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.