December 30, 2010

Fundamentals came into play today during a light day of trading due to the New Year's holiday. On this last trading day of the year, the market noted a build in distillate and a smaller than expected draw for crude. Gasoline inventory drew down as expected. Together with manufacturing data from China that showed a slowing of growth, this lead to a fall in crude and product prices from yesterday. Crude fell below $90 but this seems high based on available supply and the current level of economic growth. This is why the announcement of the lowest jobless claims in two years did not keep the price moving up. The harder number to explain is the distillate inventory build that is happening amid snowstorms and cold weather.

Having an annual perspective gives a better understanding of what happened this year. Crude +$9.99, 12.5% increase, $89.82; gasoline 32.82¢, 15.9% growth, $2.3912; distillate +36.1¢, 17% higher, $2.4845.

See you in 2011.

December 29, 2010

Analysts may be starting to wake up as to why inventories are falling this month and may not want to be holding expensive inventories next month when products start to build with lower priced product. Crude and product prices all went up. The news that consumer confidence and home values are down did nothing to help make prices increase. Prices are magnified this week as trading volume is low. Tomorrow's EIA report will affect the final settlement prices of the year.

Today, crude -33¢, $91.12; gasoline -1.77¢, $2.3904; distillate -0.45¢, $2.5215.

December 28, 2010

The fourth day of crude above $90 while gasoline and diesel have settled sideways. December retail sales were reminiscent of better economic times and gasoline demand has been improving lately. Some analysts are talking about inventory draws but by now everyone has been reminded of LIFO and year-end tax planning. Economic news is a mixed bag: prices for homes for sale are down, equities are up, fuel demand is picking up, but no one is sure about Chinese fuel demand and its attempt to dampen inflation.

Today, crude +41¢, $91.45; gasoline -1.38¢, $2.4081; distillate +0.0094, $2.526.

December 27, 2010

Is China's increasing of interest rates and deposit requirements a move that will curb inflation or will it do little to help their economy as it is only one quarter of one per cent?

Will the airlines ever make up for the planes that did not fly over the weekend? What happens to total diesel demand now that both shopping and trucking were greatly curtailed because of snow storms On Christmas Day and the following Sunday. The markets seem to think that that demand will not make up the lost product, relatively speaking.

The draw on inventories will also soon end as the new year will mean that the LIFO layers will start anew and inventories can reflect true demand. This may stop the increase of crude and and product prices or limit the effects of dollar devaluation.

Today, crude -44¢, $91.04; gasoline -1.71¢, $2.4219; distillate -2.42¢, $2.5166.

December 23, 2010

As we approach 12/31/10 and the final inventory of the year, refiners are paying close attention to inventory levels because of the LIFO rules and inventory layers and all the other tax valuation issues. Consequently, inventory has been drawn two weeks consecutively. Some analysts see this as positive signs that the economy is improving and demand is increasing. However, the housing sales numbers are half what they were forecast to do. At best And with the holiday season, many analysts have already taken off for the year and the number of trades are lower so that any movement seems bigger than it is. Nevertheless, crude has risen 3.9% in a week. Gasoline is already $3/gallon in some markets.

For the week (short week due to the Christmas holiday), crude +$3.46, $91.48; gasoline +12.12¢, $2.439; distillate +1.12¢, $2.5408.

December 21, 2010

Crude and products settled higher today as reports of high same store retail sales were published. Coupled with initial reports of tightening supply, this news made for very bullish activity today.

Today, crude +99¢, $89.80; gasoline +2.31¢, $2.399; distillate +2.9¢, $2.5178.

December 20, 2010

Initial U.S. Commerce Department GDP reports indicate an improving economy. It is important to remember that it is the initial report and every report in the past year has been adjusted downward but analysts overlooked that today and pushed prices up. Global cooling in North America and Western Europe is also impelling prices up. The period around the holidays see lower levels of trading and many moves now seem greater than they would normally be considered because trading is so light.

Today, crude +69¢, $88.81; gasoline +5.81¢, $2.3759; distillate +1.51¢, $2.4888.

December 17, 2010

The passage of the bill extending the Bush tax rates helped crude overcome the dollar's rise as it also climbed 32¢. Some traders were taking chances that the onset of colder weather may move crude and distillate prices higher but distillate fell despite crude's rise. Looking at the movements of the past week, price was slightly higher for crude and both products. The price movements this month seem to indicate that traders are wary of $90 but also believe that prices should not go down below $87.

For the week, crude +23¢, $88.02; gasoline +0.85¢, $2.3178; distillate +1.92¢, $2.4737.

December 16, 2010

Trading is light because of the time of the year and everyone is aware that refiners are cutting back on inventory because the end of the tax year approaches. Despite the news that there was a huge inventory draw, a review of the actual numbers showed that current levels are still above average of the past few years. The financial markets took precedence again today and with the dollar's rise came crude's fall.

Today, crude -92¢, $87.70; gasoline -0.49¢, $2.3043; distillate -0.72¢, $2.4763.

December 15, 2010

Crude inventories fell by nearly 10 million barrels but there was a build in gasoline and, surprisingly, distillate inventories. The year end valuation of inventories approaches since most of the industry uses LIFO and refineries were probably producing as much of product as could be forecasted to be profitable thus draining crude and building product. The futures gains for crude and products were quite modest signaling a market understanding of the accounting moves by refiners.

Today, crude +21¢, $88.62; gasoline +1.03¢, $2.3092; distillate +1.5¢, $2.4835.

December 14, 2010

The Nazis finally met their match in the outskirts of Moscow in early December 1941.
The rush to get to $100/barrel oil has hit a snag this December but it is not yet time to do more on that analogy. There are a number of activities that are leading against the rising to that price point. The inflationary quantitative easing is definitely in analysts' minds. U.S. gasoline demand fell 3%last week and gasoline futures dropped 0.8% at settlement with the release of that news. It is hard to talk about an improving economy in the light of demand decreases. Unlike the German advance led by Guderian, oil price increases are moving steady and there is no blitzkrieg to higher prices yet. With all the doom and gloom, retail sales are up and that is hard to configure with gasoline demand being down.

Today, crude -19¢, $88,41; gasoline -1.96¢, $2.2989; distillate +0.28¢, $2,4685.

December 10, 2010, part 2

The Chinese government is doing the right thing by trying to control inflation but oil traders saw this as slowing down the economy and reducing oil demand. Crude and product prices dropped and all eyes are now turned to the OPEC meeting in Quito, Ecuador. No major decisions are expected from the OPEC meeting but there may be indications of how the Cartel wishes to proceed.

For the week, crude -$1.40, $87.79; gasoline -4.28¢, $2.3093; distillate -2.99¢, $2.4575.

December 10, 2010

Sixty nine years ago today, Captain George McMillin, USN, surrendered on Guam, after a brief battle against Imperial Japanese forces. The were about 550 sailors, Marines and militia with a total of 12 automatic weapons matched against about 5,500 Japanese soldiers, fully armed with modern weapons. Isolationists in Congress led by Rep. Joseph Martin (R-Mass.) had opposed any defensive measures that would have armed the sailors, Marines, and militia and enabled them to give real resistance. Three militia men were beheaded near the Governor's residence in Agana.

Guam was initially bombed on December 8 at 8:30 a.m., three hours after Pearl Harbor was attacked. Some residents of Guam were unaware of the attacks on Pearl Harbor and were attending Mass at the Agana Cathedral as it was the Feast of the Immaculate Conception. The bombing attacks continued until ground trooops came ashore on December 10. The brutal Japanese occupation lasted until July 21, 1944.

December 9, 2010

Gasoline took center stage today as a Hess refinery in the Virgin Islands was shut down for unexpected repairs and concerns arose about gasoline supply. This 3.6¢increase was modest but pronounced and there was barely any movement at settlement foe either crude or distillate. The dollar was steady and many traders were sitting on the fence because of the OPEC meeting this weekend. Although there was an announcement that unemployment claims were slightly down, there was no reaction from the markets as there has been a tendency for those numbers to be revised at a later date.

Today, crude +11¢, $88.39; gasoline +3.6¢, $3.3406; distillate +0.69¢, $2.4676.

December 3, 2010

Inventory builds and rising unemployment could not overtake the falling of the dollar and crude went up $1.19 as it now begins to test the $90 ceiling. Even news that fuel consumption fell for the week ending November 26 could not keep crude from rising. Helping the bullish thinking are the future projections of $110/barrel and $120/barrel crude that sees increased demand and therefore these higher prices.

For the week, crude +$5.43, $89.19; gasoline +14.18¢, $2.3521; distillate +17.62¢, $2.4874.

December 2, 2010

News of an improving economy and the fall of the dollar versus the euro led analysts to ignore oil fundamentals about supply and demand and caused crude and both gasoline and distillate to escalate in today's trading. Crude is now trading where it was over two years ago when prices were falling rapidly. It is now rising in fits and starts but steadily rising since October 1 and staying in the $80s.

Today, crude +$1.25, $88.00; gasoline +5.49¢, $2.3553; distillate +4.9¢, $2.4546.

December 1, 2010

It was Wednesday but you could not tell that there was a crude and gasoline inventory build as crude rose 3.1% in one day because favorable U.S. employment numbers, an expansion of Chinese manufacturing, and news that the IMF would support European efforts to address the sovereign debt problem of Italy, Portugal and Spain.

Today, crude +42.38, $86.75; gasoline +5.04¢, $2.3004; distillate +9.71¢, $2.4056.

November 30, 2010

On the last day of the month, we continue to talk about the daily movements but we also point out what happened over the past 30 days. There's continued concern about the sovereign debt problems of Portugal and Spain and now Italy and this has pushed the dollar higher and crude followed in the opposite direction. With Ireland's bailout now being worked out, the problem with the southern European countries' debt is now in the forefront. Added on top of this is the concern for inventories. The release of the EIA's report tomorrow should inform the markets where inventories were last Friday and prices should be set by the report.

As interesting as the day to day movements are, the month to month movements show some interesting facts. Crude gained $1.45, gasoline jumped 15.77¢, and distillate rose only 2.52¢. This seems to indicate a return of gasoline buying at retail while diesel, heating oil and jet seem to really stand still with such a modest gain in price and with winter having already arrived in many states.

November 29, 2010

Crude went contrarian today by going up even when the dollar got stronger while equities dropped. Increased retail sales over the weekend and a colder-than-expected winter temperature prediction have all led to a positive attitude about the direction of the economy and petroleum demand.

Today, crude +$2.02, $85.78; gasoline +7.42¢, $2.2845; distillate +4.32¢, $2.3594.

