December 31, 2011

Crude prices ended 10% higher than the year's final settlement price of $89.82 on 12/30/2010. There were conflicting reports about the American economy as every Friday would see the publication of the new unemployment numbers and revisions would follow sometime the following week that more accurately reflected the true state of joblessness.

In the world's second economy, the Chinese also played a similar game of providing statistics that would always need revisions or extra spin. There's always an examination of the state of the Chinese economy, especially the manufacturing sector but world demand creates manufacturing output and thus the world is constantly eyeing how Europe solves the sovereign debt problem, if the Europeans ever solve it.

The revolts in Tunisia, Libya, Egypt, and Yemen caused regime changes and these led to huge premium increases between NYMEX and Brent throughout the year but now there does not seem to be as big a need for the premium as European supply seems to be less problematic with the end of Ghadaffi's rule in Libya.

For the year, WTI+$9.01, $98.83; Brent+$14.26, $107.35; RBOB+29.51¢, $2.6863; HO+45.05¢, $2.935.

December 28, 2011

We have to take note of oil and product price movements this week but all such developments this week come with a caution that trading volume is light in the period between Christmas and New Year's Day. However, the dynamics moving the market remain the same. Over the past few days the Iranians have threatened to close the Straits of Hormuz. The Iranians may use proxies such as Hezbollah and the Sadr Army to push their agenda and may kidnap sailors in single boats in the Persian Gulf or lost hikers along the Iraqi border but they have yet to openly attack the Sixth Fleet. Ten months from an American election, the Iranians may not want to overtly attack U.S. Naval vessels and challenge a beleaguered president Obama.

Also affecting prices was the drop in equities and the euro's recent climb.

Today, WTI-$1.98, $99.36; Brent-$1.71, $107.56; RBOB-3.75¢, $2.6513; HO-1.51¢, $2.8934.

December 21, 2011

The LIFO adjustments for inventories have to be made by year's end and the EIA may have just figured out the numbers or oil companies have been really slashing inventories recently to improve their year-end balance sheets by reducing taxes owed. Whatever the reason, the inventory report released today shows a major draw on inventory but the market reaction only consolidated the price increases of the past two days by another 1.5% increase.

Today, WTI+$1.45, $98.67; Brent+91¢, $107.83; RBOB+4.12¢, $2.6199; HO+5.93¢, $2.9087.

December 19, 2011

Sideways movements by crude and gasoline with North Korean succession considered the prime cause for the minimal price movements. However, the alternative rationale is that analysts are still trying to get their strategy straight concerning the Euro debt problem. The news late last week that six countries were facing a ratings downgrade still lingers heavily in the back of the mind. If Europe should have a problem, the rest of the world will be affected.

Today, WTI+35¢, $93.88; Brent+36¢, $103.60; RBOB+0.21¢, $2.4891; HO-2.01¢, $2.7804.

December 16, 2011

As we approach the Christmas and New Year holidays, the volume of daily trading will begin to wind down and this lower trading volume will also tend to be more conservative in approach. Traders don't want to be left hanging holding on to high price contracts, especially in a sluggish economy with stagnant oil demand. All the optimism of earlier in the month has been ground down by the inability of the Europeans to solve the debt crisis and now equities are falling because economic prospects are diminishing. Even OPEC became aware of the problem and raised production quotas to try to get more demand by promising more crude in the market.

This week, WTI-$5.88, $93.53; Brent-$4.70, $103.96; RBOB-10.91¢, $2.487; HO-11.2¢, $2.8005.

December 14, 2011

Europe's inability to resolve the sovereign debt crisis for Greece and Italy and with similar problems for Portugal and Spain also on the horizon led OPEC to unexpectedly increase its production quotas. This caused the euro to continue its descent and equities followed while the dollar rose and crude and products fell. NYMEX seemed safely ensconced in the low $100s just a week ago especially with the initial estimate of a fall in the unemployment rate but the world economy is much more sluggish than government officials wish to confirm and this insight led to today's 5.2% drop in crude and 4.6% tumble today.

Today, WTI-$5.19, $94.95; Brent-$4.82, $104.68; RBOB-12.17¢, $2.5037; HO-9.89¢, $2.8299.

December 12, 2011

Europe's sovereign debt crisis does not seem to have a workable solution but the markets keep hoping that one is in the offing. In three of the past four trading days, however, analysts seem to be inclined to no resolution and the euro goes down while the dollar goes up and this leads to crude falling. Today's trading followed that trend. The volatility will continue until the Europeans resolve the debt crisis.

Today, WTI-$1.64, $97.77; Brent-$1.45, $107.21; RBOB-3.25¢, $2.5636; HO-1.64¢, $2.8961.

December 7, 2011 - 70th Anniversary of the Day of Infamy

On most Wedenesdays the fundamentals of supply and demand are the most important factor in futures price movements for crude and products. Today was no exception as technical matters took a back seat to higher than expected imports, increased supply, and boosted refinery utilization. Continuing worries about sovereign debt problem resolution and the rise of the dollar over the euro kept prices from settling beyond yesterday's close.

Today, WTI-79¢, $100.49; Brent-$1.28, $109.53; RBOB-5.85¢, $2.5869; HO-3.93¢, $2.9824.

December 5, 2011

Today was the 3rd trading day of the month and it was the third straight trading day that crude settled above $100. S&P reported that it was considering downgrading the credit rating of six western European countries including Germany and France and this led to falling prices at the end of the day. Such a move by S&P pushed the dollar higher and the euro lower. Stronger dollar means that crude falls. The counterpoint to this was the Obama regime's push for more sanctions against Iran. Continued instability in the Middle East especially with threats to supplies normally increases prices. However, it should be noted that price increases or decreases for crude and products were so minimal as to be sideways movements.

