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.