November 24, 2010

The fall in weekly jobless claims trumped the decline in crude stocks. Gasoline also showed a build while distillate showed a decline; as winter approaches distillate will continue to show greater demand. Equities and the dollar also rose. The dollar's rise normally would see crude going in the opposite direction but the good news on unemployment was foremost in traders' minds. Both gasoline and distillate showed major gains for the day.

Today, crude +$2.64, $83.89; gasosline 7.9¢, $2.214; distillate +7.12¢, $2.3214.

November 23, 2010

The first time I went to South Korea in the 1970s, a Korean friend pointed out to me that all the highways were constructed so that they could also be used as runways in case the North Koreans did something crazy. Park Chung Hee was the president of South Korea then and it was my thought that this was the way a general thinks when he is developing the resources of a country. The North Koreans have now done something crazy again this year by shelling an island off the west coast of Korea and killing two people while earlier this year sinking a South Korean warship an killed 46 sailors.

The artillery shelling and the South Korean return bombardment are causing jitters around the world and set off a fall in equities and help the dollar increase. The primary reason the dollar gained versus other currencies is concern about the Irish debt problem. We're back to worrying about the PIGS' (Portugal, Ireland, Greece, Spain) debt problem. The most worrisome of the PIGS is the Spanish requirements should a bailout be necessary. The tension caused by the Korean armed conflict and the Irish debt problem caused crude and products to fall even though it is anticipated that there will be an inventory draw in tomorrow's inventory report.

Today, crude -45¢, $81.25; gasoline -1.49¢, $2.135; distillate -1.65¢, $2.2502.

November 18, 2010

Once the news came out that the Irish were to agree to a bail-out, the dollar began to fall versus the euro and crude rose to complete the cycle. As product supplies tighten, gasoline futures increased sharply 3.33% in one day. Normally distillate would be leading the charge upward with cold weather moving in.

Today, crude +$1.44, $81.91; gasoline +7.2¢, $2.2312; distillate +4.29¢, $2.2959.

November 17, 2010

Everyone expected crude to rise when the EIA inventory report came out today showing another large draw. However, the Irish debt problem and the Chinese deciding to increase interest rates to dampen inflation are global worries and those events set up another fall in crude prices. The analysts are also paying attention to fundamentals. The refiners are buying less hoping to cut back on carrying costs and that is why inventory is down while demand is marginally better than a year ago. Since going to nearly $88 last week, crude has dropped four straight sessions and is now knocking on the door of $80 and below.

Today, crude -$1.75, $80.47; gasoline +0.35¢, $2.1592; distillate -5.6¢, $2.253.

November 16, 2010

When we think of volatility, we often think of the physical movement of prices in the markets. We should also think of the volatility of the mind. Yesterday, analysts said they were waiting for Wednesday's EIA report before making any big moves in the market. Today, prices fell by a lot. And there is a lot to think about.

Overriding all concerns is the Fed's intention to inflate the economy with quantitative easing. It did not work for Diocletian and it won't work for Bernanke. I don't think that Ben will be able to retire to his cabbages any time soon as Diocletian did after he issued his Edict on Coinage.

The Chinese and the South Koreans are doing the reasonable thing and using monetary policy to fight inflation. The Europeans are trying to find solutions to their debt problems and this has caused the euro to fall versus the dollar. Added to this news was the rumor that crude and product inventories have built once again and prices had to fall significantly.

Today, crude -$2.53, $82.22; gasoline 3.88¢, $2.1557; distillate -6.17¢, $2.307.

November 15, 2010

With mixed economic messages from the Commerce Dept. that retail sales were up but manufacturing was down, analysts are back to reading fundmentals of supply and demand. The large inventory drawdowns the past two weeks have pushed the price clost to $90 but late last week currency and global economic factors led to a major reassessment of petroleum demand and prices crashed. Today the market went sideways barely moving up or down for crude and products. The focus seems to be whether there will be a significant inventory draw or a build up.

Today, crude -12¢, $87.75; gasoline -0.63¢, $2.1945; distillate +0.73¢, $2.3687.

November 12, 2010

The market decided that it had been too exuberant about the economy and the prospects for economic growth for most of the early part of the month as they began to digest the counter-inflationary measures the Chinese are intending to impose. The Chinese have just finished berating Obama about the QE2 and then took measures to cut back inflation by announcing their intention to raise interest rates. A $3 drop in the price of crude is big news and represents the significant uneasiness within the trading community about how the global economy is doing. This happened on a day in which the dollar dropped in the currency markets which would normally be a signal for commodities to take the opposite course.

For the week, crude -$2.07, $84.87; gasoline -2.57¢, $2.208; distillate -2.5¢, $2.3614.

November 11, 2010

Veterans Day! Gerry, Albert, Victor, Patrick, John and Ben, thank you for your service. The first four men, my wife's brothers, served (Patrick still serves) in the U.S. Army from the Vietnam era until today. John is their cousin and was a corpsman in Vietnam. Ben, our collective brother-in-law, was a Marine in Vietnam. I asked Ben what he did when the North Vietnamese attacked, he said hide in the fox hole. I once asked my friend Alan, a Marine door gunner in Vietnam, if he was ever in a helicopter crash and what did he do. He said he was in two crashes and both times he fainted. He said he was fortunate because the other door gunner died in those crashes.

There was no fainting nor crashes today in the oil markets. The continuing draw on inventory presages the end of contango in the market. Equities fell, the dollar rose and China is buying more oil and so crude went sideways while there were small decreases in products. There was not a lot of trading on this holiday.

Today, crude +15¢, $87.84; gasoline -0.45¢, $2.355; distillate -1.3¢, $2.426.

November 10, 2010

Happy Birthday U.S. Marine Corps!

I still think of that Liberation Day party that the Guam Association of Utah celebrated at Roy in 2004. Somehow they found and invited five Marines who had participated in the liberation of Guam in July 1944, one of whom had been shot through the neck by a Japanese sniper. The Guam Association also invited a Marine who was a member of the pre-war garrison who surrendered to the Japanese Imperial forces on December 10, 1941, and spent the war in a prison camp. Honoring these octogenarians for their service of sixty years earlier was an incredible experience that more than matched watching the Marines marching at all those Liberation Day parades on Guam over the years.

The Administration may deny it but QE2 is inflationary and the results are already apparent. Today's crude settlement price was the highest since October 2008. The initial explanation is the draw on crude and product inventories was greater than expected. The real action is in the currency markets and the dollar's fall is causing the opposite reaction for oil. It should be noted that although refinery utilization is up slightly, it is still at only 82.4. Meanwhile imports are down significantly while demand is rising but mostly for distillate. Seasonal demand growth for distillate is expected as winter approaches.

Today, crude +$1.03, $87.69; gasoline +4.8¢, $2.231; distillate 2.84¢, $2.439.

November 8, 2010

Even though no one is expecting any real decision or news coming from the G20 Summit Meeting later this week, market watchers are still checking for signs and the market went sideways for the second straight day after the dramatic increases in price for crude last week. Today, the dollar and equities rose and oil played its part of the dance and fell. However, there are other signs that the market is watching. The status of inventory and the strength of demand are important when the currency market is uncertain. Gasoline also went sideways but down while distillate is gaining strength as we enter the cold season and demand for heating oil heats up.

Today, crude +12¢, $87.06; gasoline -0.33¢, $2.179; distillate +1.21¢, $2.3985.

November 5, 2010

The markets continued to ponder the inflationary actions of the Federal Reserve and the dollar continued to fall in the currency markets. The dollar's fall and the creation of 151,000 private sector/non-farm jobs in October led to significant increases for crude and products. Floating storage inventory is also drawing down as is product inventory across the U.S.

For the week, crude +$5.77, $86.94; gasoline +10.01¢, $2.1823; distillate +16.89¢, $2.3864.

November 4, 2010

The Fed has started inflating the economy, thus causing the dollar to fall. This has led to crude breaking the $86 barrier today for the first time since April. The normal movement in the markets is for crude to do the opposite of the dollar and be in tandem with equities. It did that today. The big news of the inflating dollar scheme by the Fed overshadowed the increase in unemployment announced today. The draw on product inventories also seems to help the price move up but the draw could also be related to decreased refinery utilization.

Today, crude +$1.83, $86.49; gasoline +3.93¢, $2.1758; distillate +4.4¢, $2.373.

November 3, 2010

May 3 was the last time crude settled this high. The dollar was stronger today but so is the economic outlook. Crude inventories rose but gasoline and distillate stock were drawn down. This seems to be more a matter of refinery utilization rather than supply but the market should work that out sooner or later. The printing of money or money expansion as Bernanke calls it is seen as positive and that added to the all-around good feeling that analysts were enjoying the day after the midterm elections.

Today, +77¢, $84.66; gasoline +2.71¢, $2.1365; distillate +3.59¢, $2.329.

October 29, 2010

There seems to be a pall over the economy now that we've hit month's end and the economic reports start to come in. The first round of announcements about GDP revealed that GDP rose 2% in the 3rd quarter. This was already lower than expected and normally the follow up to this announcement is an adjustment downward. The rumors about the actions the Fed will take next week are also all about further stimulating the economy but the Fed has really run out of ideas for making the economic picture better.

The fall of the dollar did not raise crude and products today the way it normally sends it rising when dollar loses ground against other currencies. The unforeseen inventory build announced Wednesday leaves traders worried that they could be holding expensive product in a falling market.

The big news for Ocotober was the 9¢ jump in gasoline futures: crude +$1.20, $81.17; gasoline +8.87¢, $2.0822; distillate +2.7¢, $2.2175.

October 28, 2010

I return to my observations and analysis of the petroleum markets after taking time off to attend my daughter's wedding. A short historical digression before we get to the news of the day.

Today's importance is little recognized by modern commentators but Emperor Constantine the Great defeated the army of Maxentius at the Battle of the Milvian Bridge 1,698 years ago. Constantine later converted to Christianity and made Christianity a legal religion in the Roman Empire. Emperors often claim to have visions and hear voices but Eusebius claimed that Constantine himself told him he saw the sign of the cross cover the sun and he heard a voice say, "In hoc signis, vinces." Christianity took a big step nearly 1,700 years ago today.

Very few analysts totally trust the first economic report and today's release of lower than expected unemployment claims did not lead everyone to buy at higher prices. The dollar's weakness led the market to rise but that increase was stunted by yesterday's inventory report on supply builds.

Today, crude +26¢, $82.20; gasoline 1.9¢, $2.1139; distillate +0.59¢, $2.2442.

October 18, 2010

The dollar fell, the stock market rose and the strike at a major French port for oil imports went into its fourth week. These factors in combination with the API's report of an increase in oil consumption in September have the analysts thinking about a rising market for oil. There are major supply disruptions in France and this probably poses more of a psychological problem rather than a physical problem for the crude and product markets. Obviously the European supply system may be undergoing problems. If there is a bottleneck for bringing American products into France. There will be repercussions in the U.S.

