inventories are seasonally average.

The production of distillate fuels, including diesel and heating oil, increased last week, averaging about 4.1 million barrels per day. Inventories, as a result, increased by 2.1 million barrels instead of the 600,000-barrel build forecast by analysts. Stocks are above average for this time of year.

Refining margins ratcheted down 2.9 percentage points to 13.9% this week, mostly due to a deterioration in the gasoline crack. Heating oil spreads were pretty much unchanged.

NYMEX-Implied Refining Margins

Ten cents was shaved off crude's quarterly contango, consistent with this week's inventory drawdown. The three-month delivery spread, once more than $15, now hovers near $2 a barrel.

The oil market has taken a severe hit this week. Technical indicators have turned bearish.

Bulls will be encouraged as long as the August West Texas crude contract can maintain closes above key support at $67.66. Secondary support rests at $64.62.