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.