Today, crude +$1.79, $83.09; gasoline +4.7¢, $2.1536; distillate +4.34¢, $2.2772.

October 15, 2010

The dollar is still driving the crude oil futures price as it gained 0.5% on the day while crude and both products fell. Every session in October has ended over $80 while all of the September closings were in the $70s as were most of the August closings.

Goldman Sachs is starting its game again about crude prices going above $100 and you would think that Eric Holder would bring them in for consultation or at least have Surgeon General Regina Benjamin take their temperature. After all, demand dropped 0.7% for the week ended 10/8 and inventories continue at near historically high levels. Until the economy improves appreciably and causing demand to significantly increase, supply will be abundant and prices should be lower than they are today.

For the week, crude -$1.36, $81.30; gasoline -4.31¢, $2.1066; distillate -4.88¢, $2.2338.

October 12, 2010

Oil traders played a wait and see game with the movement of the dollar and the price of crude still fell even though the dollar also dropped. The traders want to see prices go up but economic conditions and industry fundamentals also influence in which direction crude eventually goes each day. Now, traders will scrutinize the decisions of the OPEC meeting Thursday which is, incidentally, also the day that the government issues the inventory report.

Today, crude -54¢, $81.70; gasoline -4.22¢, $2.125; distillate -1.76¢, $2.2631.

October 11, 2010

The tail wagged the dog this Columbus Day as corn futures were seen to be bullish because of a less than expected corn crop yield and that meant that ethanol prices would rise and this caused an increase in gasoline futures. The opposite happened on the crude side as equities rose and the dollar gained leading to a slight crude decrease. The real issue is whether there will be greater future demand for fuel products and so far the supply and demand balance is tilted greatly towards supply.

Today, crude -44¢, $82.24; gasoline +1.75¢, @2.1672; distillate -0.19¢, $2.2807.

October 8, 2010

95,000 jobs were lost while unemployement somehow idled at 9.6%. Equities went up while the dollar went down. Crude rose and gasoline and distillate followed.

For the week, crude +$1.08, $82.66; gasoline +6.3¢, $2.1497; distillate -1.14¢, $2.2826.

October 7, 2010

The familiar refrain of strong dollar and falling commodity prices stayed true today. The dollar increased versus the euro while crude and equities fell. There are expectations that the jobless rate will fall but the government is being accused of padding the numbers with poll watchers (who have never been counted before). Demand remains low while suppliers are awash in inventory.

Today, crude -$1.68, $81.57; gasoline -3.82¢, $2.1179; distillate --5.56¢, $2.2517.

October 4, 2010

Oil moved sideways and a little down as the dollar strengthened while the stock market faltered. Distillate followed but gasoline went up. Concern about the fundamentals of abundant supply and anemic demand became evident as traders remembered the last time they were this exuberant about buying crude at higher prices and how much they lost within days. The financial markets may control how investors perceive commodities but it makes no sense to buy at higher prices when there is no economic underpinning of higher prices.

Today, crude -6¢, $81.58; gasoline +0.74¢, $2.0941; distillate -0.7¢, $2.287.

September 30, 2010

It has been an event-filled day. Crude briefly jumped over the $80 barrier before settling barely below this marker. Gasoline and distillate followed suit for price levels not seen since early August. Just to emphasize the direction of the market, Brent futures settled at $82.36 on the I.C.E.

Obviously, the stock market rise has given some impetus to the commodities market but events in the economy seem to be mirrored by fundamentals in the oil markets. However, 2 revisions of the GDP are worrying because there may be some effort to manipulate the markets this close to the elections just as there are rumblings that the Fed's easy money policies are allowing companies to buy stock relatively easily.

U.S. GDP was revised upward to 1.7% from 1.6% but the original estimate was 3.7%.

Gasoline demand did grow 6.1% to 9.38 million barrels daily. There was a draw on crude inventories of 500,000 barrels. More telling was the draw on gasoline of 3,500,000 barrels.

For the month, crude +$8.18, $79.97; gasoline +15.54¢, $2.0448; distillate +24.96¢, $2.244.

September 28, 2010

Crude fell in a sideways motion but it fell nonetheless. Both products increased slightly. The dollar weakened but the continuing worry about inventory and abundant supply made for the slight drop in the crude futures price. It is not just the supply glut that worries analysts but the size of crude and product inventories when compared with supply availability of the past 20 years. Equities may have risen but there is little faith in the economic revival and in a return of sustained robust demand.

Today, crude -35¢, $76.16; gasoline +1.5¢, $1.963; distillate +0.99¢, $2.1328.

September 27, 2010

Crude and products were treading water, moving up and down throughout the day but settling slightly higher than Friday's close. Equities were down but all indications are that there is a huge supply surplus worldwide and no one wants to be caught with high priced product any time soon.

Today, crude +7¢, $76.51; gasoline +0.15¢, $1.948; distillate -0.79¢, $2.1229.

September 24, 2010

Demand is still down and supply is plentiful. The economic picture is not promising but the dollar fell against the euro and that was enough to cause crude and products to increase over yesterday and to show solid gains over last week. There is a fundamentals reason why prices are up as many refineries will do turn arounds to retool for winter product production.

For the week, crude +$2.83, $76.44; gasoline +2.77¢, $1.9465; distillate +3.17¢, $2.1308.

September 23, 2010

The rising dollar helped crude overcome inventory builds and increases in jobless claims and climb moderately today.

Crude +0.53¢, $75.22; gasoline +1.76¢, $1.9176; distillate +0.84¢, $2.115.

September 22, 2010

The weaker dollar was not able to overcome the inventory build for crude and products allowing for a small drop in crude and product futures. Analysts were expecting a draw on inventories but the EIA report, released at mid-morning, showed a build for crude and both gasoline and distillate began to fall after rising earlier in the day.

Today, crude -26¢,$74.69; gasoline -2.79¢,$1.90; distillate -2.29¢, $2.1066.

September 20, 2010

Equities rose and oil followed and enough analysts felt comfortable with today's economic news that crude and both products rose today for the first time in 5 days. Fundamental supply issues remain problematic. Even if there are inventory draws this week, stock levels will be higher than any 5 or 10 year average and that is occurring while refinery utilization is declining; low production and lower demand is a bad combination.

Today, crude +$1.22, $74.83; gasoline +3.05¢, $1.9493; distillate +4.11¢, $2.1402.

September 17, 2010

The signs are hard to miss. Refinery utilization is declining, down 0.7 from the previous week, gasoline consumption declined in August and is down for the first 8 months of the year when compared to same period last year, and consumer confidence is down in September by 2.3. All these are part of the story that led to a hefty decrease in crude and product prices for the week. The Enbridge pipiline has also begun operations again removing any reason to move prices up.

This week,crude -$2.85, $73.61; gasoline -6.01¢,$1.9188; distillate -0.54¢, $2.0991.

September 15, 2010

Inventory for crude and products fell close to forecast but crude and gasoline prices fell anyway as the Enbridge pipeline is being repaired and is now expected to be back in operation within two or three days. Distillate prices rose but we should begin to see distillate prices rise as we approach the colder winter months. In the financial markets the Japanese government is working to stop the yen from gaining strength versus the dollar and the rise of the dollar also provided traders with another reason to bring crude's price down.

Today, crude -64¢, $76.14, gasoline -0.5¢, $1.9627, distillate +0.55¢, $2.1331.

September 10, 2010

The pipeline break in Illinois, positive economic news from China and Japan, and IEA's improved demand forecast for the rest of the year led to a significant increase in crude and product prices followed crude's lead. The ability of the pipeline company to quickly repair the line and get oil moving into the US from Canada will likely determine how the price of crude moves next week. The US still has abundant supply to cover the short term. Even if the pipeline cannot be repaired ASAP, supply shortages look to be localized to the Chicago area. This makes it a logistical and not a supply problem for the moment.

For the week, crude +$2.05, $76.46, gasoline 3.75¢, $1.9729, distillate +3.95¢, $2.1045.

September 9, 2010

The early take today on the weekly supply report seems to have confused traders as they initially bought futures and raised prices but then the true nature of the supply report kicked in. We are awash in supply all over the world and not just in the USA and demand has not picked up sufficiently to reduce supply even in the normally high demand summer.

The trading band is quite narrow. Prices may move a lot during the day but the settlement prices remain within pennies range not even a dollar, up or down, for nearly a month. This seems to come from a wish to drive the prices higher but there is no support for a real push to go over $76.

Today, crude -40¢, $74.26, gasoline -0.61¢, $1.9354, distillate -1.76¢, $2.065.

September 3, 2010

Today is not only Friday but also the last trading day until next Tuesday because of the 3 day Labor Day weekend. There was a lot of economic information being released and the markets generally took a bearish stance. Unemployment rose to 9.6%, equities rose while the dollar weakened, and the ISM's index fell 2.8 to 51.5. The Mariner's fire is out and all 13 workers on the rig escaped and this piece of good news amid the bad did not push prices up.

For the week, crude -75¢, $74.41; gasoline +3.39¢, $1.914; distillate -1.11¢, $2.0535. It was a tumultuous week but in the end. there was actually little movement.

September 1, 2010

New month, new outlook on the economy seems to be the theme for the trading day. Fundamentals do not seem to matter as refinery utilization was down 0.7 to 87.0 and the decline of gasoline and distillate inventories is a result of this lower output. One of the outcomes of the decreased utilization is that crude inventory was even higher than forecast. All this news was disregarded by the oil traders as crude rose 2.8%. The fall of the dollar in today's trading added to the move to buy at higher prices.

Today, crude +$2.19, $73.98; gasoline -0.16¢, $1.8878; distillate +5.78¢, $2.0426.

August 30, 2010

Previous to today, the 3 trading sessions had seen increases in final settlements despite the steady stream of bad economic news. Today there was a breakthrough that saw the price of crude fall even if it was a small decrease. The dollar is strengthening and equities are dropping while inventories are extremely high and a further build is expected.

Today, crude -46¢, $74.70; gasoline -1.06¢, $1.9373; distillate -1.76¢, $2.0269.

August 26, 2010

There is a disconnect between what analysts are saying about the economy and market fundamentals and the amount of buying in the market the past couple of days. While it is true that first time unemployment claims were down 31,000, the four week rolling average is still the highest in ten months. The economy hasn't sufficiently improved to significantly decrease the jobless rate. What is incontrovertible are the high levels of supply and the low levels of demand. As we approach the end of the summer driving season, supply is abundant. However, for the second straight day prices went up.

