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.