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If there's a forecast the experts can defend, it's that for refinery usage. The green-eyeshade set was pretty much on the money again this week on refining operations. Last week's capacity utilization, says the Energy Information Administration, was 85.3%, just two-tenths of a percent above industry expectations. Calls for product inventories, however, were off base again. Gasoline inventories, which were expected to rise by 1.3 million barrels, instead fell by 1.5 million. A 700,000-barrel build in distillate fuel stocks, including diesel and heating oil, was forecast, but fuel inventories rose by 2.3 million barrels. Traders are now focused on fund liquidations in the crude oil market. Over the past two weeks, the proportion of net long open interest held by large speculators - hedge and managed futures funds - has dipped to levels from which this year's dizzying price run-up was launched. A break below those levels would be especially bearish for the oil complex. Large Speculators Net Long Crude Oil Positions 
The downtrend in crude oil prices, however, is improving NYMEX crack spreads (background on the spread and its trading significance can be found in "Time For Crack Spreads?"). The nearby spread has firmed at the $5-a-barrel level, implying gross profit margins around 8%. A year ago, margins were below 7%. Refining Margins 
Short covering was also featured in the natural gas futures market last night. While still appearing oversold, technical indicators are tipping bullish for the gas market, suggesting that the market may be near a short-term low. Crude oil's premium to natural gas continues to deteriorate, as it aims for a November seasonal low. Since Labor Day, crude oil's fallen 43%, while natural gas has slipped 15%. The price action has whittled more than $7 per million British thermal units (mmBTU) off crude oil's energy-equivalent value. The drop has yielded a 239% return for spreaders who are long gas and short crude on a 1-to-1 basis (the seasonality of this spread is explained in "Spreading Oil And Natural Gas"). Crude Oil/Natural Gas Premium ($/mmBTU) 
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