Today, crude +87¢, $73.36; gasoline 4.46¢, $1.9085; distillate +3.86¢, $2.0092.

August 25, 2010

Sometimes the movements of the markets are a mystery and today's market session settlements is one of those times. There were builds in inventory for crude and both products. Petroleum consumption is down 1.2% from the previous week and this is August where we are supposed to be coming to the end of the high gasoline demand summer driving season.

Other economic news was also pessimistic. The bad news on house sales was extremely negative. The increase in durable goods orders was only a meager 10% of forecast. However, the dollar did fall versus the euro.


Today, crude +77¢, $72.49, gasoline +1.44¢, $1.8639, distillate +1.51¢, $1.9706.

August 23, 2010

Crude experienced the fourth straight day of decline and the lowest settlement price in almost seven weeks. There is no good economic news to reverse the falling trend. Equities are falling and the dollar is rising over the euro. It is also expected that fundamental news will be bearish and that inventory reports tomorrow and Wednesday will show builds.

Today, crude -36¢, $73.09, gasoline -4.07¢, $1.8818, distillate -1.51¢, $1.9564.

August 20, 2010

For most of the year, oil played a dance with the dollar. If the dollar rose, oil fell; if the dollar fell, oil rose. This summer the dynamic changed. Equities were now playing the tune to which oil must dance. However, the reality is that the economy has not significantly improved all year and demand has increased insignificantly while inventories are at twenty year highs and refinery utilization is at lowest rates in some time. The fundamentals have been weak all along.

The bad economic news now has caused a decided downward trend for oil. All the talk of whether Asia, read China, would somehow increase global demand does not tell the full story. China cannot export to a faltering America. They cannot grow their economy organically without demand from the rest of the world.

For the week, crude -$1.88, $73.45; gasoline -1.56¢, $1.925; distillate -2.33¢, $1.9715.

August 19, 2010

Crude fell again today to the lowest level since July 7 when it settled at $74.07. The increase in first time jobless claims signaled once again that the economy is not improving. Another indication of the poor economy is that inventory levels are at the highest levels in twenty years. These inventory levels are occurring when refinery utilization is lagging previous years' rates.

Today, crude -$1.01, $74.42, gasoline -3.23¢, $1.9281, distillate -1.7¢, $2.007.

August 18, 2010

It's the Wednesday story. The inventory report came out and the traders wanted to buy but further analysis told them that selling was the better alternative. Crude inventories had a small draw, gasoline inventories were flat, and distillate saw a medium build. This really means that demands remains weak in what is supposed to be the high demand period. Additionally, the dollar weakened but demand weakness is heavy on the mind.

Today, crude -32¢, $75.43, gasoline +0.8¢, $1.9604, distillate -0.08¢, $2.024.

August 13, 2010

All news now is bad news. There seems to have been a hangover from yesterday's jobless report. Today retail sales did not meet expectations by a very slim margin but most analysts are wary of the later revisions to the initial announcements that somehow never quite meet neither forecast nor expectations and are inevitably adjusted downward. The fundamentals remain as they have all year: low demand, abundant supply, and no light at the end of the tunnel yet.

For the week, product dropped even more than crude: crude -41¢, $75.33, gasoline -17.52¢, $1.9381, distillate -15.14¢, $1.9948.

August 12, 2010

The announcement of bad economic news continued today. The jobless report showed another increase in joblessness and this increase indicates that the economy has slowed down if not completely stalled. The equities market continues to fall as analysts try to find the silver lining in all these dark economic clouds. The dollar is higher and normally commodities go in the opposite direction.

Today crude -$2.30, $75.74, gasoline -4.27¢, $1.9548, distillate -7.37¢, $2.0015.

August 11. 2010

The economic news is bad. The trade deficit widened to almost $50 billion. There are signs that the economy is either in double dip or slowing considerably. The equities market has seen considerable losses this week. Mean time, product inventories for both gasoline and distillate are building while crude inventories were falling though crude supplies are still at all time highs. Refinery utilization is down 3.1% from the previous week to 88.1%. This all points to weak demand.

Today, crude -$2.21, $78.04, gasoline -8.78¢, $1.9975, distillate -5.02¢, $2.0752.

August 5, 2010

New unemployment claims are higher than forecast, crude and product inventories are also higher than expected, and fuel consumption is 2.5% lower during the driving season. In the financial markets the dollar rose against other currencies. The surprising issue is why crude remains above $80 with all this bad news.

Today, crude -39¢, $82.06, gasoline -0.89¢, $2.1657, distillate -1.34¢, $2.1881.

August 4, 2010

The equities and financial markets sent out a mixed bag of news today as did the inventory report and the result was a confused reaction from oil markets. The dollar gained on the euro and both the Dow Jones average and the S&P increased. However, gasoline supplies increased to their highest levels since the end of April and are the highest levels ever for the end of July since these reports first started coming out twenty years ago. This is a sure indication that the demand for gasoline even during these summer months is not as strong as it has been earlier in the decade.

Today, crude -10¢, $82.45, gasoline -1.89¢, $2.1746, distillate +0.15¢, $2.2015.

July 30, 2010

Despite all the economic uncertainty and abundant supply, oil markets were up significantly for the month. The trading range has been $72.95 to $78.99 during the month. The economy grew at a 2.4% rate rather than 3.7% as forecast. Traders took comfort in other economic reports and raised the price throughout the day after the initial shock of the economic report was announced.

For the month, crude +$3.29, $78.92, gasoline +4.2¢, $2.1026, distillate +6.1¢, $2.0427.

July 26, 2010

Positive economic news from the housing market and good news that there were no storms in the Gulf were tempered by expected inventory builds and crude basically went sideways while gasoline and distillate both experienced small decreases.

Today, crude +2¢, $78.99, gasoline -1.48¢, $2.1068, distillate -0.67¢, $2.0429.

July 23, 2010

This past Wednesday and on the other side of the International Dateline, the people of Guam celebrated the 66th anniversary of their liberation from Imperial Japanese troops who had controlled Guam since December 20, 1941. Some time this week, probably on the weekend, Guam clubs around the US (or the mainland as people from Guam refer to the contiguous 48) will also be celebrating Liberation Day, Guam's most celebrated non-religious holiday. Meanwhile, Guam is now planning on 41,000 additional people moving to Guam including the 3rd Marine Division currently based in Okinawa. And the government of Japan will be paying $740M to move the troops there. Times they truly are achanging.

What hasn't changed is the price channel that crude has been in for the past two months, $71.51 - $79.15, final settlement prices at the end of the trading day. The scare about the stress tests that the European banks were undergoing went away but is still in the minds of analysts. The banana storm (on Guam a storm under 100 MPH in wind velocity would only knock down banana trees) in the Gulf of Mexico has been downgraded to a tropical depression but this did not seem to affect prices and neither did the dollar's rise over the euro.

All the talk has been bearish this week but the week to week prices tell us another story. For the week, crude +$2.94, $78.97, gasoline +7.3¢, $2.1216, distillate +3.79¢, $2.0496.

July 21, 2010

Fed Chairman Bernanke is unsure about the economic recovery, crude and product inventories unexpectedly rise, and equities fell. All this bearish news led to small decreases in crude and gasoline and a moderate decrease in distillate. In other industry news, refinery capacity was up to 90.5% while fuel consumption rose over the previous reporting period 3.2% but this is summer and a much bigger increase and great draws on inventory were expected.

Today, crude -68¢, $76.56, gasoline -1.12¢, $2.067, distillate -3.53¢, $1.9892.

July 19, 2010

Oil traders followed the equities markets today and as the positive earnings reports came in and stocks rose, so did the trading numbers for crude rise. Everyone wants to be hopeful but this is still an oversupplied market with little, if any, demand growth. The positive earnings reports augur improved demand but the reports so far have not been consistently positive. It remains to be seen on Wednesday if crude and product inventories have fallen again or whether there is an increase in one or the other or both.

Today, crude +50¢, $76.53, gasoline +1.04¢, $2.059, distillate +0.53¢, $2.017.

July 16, 2010

The news of the economy and the markets was all bearish. The earnings reports have not continued to be good unlike the first ones that came out two days ago. The stock markets are down as the analysts there see the same numbers that oil industry analysts are viewing. Added to that is the fact that gasoline demand has not met expectations and neither has distillate demand. The unemployed are not driving around a lot and this will start to put a crimp on margins and profits in the 2H.

All the talk about dropping prices obscures the fact that prices have been in a specific channel, $70 to $80 per barrel, for sometime. Halfway through this month we are actually priced higher today than we were at the beginning of the month.

For the month, crude +$3.08, $76.03, gasoline +5.86¢, $2.0486, distillate +7.17¢, $2.0117.

July 15, 2010

The Federal Reserve announced that factory output fell 0.4% and China reported reduced economic growth. Meanwhile, the dollar fell against the euro and there was a drop in the jobless reports. This combination of factors led to a small decrease in crude and products. Earlier signs of optimism for greater revenue and profits are now being replaced with significant caution especially since demand has never really met expectations.

Today, crude -37¢, $76.60, gasoline -0.71¢, $2.0599, distillate -1.53¢, $2.0181.

July 13, 2010

The first news out of the corporate earnings reports came out very positive and it is expected that these reports will be generally positive and be the harbinger for economic growth and greater fuel demand. The dollar also fell against the euro today and there are forecasts for a draw on inventories. Crude did its contrarian dance with the dollar and went up quite significantly.

Today crude +$2.22, $77.17, gasoline +5.4¢, $2.082, distillate +2.41¢, $2.0461.

July 12, 2010

The dollar strengthened against the euro, the stock market fell, and crude declined for the first time in four trading days. The focus on equities also extends a focus on high inventories and that will start to further drag prices down. Last week, although crude stocks were down, gasoline inventories were up for the third straight week.

Today, crude -$1.13, $74.95, gasoline -4.11C, $2.028, distillate -0.47¢, $2.022.

July 8, 2010

Today's EIA inventory report sent mixed messages to the market. A sharp draw on crude and a large build in gasoline say that lots of crude is in process but there's not the corresponding increase in demand for the finished product. However, demand for gasoline is up 3.2% while inventory built up nonetheless with crude prices ascending anyway. Refinery utilization is up to 89.8% and crack spreads are shrinking as refineries changed to summer 2:1 gasoline:distillate production ratios.

Analysts also took comfort in their buying from the drop in first time unemployment claims.

Today, crude +$1.35, $75.42, gasoline +2.54¢, $2.0513, distillate +2.62¢, $2.0058.

