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.