July 6, 2010

Some analysts called today's price movements "little changed," others focused on the fall at the end of the day that not only erased earlier gains but also went below last Friday's close, and still others talked about the 6th straight day of falling prices. All are now focused on whether continuing talk of unmet economic growth expectations will lead to even further decreases in price that could lead to a price fall to the mid-$60s. The dollar also fell and that normally leads to crude price increases but the bad economic news outweighed the normal equation balancing between crude and the dollar. In the back of the minds of all is that supply remains at very high historical levels and holding lots of contracts for crude supply may invite major losses.

Today, crude -15¢, $71.97, gasoline -0.66¢, $1.9713, distillate +0.15¢, $1,9172.

July 2, 2010

Facing a three day weekend and with no good economic news in sight, traders decided to continue the trend of falling prices today and crude, gasoline and distillate closed the day lower. The unemployment percentage barely moved downward from 9/7% to 9.5% but that is because the number of unemployed people who stopped looking for work increased to offset the 125,000 jobs shed by private non-farm employers.

It is a statement by the market that prices are falling early in the summer when the driving season has just started. Compared to a week ago, crude -$6.76(-8.6%), $72.12, gasoline -19¢(-8.8%), $1.9779, distillate -20¢(-10.4).

July 1, 2010

The bears were out in full force today and prices were in full retreat. Economic news was bad on many fronts such as the unemployment report, home sales, manufacturing, and construction. China's growth seems to have stalled which should not be surprising as the US consumers are China's top customers. The news is no better from the industry itself where crude inventories are higher than they've been since the early 1980s while demand dropped in June.

Prices started out high just this past Monday, closing at $78.27. That price was 4% below the settlement price on the first day of the trading for the year at $81.49. Today's closing price is 6.8% lower than Monday's, just 4 days ago. Of course, it is hard to be optimistic about the economy with the numbers released the past couple of days.

Today, crude -$2.68, $72.95, gasoline -7.06¢, $1.99, distillate -4.86¢, $1.93.

June 30, 2010

There was a draw on crude supplies but builds for gasoline and distillate while refinery utilization was down. This is the summer driving season and production is down while inventory is up. This is definitely demand deterioration. Crude prices fell for a 3rd consecutive day but were still up on a month to month basis. The background for all this is Hurricane Alex in the Gulf and about to make landfall but the oversupply of crude and product had kept prices down.

For the month, crude +$2.63, $75.63, gasoline +4.7¢, $2.0606, distillate +0.62¢, $1.9817.

June 29, 2010

The downward revision of one of China's leading economic indicators and the decline in US consumer confidence once again led to fears that the global economy was not improving but actually deteriorating. In turn this led to significant decreases in crude and product futures prices. Despite Treasury Secretary Geithner's statement yesterday that the rest of the world had to pick up the economic pace and could not rely on American economic prowess, investors and analysts look for the US economy to pick up before the world economy can be deemed to be improving. The corollary to that scenario is that if the US economy improves then there will be Chinese goods to be sold in the US and then worldwide demand for oil and oil products will increase.

Tomorrow's EIA inventory reports will give direction to the market for the rest of the week although the upcoming three day July 4th weekend will also have analysts worrying about the state of markets prior to the holiday.

Today, crude -$2.33, $75.94, gasoline -6.64C, $2.0716, distillate -7.36¢, $2.0209.

June 28, 2010

Fears of hurricane force winds blowing through the oil production areas of the Gulf of Mexico abated over the weekend and that led to a modest price decrease for crude, gasoline and distillate. The market discounted the good news about the increase in the savings rate and instead focused on the rejection of the stimulus type spending that The Obama administration was urging on the other G20 participants. There was little notice of the increase in consumer spending and personal income nor was the dollar's rise much noticed.

Today, crude -61¢, $78.27, gasoline -2.999¢, $2.0945, distillate -1.78¢, $2.0945.

June 25, 2010

The revised lower GDP did not affect prices today and the the falling dollar was not considered the main reason why prices dropped. The fear of a tropical storm developing in the Gulf of Mexico and disrupting supply raised prices to the highest level since May 5. Prices have been staying in the $75 to $78 channel for a couple of weeks but today's price surge led beyond $79 but settled barely below that number. Product prices followed suit and overcame the worries about weak demand.

For the week, crude +$1.71, $78.88, gasoline +7.76¢, $$2.1679, distillate, +5.61¢, $2.1123. Street prices up to $2.479.

June 24, 2010

Crude took a sideways turn today,first falling and then recovering before staying just a little behind yesterday's close. Gasoline finished higher while distillate fell moderately. Economic news is not so good with housing starts' decline overcoming the tiny fall in unemployment claims. The slight increase happened even after the full impact of yesterday's inventory reports came to be more fully understood as bearish on the market because it augurs continuing weak demand.

Today, crude -8¢, $76.37, gasoline +0.49¢, $2.0903, distillate -1.53¢, $2.0562.

June 23, 2010

Inventory took center stage as it does most Wednesdays when the EIA releases the stock level report on crude and product. Although there were builds in crude and gasoline, distillate saw a decline. Even though crude and gasoline were drawing on inventories, diesel supply increased.There is no clear direction in which the market is moving but even with the inventory build, analysts are unsure of the economy's direction.

Today, crude -65¢, $76.45, gasoline -4.76¢, $2.0854, distillate -4.1¢, $2.0715.

June 22, 2010

Weaker than expected economic news from retail sales and housing starts overcame yesterday's news of impending changes in China's yuan that would lead to greater Chinese economic activity leading to crude's fall for the first time in three trading days. The strengthening of the dollar vs. the euro finalized crude's movement for the day and insured that products also followed crude's move down. Tomorrow EIA will release the inventory report and that should determine where prices go unless there are very dramatic movements in the currency markets or the economy.

Today, crude -77¢, $77.10, gasoline -0.9¢, $2.133, distillate -3.25¢, $2.1125. Distillate fell more than gasoline because of greater gasoline demand expectations over distillate demand.

June 21, 2010

Despite being long awaited, China's currency moves seemed to confuse the market more than give it direction. Financial market moves have a greater impact on oil prices than oil industry fundamentals but global oil demand is still uncertain and even the moratorium on deep sea drilling in the Gulf of Mexico hasn't affected oil supplies. Crude rose modestly as did distillate while gasoline fell slightly.

Today, crude +64¢, $77.81, gasoline -1.04¢, $2.142, distillate +1.57¢, $2.145.

June 17, 2010

The dollar fell, there was increase in the number of new jobless claims, and economic growth seems to have stalled. When you add these figures to the crude inventory build, the price could only go down. Product prices continued to rise but that reflects not just US demand but increased demand for diesel from Asia.

Today, crude -88¢, $76.80, gasoline +1.76¢, $2.1635, distillate 3.55¢, $2,1472.

June 16, 2010

Crude and distillate inventories saw a build while gasoline inventories saw a draw. Refinery utilization dropped 1.2% to 87.9%. Investors only seem to see the 1.2% increase in industrial output and bid gasoline and distillate up much higher than crude. Gasoline demand is up 144,000 barrels per day and analysts are zeroing in on that number in bidding product prices up. Another sign that gasoline demand is up is that crack spreads are now above $12.

Today, crude +$0.75, $77.68, gasoline +2.6¢, $2.1459, distillate +4.33¢, $2.1117.

June 14, 2010

Crude rose on speculation that Europe will play a part in the expected economic surge and recovery this year despite Greece's sovereign debt problems. There would have been irrational exuberance in the markets if Greece's credit rating had not been downgraded to junk status by Moody's. European and US manufacturing activity increased last month and these are considered signs of an improving economy and thus of increased demand. The euro also gained today relative to the dollar and this kept the action positive.

Today, crude +$1.36, $75.05, gasoline +2.51¢, $2.0741, distillate +2¢, $2.0248. Street price holding steady at $2.369.

June 11, 2010

The dollar gained on the euro, May's retail sales dropped, and while crude supplies saw a draw on inventory, the refineries were producing more causing a build in refined products. Taken together, crude saw a decrease from yesterday but there was still an increase for the week.

For the week, crude +$1.92, $73.69, gasoline +4.84¢, $2.049, distillate +4.51¢, $2.0048.

June 10, 2010

Crude closed at its highest level since May 11 as the dollar fell and the stock market rose. Expectations of an improved world economy are high since China and Japan have reported higher than expected economic activity while fears of an economic melt down in Europe have lessened. However, there is still a great deal of caution about the mid-term as fears that too great an increase might have a deleterious effect on the economy and dampen demand.

Today, crude +$1.32, $75.60, gasoline -3.71¢, $2.0731, distillate -2.68¢, $2.0353.

June 9, 2010

China's exports surged, the dollar fell, inventories declined and refinery utilization was up to 89.1%, and so crude rose to the highest level of the month.

Today, crude +$2.24, $74.28, gasoline +4.39¢, $2.036, distillate +4.35¢, $2.0085.

June 8, 2010

The market remains unsure of the direction of the world economy. Thus there was a small increase in crude and small decreases in both products. Looking only at fundamental issues, fuel demand was up during the holiday weekend but is not trending towards a strong recovery in demand, refinery utilization is down, and the expectations are for a draw in crude and a build in gasoline and distillate. Tomorrow's inventory reports will answer some question about the direction of the market but so far this year these considerations have taken a back seat to the financial markets.

The other greater factors affecting oil prices are the currency market movements between the dollar and the euro and the dollar moved down today as the euro rose for the first time in four trading sessions. There were no headlines about sovereign debt problems with the southern European countries and so the effect on oil was muted.

Today, crude +$0.63, $72.04, gasoline -0.75¢, $1.9921, distillate -0.25¢, $1.965. Street +6¢, $2.369.

June 7, 2010

The great uncertainty about the direction of the world economy and the availability of supply due to the Federal Government reaction to the Gulf oil spill made the market move sideways today. The European sovereign debt problem, uncertainty about China's economic direction and the US's own economic problems are weighing heavily despite increasing demand and falling inventories. Some idea of the market's direction will likely be evident this week but most of the factors affecting prices have to do with factors outside of the industry.

Today, crude -$0.36, $71.41,gasoline -0.0046¢, $1.996, distillate + 0.78¢, $1.9675.

June 5, 2010

The futures market is all about expectations. When expectations are met or exceeded the markets tend to go up but when expectations are not met, the markets will drop. The Administration was touting the jobs report that was due yesterday but reality did not meet expectations. There was employment growth of 431,000 but the expectations were for 536,000. The kicker came in the details as it was revealed that 411,000 of these jobs were from the ongoing Census. 20,000 new jobs indicates that the economy is not doing as well as touted.

Adding to economic worries is word that Hungary has joined the sovereign debt club of Greece, Italy, Spain and Portugal. Although Hungary is not part of the euro agreement, the euro took a beating nonetheless. Since the euro fell, the dollar rose and that helped crude to fall even more.

For the week, crude -$1.55, $71.77, gasoline -0.7¢, $2.0006, distillate -1.58¢, $1.9597. Street price steady at $2.269.

June 1, 2010

June is starting out with a certain amount of market indecisiveness as crude started out well but started falling after more thought during the day. The Gulf oil spill is affecting the trading of oil companies' stock and that led to negative territory for crude. BP is obviously in great trouble on the stock exchange and is still unable to cap the leaking well. BP's woes are affecting the entire industry and that has affected crude futures as well. Additionally, the news out of China is mixed and that led to caution in the market.

The inventory reports won't come out until Thursday because of yesterday's holiday. The market will interpret the inventory reports and try to make a connection between those reports and the dollar's position vs. the euro and the state of the world economy.

Today, crude -$0.55, $72.77, -2.16¢, $1.992, distillate +0.31¢, $1.992. A wide range of street pricing seen yesterday: $2.899 in suburban Chicago; $2.699 in central Illinois; $2.49 in the Missouri Boot Heel; and, $2.319 in Jonesboro, AR.

May 28, 2010

Crude futures fell $1.25 on news of Spain's credit downgrading as the euro fell and the dollar rose. The sovereign debt problem of Greece, Spain, Portugal and Italy is a problem for all of Europe and the euro. However, the fall was not deep and if viewed from a week ago, crude actually is higher. If viewed from the beginning of the month, the price is substantially lower showing a 15% decrease in four weeks.

For the week, crude +$3.28, $73.32, gasoline +5.05¢, $2.0136, distillate +5.05¢, $1.9755.

May 27, 2010

Talking about volatility, what do you think about a 4.3% rise in crude futures the day after a 4.4% increase the day after 2.5% decrease that was part of a 21% drop month-to-date. Is it the computer programs or do analysts and traders only live in the moment? U.S. GDP is up and jobless claims are down. The economy seems to be on the mend. China said it supports the euro and that helped the euro rise 1.7% against the dollar.

The markets may be a little bit more volatile tomorrow as the exchanges will be closed for the Memorial Day holiday on Monday. Traders and analysts will be second guessing every move because of the extra weekend day off.

Today, crude +$3.06. $74.57, gasoline +7.41¢, $2.0407, distillate +8.33¢, $2.0017.

May 26, 2010

A number of reasons for the 4.5% increase in crude futures today: demand has increased 0.6% in the trailing four weeks ending May 21 and there is an increase over last year and not just the previous reporting period; Cushing inventory had a slight decrease; the front end month versus the further out month premium has declined to $1.00 and this also portends increased demand; and, counter to how the markets correlate, the dollar rose and the euro fell. The latter outcome was overlooked today because on most Wednesdays the EIA releases the inventory report and all eyes were focused on industry statistics.

Today, crude +$3.07, $71.51, gasoline +4.22¢, $1.9666, distillate +5.39¢, $1.9184. Street starting to move down at $2.319.

May 25, 2010

After two days of climbing, the market went down today. The resurgence of the dollar and the continued uncertainty caused by the European sovereign debt crisis has led to a channel change of crude pricing. For the past two weeks, the market has a range of $68 to $77 rather than $77 to $87. This channel change is supported by the ongoing inventory build. The contango premium has slimmed down and that might mean that more demand is foreseen in the closest month.

Today, crude -$1.76, $68.44, gasoline -4.56¢, $1.9244, distillate -3.79¢, $1.8645.

May 24, 2010

Very modest increases in crude and products today. The dollar continues its advance against the euro and China said it is not sure what credit policies to follow allowing every body to think that China won't minimize credit risk with its future policies. As we approach Wednesday's EIA inventory report, international news may not be as important as US demand and supply and other economic fundamentals.

Today, crude +16¢, $70.20, gasoline +0.69¢, $1.97, distillate +0.58¢, $1.9024.

May 22, 2010

Eight is enough and so crude rose today after 8 consecutive decreases. The European sovereign debt crisis may be close to be solved, if temporarily, but the perception of the European economic condition and the continued inventory build have everyone thinking about lower prices. The high inventory levels are affecting crack spreads negatively as the summer driving season approaches. The discount for the nearer month from the further out month remains high and now that we are talking of July versus August it is obvious that demand may not reach earlier forecasts.

For the week, crude -$0.93, $70.04, gasoline -15.73¢, $1.9631, distillate -15.79¢, $1.8966.

May 20, 2010

17 days ago, 5/3/10, crude ended trading at $86.18. Today, crude ended trading 21.1% less than what now seems like a lofty peak beyond $86. The news keeps getting more and more bearish: more than expected unemployment claims, continued depressed demand, the strength of the dollar and the weakness of the euro, and Cushing approaching its holding capacity. The Contango premium between the front month and the further out month is nearly $3/bbl.

The news about gasoline reflects a similar plunge. Gasoline ended trading on 5/3 at $2.4309 and it is now 48.7¢ lower. Distillate is in the same downward spiral, $2.3455 on 5/3 and down 46.2¢. Since the beginning of the year, analysts and traders have been trading as if the economy would improve in the very near term and this pushed crude up to the mid $80s trading range. The summer driving season is upon us and the economy does not look robust enough to consume the growing inventory build.

Today, crude -$1.67, $67.91, gasoline -7.48¢, $!.9442, distillate -6.41¢, $1.884. Street price down 5¢ to $2.489.

May 19, 2010

Traders, analysts and the markets are trying to catch their breath and crude barely moved down and there were small decreases for gasoline and distillate today. Inventory continues to build and Cushing continues to break records with the amount of barrels it is storing. Demand remains weak and the political problems in SE Asia and southern Europe would seem to indicate weakening demand. Refinery runs are down to 87.9% from 88.4% as refiners are cutting back on production as they think demand may not be as robust as originally forecast.

BTW, the world is focused on the sovereign debt crisis in Southern Europe as depicted every day in the violence in Greece but there is great violence among the most peaceful people in Thailand that is somehow not shaking southeast Asia the way Greece is affecting Europe. The monarchy has not been able to assert itself and make the factions stop fighting. A true tragedy is unfolding.

Today, crude -$0.18, $69.58, gasoline -2.1¢, $2.019, distillate -1.71¢, $1.9481.

May 17, 2010

The European sovereign debt crisis exemplified by the predicament in Greece continues to drag the euro down and raises the dollar causing oil to decline in the market. Fundamental factors such as the high levels of inventory push the price down further and today crude's price almost ended below $70. Crude has now fallen 5 sessions consecutively. Already there are expectations of even more inventory build at the Cushing Terminal but the limit of 40 million barrels is already being approached as last week's inventory was over 37 million barrels.

The biggest worry is that there is no economic recovery is really occurring and therefore fuel demand will not rebound later this year. The $5 premium on contango is predicated on demand increase later this year due to improving economic activity.

Today, crude -$0.89, $70.08, gasoline -7.82¢, $2.0422, distillate -7.01¢, $2.0422. Street -6¢, $2.509.

May 14, 2010

The European sovereign debt crisis is making the euro fall and the dollar rise. The world economy still has not recovered and thus demand is down causing a record inventory build in the US. Crude is now down 5.6% from yesterday and 17.6% from the first of the month as prices ended at their lowest point since December 15. Products are now falling sharply in tandem with crude after trending up most of the past week.

For the week, crude -$4.34, $70.97, distillate -2.94 cents, $2.0545, gasoline -0.8 cents, $2.1204. Street unchanged at $2.569.

May 13, 2010

Crude continued to fall and both products followed the downward movement today. Yesterday's crude inventory level report for Cushing showed the highest levels ever for inventory and this is worrying traders. The dollar also continues to rise while the euro persists in its downward spiral as southern European countries try to come to grips with their respective deficits.

Refineries are trying to make the most of a bad situation and cut back on utilization 1.2% last week to 88.4%. This has led to an 9.3% increase in the crack spread to $16.45. The contango premium is now at $4.55 between front month and the further month caused by the extraordinarily large inventory.

Today, crude -$0.42, $74.97, gasoline -1.04 cents, $2.1955, distillate -1.19 cents, $2.1385. Street steady at $2.539.

May 10, 2010

Moderate gains in crude and product today as the markets reacted to the $1 trillion dollar bail out plan for Europe's financially strapped southern tier. The euro was up slightly and thus the dollar was down slightly. There's more optimism about the direction the economy is taking and this led to today's price increases.

The past couple of weeks have seen a number of "mood swings" as analysts and traders try to understand what is driving the market. There have been a number of indicators that have been spun to make them seem positive but the continued increase in US supply despite logistics problems in the Gulf is a worrying negative factor. The other is the talk of a jobless recovery. People who have no jobs don't have money and don't buy gasoline.

Today, crude +$1.19, $76.50, gasoline +4.4 cents, $2.1724, distillate +3.56 cents, $2.1195.

May 6, 2010

The dollar is surging against the euro and since the financial markets are so much bigger than the oil market, crude fell for a 3rd day and has fallen 10.8% in 3 trading days. The Greece debt problem foreshadows even bigger problems with Portugal, Spain and Italy and is punctuated by the continued violence in the streets. Today's stock market descent of almost 1,000 points was due to some kind of error but it has made all markets nervous. With the continuing inventory build and uncertain future demand, price really has no place to go but down.

Today, crude -$2.97, $76.90, gasoline -8.14 cents, $2.1424, distillate -7.92, $2.1035. Gasoline retailers are intent on making some margins while prices fall and street prices have remained unchanged at $2.699.

May 5, 2010

The psychology of the market has radically changed recently. All of the good economic news last week and the oil leak in the Gulf seemed to indicate that prices would go even higher perhaps to $90. Yesterday, the riots in Greece broke out and the euro began to fall again as the problems in Portugal, Spain and Italy are also under greater scrutiny. This has caused the dollar to rise and thus commodities fall as investors run to the dollar.

The size of the two day fall is also about the continuing increase of crude supply despite positive economic indicators. Crude has fallen the equivalent of 15 cents a gallon the past two days while gasoline has fallen 21 cents because of a significant build in inventory when a modest draw was expected. Refinery utilization rates have also increased to 89.6%. No one talked about contango today as so many had bought into an improving demand picture but there's considerable doubt about that now.

Today, crude -$2.76, $79.87, gasoline -9.71 cents, $2.2238, distillate -7.64 cents, $2.1827.

May 3, 2010

Crude moved sideways while product prices jumped as positive news on improved manufacturing results came in from the U.S., China and Europe. However, the dollar gained on the euro and the market remains in contango with the premium between front month and the farther out month expanding. No one yet knows what the effect of the BP oil spill in the Gulf will be.

Today, crude +$0.07, $86.18, gasoline +3.62 cents, $2.4309, distillate +5.85 cents, $2.3455, street $2.759.

April 30, 2010

The Commerce Department reported that the economy grew at 3.2% in the 1Q, the dollar dropped vs. the euro, and gasoline consumption in the trailing 4 week period ending last Friday, 4/23, surged 3.1%. This lead to another bullish trading session with a $0.94 increase over yesterday and a similar increase on a week to week basis.

Imports may be affected by the spill in the Gulf of Mexico but there is so much crude in the system that prices may not be affected. The market remains in contango because of the high inventory levels.

For the week, crude +$1.02, $86.11, gasoline +3.77 cents, $2.3947, distillate +3.4 cents, $2.287.

April 29, 2010

The rationale for today's major ascent in crude prices was rather brief. It boils down to a second day of contemplating lower interest rates added to the unemployment report coming in as expected. With contango still commanding the further months out, the market takes the current oversupply into consideration and is betting that the demand will be as expected in the summer. In 2010 so far, April has been the most optimistic in terms of economic expectations and the market reflects that. The range of closing prices of $81.51, April 19, to $86.81, April 6, is a higher range than the $78.80 to $84.41 of March, $71.16 to $80.13 of February, and $72.95 to $82.93 of January. Of special note is how much tighter the pricing band is for March and April when compared to January and February.

Today, crude +$2.45, $85.17, gasoline +3.65 cents, $2.357, distillate +3.27, $2.253.

April 28, 2010

The Fed announced today that interest rates would continue to be set low to spur economic growth. The market then ignored rising crude and product inventories and the continuing financial crisis in Greece that seems to also threaten Portugal and now Spain and crude and gasoline prices rose marginally while distillate fell. The probable future availability of cheaper funds for economic expansion led analysts to discount bearish fundamentals. Even refineries are in the expansion mode as the utilization rate is now at 89%.

Today, crude +$0.48, $82.72, gasoline +0.35 cents, $2.3205, distillate -0.4 cents, $2.2203.

April 27, 2010

Greece and Portugal's credit ratings fell, the dollar gained on the euro, and there's an oversupply of crude and product in the US market. All these factors led to decreases in crude and product futures. The market remains in contango which means that analysts believe that demand will improve in the future. The early inventory release from API is of continued inventory build but the market will wait for tomorrow's EIA inventory report before a definite direction is taken.

Today, crude -$1.73, $82.24, gasoline -2.25 cents, $2.317, distillate -1 cent, $2.2243.

April 26, 2010

A week's worth of exuberance for higher prices met the cold, hard facts today and prices fell for for the first time in five trading sessions. The dollar gained against the euro and amid reports that the Cushing, OK, storage was nearing inventory levels not seen in many years as well as reports of more crude floating storage being leased. Leasing floating storage means that there is significant oversupply and that it is profitable to hold on to inventory and wait out the market. One bit of good news is that crack spreads are now over $14/barrel.

Today, crude -$1.12, $83.97, gasoline -1.01 cents, $2.3395, distillate -1.4 cents, $2.2343.

April 23, 2010

Analysts, unsure of which economic and industry indicators to base their decisions on, decided on the rosy picture today. The dollar fell against the euro but sales of new homes are on the rise. There is an initial report that the economy grew 3.4% in the first quarter but the sale of durable goods fell. It was take your pick. The market picked up even though inventories are higher than expected and that leaves the market in contango. This inventory caution also includes Brent's premium over WTI.

Today, crude +$1.35, $85.09, gasoline +5.21 cents, $2.3496, distillate +2.97 cents, $2.2483.

April 22, 2010

Crude barely dropped even though there was good news from the housing market while the dollar rose against the euro because of problems with Greece's deficit financing. The market is still in contango and there's more talk of storing crude to wait for better prices in the future.

Today, crude -$0.02, $83.74, gasoline +1.04 cents, $2.2975, distillate +1.04 cents, @.2186.

April 21, 2010

The unexpected rise of crude and product inventory made the market go sideways today. The dollar strengthened against the euro but the higher than expected inventory increase led to crude rising minimally and no movement in gasoline while distillate rose because of the reopening of European airports. European traders seem to think that demand will pick up and Brent, normally selling at a discount off NYMEX, has been selling at a premium for the last 7 trading days. The market remains in contango with analysts expecting lower prices in the near term.

Today, crude +$0.38, $83.76, gasoline no change, $2.2871, distillate +2.29 cents, $2.2871.

April 20, 2010

Crude rose in trading today despite the continued grounding of airplanes in Europe that leaves airports awash in jet fuel. The dollar also climbed higher today and normally that would signal a fall for crude but both dollar and crude rose. And most telling about the bullish exuberance of today's trading, inventory reports are expected to show a build tomorrow but still crude fell. However, refinery utilization is expected to show an increase as refiners prepare for the summer driving season.

Today, crude +$1.87, $83.38, gasoline +3.2 cents, $2.287, distillate +2.73 cents, $2.1853. Street -6 cents, $2.589.

April 19, 2010

Friday's announcement of an SEC suit against Goldman Sachs weighed heavily on the market for a second straight trading day as crude and product prices fell. All of the other news was also bearish: the dollar rose against the euro, planes continue to be grounded because of the volcanic dust spewing from an Icelandic volcano, and probably most important, OPEC members are sensing that prices are headed for an extended period of descent and are cheating heavily and likely causing a glut in the market.

Today, crude -$1.79, $81.51, gasoline -1.95 cents, $2.255. distillate -5.7 cents, $2.158.

April 16, 2010

The Securities and Exchange Commission (SEC) charged Goldman Sachs with fraud today. Goldman is one of the oil market's largest traders and one of the biggest boosters of higher prices with the possible exception of OPEC. The SEC accuses Goldman Sachs of misleading investors about financial products connected to sub-prime mortgages. If this becomes a bigger story, there may be significant downward pressure on crude and products.

Early in 2008 Goldman forecast $100 crude. Later in 2008's first quarter, Goldman predicted $150 crude. These forecasts seem to be self-fulfilling as Goldman kept the pressure up with its buys during the first half of that year. Goldman is so far only charged with fraud in the sub-prime mortgage matter.

Refinery utilization is up and inventories are down and that should normally lead to price increases but with economic reports sending mixed messages it is hard to determine the profitable mix of refining and importation. Add to that the drop in equities and the rise of the dollar and there is more to consider than just supply and demand. The market continues in contango and despite or maybe because of the relative high price levels in the $80s, traders and analysts are wary of long positions.

Today, crude-$2.29, $83.30, gasoline -5.13 cents, $2.2745, distillate -3.49 cents, $$2.215.

Taxation Day, 2010

The respite from falling prices lasted a day. High than expected inventory reports led to yesterday's increase but today worries about increased unemployment and lower than expected manufacturing results led to a small decrease in crude and gasoline. Something is going on in Europe as Brent rose by nearly a dollar and passed the NYMEX price. The dollar rose and helped to move investors out of commodities and into dollar accounts. There is also a nagging worry that the economy will not improve enough to warrant current high pricing.

Today, crude -0.26 cents, $85.59, gasoline -0.68 cents, $2.3258, distillate +0.80 cents to $2.2499. Street still steady at $2.649.

April 14, 2010

Inventories saw a draw of 2.2 million barrels when a build of 1.3 million barrels was expected. Added to the dollar's drop, this led to a strong session for crude and products. Latest figures on demand were positive as was the report on refinery utilization and both of these would seem to lead to higher prices. This should confirm the move to $90 crude as more positive economic data is reported. Whether higher prices will lead to decreased demand is yet to be determined. After 5 down days, the market seemed to find a new road.

Today, crude +$1.84, $85.85, gasoline +2.46 cents, $2.3326, distillate -2.77 cents, $2.2419. Street steady at $2.649.

April 13, 2010

After hitting a high of $86.41 on the Tuesday after Easter, crude prices have fallen five consecutive days. The actual amounts the price has dropped is not significant, but cumulatively, $2.90 in five trading session may be dripping slowly but it is still a descent of prices. Lower demand and oversupply are still the reasons why prices have fallen. At $84 crude stands on the high side of the price range but now it is falling.

Tomorrow's government report on inventory will be market indicator that decides where prices will go the rest of the week.

Today, crude -$0.43, $84.01, gasoline +0.75 cents to $2.3080, distillate -0.82 cents, $2.2142. Street steady at $2.649.

April 12, 2010

Crude fell for the 4th consecutive session with the high levels of inventory and continuing decreased demand on analysts' and traders' minds. Today's fall of the dollar would normally signal an opportunity to buy but fundamentals of supply and demand were more top of the mind.

Today, crude -$0.33, $84.44, gasoline +1.49 cents, $2,3005, distillate, +0.19 cents, $2.2224. Street at $2.649.

April 9, 2010

The fall is small but for the third consecutive day, crude fell. With inventory increasing for three months and demand therefore not increasing, traders and analysts are reevaluating their market positions. Refiners have upped their production in anticipation of greater demand but gasoline futures prices although increasing are not rising at the level of crude. There is also concern that higher prices will dampen economic recovery and thus petroleum demand. The dollar was also stronger today as the euro fell due to the continuing financial meltdown in Greece.

For the week, crude -$0.13, to $84.77, gasoline -3.84 cents, to $2.2856, distillate -1.45 cents to $2.2205.

April 7, 2010

Inventories increased higher than expected for both crude and distillate while gasoline stocks rose higher than expected. Refinery utilization was up but not enough to overcome suspicion that demand remains weak.

There are numerous factors to consider at this point not just demand and inventory: the rise of the dollar and the decline of the euro, the switch of refineries to greater gasoline production versus distillate, and the drop of the crack spread. The market futures graph shows contango for pricing going into the outer months which normally means traders expect prices to fall in the near term.

Today, crude -$1.15, $85.76, gasoline -3.81 cents, $2.3129, distillate -2.71, $2.2415.

April 2, 2010

Prices for product and crude rose slightly but the significance is that they rose. There is news of the improving national and world economy that has been touted for months but there was no talk of the dollar's movement. Manufacturing activity is on the uptick. Demand for product remains weak and inventories continue to rise to levels not seen in four or five years. This causes analysts to be cautious because the fundamentals remain the same: lower demand than last year.

Market is closed today because of Good Friday. It should make Monday's trading activities fairly interesting.

Today, crude +$0.49, $84.90, gasoline +0.29 cents, $2.324, distillate +2.15, $2.1955.

April 1, 2010

Crude rose to its highest level in 18 months and it was all about the dollar. It was not about inventories as stocks rose but in the near term demand is not likely to increase greatly because 23,000 jobs were lost in March when 50,000 were supposed to be created. This was apparent when the figures for consumption showed a 2% fall from last year. It seems obvious that imports are increasing the crude inventory and refineries are betting that demand will increase and it is better to build product inventory now than produce higher cost product at a later date.

Prices are steadily moving up now as utilization remains around 80% while the refineries that are open are making money where as last year the expectations were that prices would continue to fall after rising so high in the spring and summer of 2008. The triggers for automated trading are looking at the numbers but don't seem to be looking at the underlying reasons for the inventory numbers. Of course the other reason is where do you invest if the dollar is falling and commodities are the better bet.

Yesterday, crude+$1.90, $84.51, gasoline +4.22, $2.3211, distillate +6.75, $2.1955. The distillate number is bad for the economy when you think about trucks and airplanes paying for higher priced product.

March 29, 2010

The European Union seems closer today to agreeing to further subsidize Greek workers at the level they have become accustomed no matter the cost and no matter the productivity. This led to an uptick for the Euro and a consequent down tick for the dollar. Added to this news were reports that economic activity in Asia was increasing and thus leading to greater petroleum demand. There is also good news from refiners as they have better margins this year than the past couple of years past and are able to produce more gasoline as there were a number of refineries shut down or not producing gasoline that will keep the margins profitable at an increased level of production. The prospects for crude look so good that OPEC announced that members are investing more money in drilling. All of this good news in combination led to a strong increase in crude and distillate futures and a modest increase in gasoline.

Today, crude +$2.56, $82.41, gasoline +2.85 cents, $2.2285, distillate +5.53 cents, $2.1215. Street price at $2.599.

March 26, 2010

Crude's futures market price is falling in small steps this week as NYMEX fell $0.72 even though the dollar dropped. What concerned analysts today was the downward revision of economic growth forecast in 4Q 2009 to 5.6% from 5.9%. The increase in inventory and the drop in gasoline demand also helped to bring prices down. European governments now seem willing to work with the IMF to subsidize Greece's labor force and are working on a bailout plan. So far no one is mentioning any possible effect of the attack by the North Koreans on a South Korean vessel causing significant casualties.

Today, crude -$0.72 to$79.85, gasoline -1.14 cents to $2.20, distillate +0.14 cents to $2.0662.

March 25, 2010

The French and Germans don't want to subsidize the Greeks and their lifestyle and their work habits and it's getting less likely that they will bail Greece out despite the desperation from Greek workers who don't work but still want the lifestyle they have become accustomed to. Consequently, the Euro is falling and the dollar is rising. This caused crude futures to fall though very slightly. Traders and analysts are still working the technicals despite the fundamentals being very bearish. The markets were positive all day but in the end caution entered the market.

Today, crude -$0.07 to $80.64, gasoline -0.94 cents to $2.2114, distillate -0.57 cents to $2.0648.

March 24, 2010

Crude dropped $1.16 at the close as crude inventories rose mostly due to increased imports while product inventories fell due to some increased demand and refinery product inventories being drawn down. The dollar gained in value and that would have deepen crude's decrease but analysts and traders are trying to understand where the economy is headed and thus decide if they should buy or sell. Fuel demand seems to have increased over last year but analysts are showing caution because of EIA's forecast model problems revealed last week. Another note of caution is European debt raising the dollar's value. Writing the buy/sell programs for commodities is made harder because of the great number of variables you have to include in your formulas.

Today, crude -$1.16 to $80.64, gasoline -3.55 cents to $2.2208, distillate -2.65 cents to $2.2208. Street at $2.659.

March 23, 2010

There was mixed news about the dollar, the economy, and Greece, and there are expectations that last week's inventories will show a decline with the release of the EIA report tomorrow. This led to a volatile trading day but in the end there were slight increases for crude and product. In February only one trading day ended over $80 and that was on February 22. January started strongly in the low $80s including a high of $82.93 on January 6. However, March has seen only one day close below $80 and that was on March 15 at $79.89. Traders have continued to ignore the oil market fundamentals and are trading that the Spring driving season will see demand strengthen to historical or near historical levels and thus their futures buys would have paid off. Despite last week's news that there were errors in the EIA estimates, everyone still awaits the mid-week release of inventory. We'll see what tomorrow brings.

Today, crude +$0.55 to $81.80, gasoline +0.27 cents to $2.2763, distillate +1.1 cents to $2.2563. Street was at $2.549.

March 19, 2010

It was all about the dollar's strong showing today. The continuing Greece problem and the fall of equities also led to more investment in the dollar and thus a fall in commodities. All measures of demand remain weak worldwide. Eyes are now turned to what kind of inventory reports come out next week.

It seems, however, that there may be problems with the way data is gathered by the EIA and released mid-week every week. More people trust the EIA data than that released by API but with today's revelation of data problems the markets will have to adjust how it views those reports.

Another volatile week that saw both a significant rise and a significant fall but week to week prices were not that far off from each other. For the week, crude -$0.69 to $80.55, gasoline +0.18 cents, distillate -2.18 cents to $2.0742.

March 18, 2010

Crude dropped on news that the dollar was strengthening and commodities were falling. In addition, there was more bearish news for crude with inventories being at their highest level since late last summer. Crude supply is high because of rampant cheating by OPEC members producing and delivering oil at discounted prices below those posted in futures markets. If demand does not rise appreciably in the Spring and Summer, prices could begin to fall beyond the current 12 month lows in the mid $60s as the cost of holding inventory becomes too high.

Today, crude -$0.54 to $82.23, gasoline -0.7 cents to $2.301, and distillate -2.02 cents to $2.1175. Street prices were up to $2.599.

March 17, 2010

Despite the obvious reason for the decline in imports, traders drove the price of crude up yet again. Demand continues lower than last year and last week's demand dropped even from the previous week. However, inventory rose less only because imports dropped but yet this news is seen as increased demand. The great hope for increased demand continues and crude and products all rose.

Today, crude +$1.04 to $82.77, gasoline +2.83 cents to $2.308, distillate +2.36 cents at $2.1377. Street price for gasoline steady at $2.559.

March 15, 2010

The dollar was up, equities were down and so were commodities including crude. OPEC will continue to produce at their current levels and will not work to stop cheating among its members. With Moody's talking about dropping the credit ratings for the US, the UK, Germany and France, it is hard to understand why prices are not dropping even further. Looking at the technicals that say that prices can continue to increase is like looking into Syd Barrett's eyes when he was still playing Astronomy Domine and Interstellar Overdrive in the mid-1960s. Pricing April product so high when demand continues below last year's levels cannot make numeric sense.

For the day, crude -$1.35 to $79.89, gasoline -2.91 cents to $2.2252, distillate -3.47 cents to $2.0613. Street prices fell from $2.569 to $2,529.

March 12, 2010

OPEC, EIA, and IEA have all revised demand forecasts for the year upwards but the markets remain bearish. Thus prices fell from yesterday and show a loss for the week. It should be noted that in the past week the closing price band has been all in the $81 to $82 dollar range. This pricing range is indicative of a lot of movement during the trading day but a return to the range at the end of the day. Everyone wants to be optimistic but market fundamentals continue to point towards a drop in demand.

For the week, crude -$0.50 to $81.74, gasoline -1.52 cents to $2.2543, distillate -1.81 cents to $2.096. Street prices are at $2.69.

March 11, 2010

Another sideways trading day as fears that China would have to tighten credit to counter inflation came to the fore. Many traders misinterpreted yesterday's less than expected inventory increases which were due to refinery retooling rather than increased demand. Refiners are gearing up for the greater demand for gasoline and decreased demand for distillate.

Today, crude +$0.01 to $81.88, gasoline -0.99 cents, distillate +0.03 cents to $2.1141. Street prices at $2.659.

March 10, 2010

Refiners are doing their annual turnarounds and have cut back on production by 1.2% causing inventories to fall to their lowest point in over a year but still quite high historically. The market reacted by raising crude modestly and increasing products a little bit more. Fundamentals have not changed but traders are trying to get prices to go up despite a demand shortfall. It should be noted that prices are not much different from where they were just last Friday.

Today, crude +$0.61 to $81.67, gasoline +2.44 cents to $2.2794, distillate +3.01 cents to $2.1138.

March 8, 2010

There was lots of volatility as the market went above $82 and below $81 today while the news from Europe, US demand, and even the inventory forecasts were considered during trading hours. In the end we had a sideways day. Traders seem intent on going above $85 but demand has yet to surface to support that price. This week's EAI report on Wednesday might be the determinant of whether prices continue to rise or fall and stay within the $75 - $81 range.

Today, crude -$0.07, gasoline -0.27 cents to $2.282, distillate -0.3 cents to $2.101. Street price steady at $2.599.

March 6, 2010

Traders are determined to move prices up and yesterday's unmoved 9.7% jobless rate and the news that the previous four weeks' rate of consumption was 3% higher than the same time a year ago gave them all the news they need to raise crude above $81. It is now march and the Spring driving season is fast approaching and it is the busiest of the year. Gasoline prices have really climbed the past couple of weeks and what was $2.239 only 2 weeks ago is now $2.569 today. So far the numbers for sustained increases are unconvincing but this news is an onion revealing only so much after each layer is pealed.

Week to week comparisons, crude +$2.10 to $81.74, gasoline, the stunner, +18.93 cents to $2.2793. distillate 7.99 cents to $2.104.

March 4, 2010

The dollar was up slightly and crude fell slightly. Economic news is still not positive as unemployment numbers are expected to increase over last month's report in tomorrow's report and this makes trying to trade energy prices up rather dicey.

In more far reaching news, Senator Jay Rockefeller (D-WV), introduced legislation to prohibit EPA regulation of greenhouse gases. Two representatives in the house are to introduce companion legislation to stop major energy tax increases and additional regulation that would raise energy costs even higher.

Today, crude -$0.73, gasoline -1.31 cents, distillate -2.5 cents.

March 3, 2010

Crude inventories increased even greater than expected but crude futures still rose $0.86. The rising inventory is mostly on the West Coast and doesn't really affect the rest of the country. Refinery utilization is up as are crack spreads making much of the fundamental news bullish. Refiners are now building spring inventory and the market will probably discount inventory levels for a while.

Today, crude +$0.86, gasoline +4 cents, distillate +3 cents, street at $2.439.

February 26, 2010

There have been many revisions of economic news during the past year and I always wait a week or two for the revisions. I am therefore skeptical about the report of 5.9% GDP growth for 4Q 2009. I am less skeptical about the report that the number of vessels used for floating storage dropped 20% in January. That tells me there there's product movement and this normally flows from economic activity. Today's price increases were all about the improving economy and declining dollar.

For the week, crude +$0.13 to $79.64, gasoline 4.75 cents to $2.09, distillate +4.13 cents to $2.0241. Street price was $2.439.