Today, WTI+3¢, $100.99; Brent-13¢, $109.81; RBOB-0.25¢, $2.6137; HO+0.24¢, $2.9924.

November 21, 2011

There was hope early last week that the Congressional Super Committee would come up with a solution to the $15 trillion debt problem. As the days passed it seemed that there would be no agreement. Over the weekend it became obvious that there would be no solution as the super committee seems unable to come up with an agreement on what to cut.

There also seems to be no solution to the European debt problems as the Moody's seems set to downgrade France's credit rating while the PIIGS (Portugal, Ireland, Italy, Greece and Spain) seem unable to come up with the right set of austerity measures and borrowing. This news led to a fall in equities and the dollar's rise with oil playing its traditional role of following stocks and going counter to the dollar.

Today, WTI-49¢, $96.92; Brent-68¢, $106.88; RBOB+1.06¢, $2.489; HO-3.0382, $2.9943.

November 18, 2011

There was a little volatility in the market today as equities were up and the dollar was down while reports of manufacturing in the Philly area was reported to be down. Additionally. reports have come in that Spain is about to join Greece and Italy in having to pay greater than expected rates to bondholders as it begins to suffer from its own debt crisis. There is also some concern that Enbridge's pipeline reversal will bring enough production to market. The markets were worried about Europe and Spain's problems will only exacerbate the worry.

For the week, WTI-$1.48, $97.41; Brent-$6.60, $107.56; RBOB-12.54¢, $2.6038, HO$-13.29¢, $3.0325.

November 17, 2011

For most of this year as the premium between WTI and Brent grew, analysts maintained that the large and growing inventory at Cushing, OK, was artificially depressing prices as much of that stock was not easily available. Enbridge's announcement yesterday of its purchase of ConocoPhillips' share of a pipeline from the Gulf to Cushing and its intention to reverse the flow to allow refiners greater access to the inventory immediately boosted prices at settlement 3.2%. Too emphasize the point, Brent lost 0.5%. The reversed pipeline will alleviate the need for barges and rail lines to bring crude, especially Canadian and North Dakota crude, to refineries. The market reacted positively despite the Obama regime's delay in making a decision on the Keystone XL pipeline project.

Inventories fell last week by a million barrels but that was dwarfed by the Seaway pipeline news.

Yesterday, WTI+$3.22, $102.59; Brent-51¢, $111.88; RBOB+4.16¢, $2.6273; HO-3.67¢, $3.1346.

November 14, 2011

Traders were a bit restrained today as they reconsidered where futures settled last Friday and where it was headed today and this led to a 1% fall for NYMEX futures. The 7.3 increase in crude prices since November rolled in may not be tenable as gasoline demand continues to stagnate and the economy does not seem to be moving forward. Adding to the gloom was the fall of equities that was caused by the fall in the euro as there continues to be no resolution to the European debt problem.

Today, WTI-75¢, $98.14; Brent-$2.27, $111.89; RBOB-6.85¢, $2.5353; HO-0.94¢, $2.1622.

November 9, 2011

The bullish news of the falling inventory reports could not overcome the bearish news out of Europe that now four countries (Greece, Italy, Portugal, and Ireland) are facing sovereign debt default issues. This was brought into focus by the historically high yield of the Italian bonds now in the market. Italy is the third largest economy in the euro zone.

Equities and the euro also dropped as the dollar rose. Crude did its inverse dance with the dollar. Of note is that refinery utilization seemed to be moving in tandem with inventory going down 2.7% to 82.6. Refiners are squeezing inventory levels so that they don't get caught with higher price product at a later date.

Today, WTI-$1.06, $95.74; Brent-$2.69, $112.31; RBOB-6.22¢, $2.6442; HO-1.76¢, $3.0986.

November 9, 2011

November 7, 2011

Traders are watching headlines and not giving much weight to recent fundamentals moves. There seems to be a lot of attention paid to European political events concerning Greece and Italy and the seemingly positive news of regime change in Greece and Italy. Oil also seems to be moving away from its traditional relationships normally in the same direction with equities and counter to the dollar. Today, however, crude once again moved in concert with the dollar and opposite of equities. This seems to be a move making oil a haven for investors wanting value in case of recession or depression.

Today, WTI+$1.26, $95.52; Brent+$2.47, $114.44; RBOB+6.48¢, $2.7282; HO+4.91¢,$3.1198.

November 4, 2011

NYMEX crude seems fairly entrenched in the mid $90s where it has settled every day since October 27. There was a lot of news that caused a lot of intraday volatility but when settlement time came, prices have remained bullish. The failure of the G20 to make any agreement on what to do about Europe's sovereign debt crisis and the almost non-existent creation of jobs in the U.S. did not cause a downward movement but rather a continuing upward motion.

For the week, WTI+94¢, $94.26; Brent+$2.41, $111.97; RBOB+2.05¢, $2.6634; HO+2.78¢, $3.0707.

November 3, 2011

The market is in a strange mood and chose to believe in a modest increase in jobs while ignoring the imploding Greek sovereign debt deal and falling demand as evidenced by builds in crude and gasoline inventories. The markets also failed to recognize the Fed announcement that GDP forecasts for 2012 would be revised down. In this sea of of bearish news the market has chosen the one ray of bullish light, however slightly it moved in that direction.

Today, WTI+32¢, $92.51; Brent-20¢, $109.34; RBOB+0.28¢, $2.6272; HO-3.72¢, $3.0007.

October 31, 2011

October's 18% crude futures price increase is breathtaking when you consider that Ghaddafi was finally overthrown and killed this month and the Europeans are still mired in the sovereign debt crisis. Ghaddafi's demise means more product in the market fairly soon causing prices to fall. The inability to definitively decide how to solve the European debt problem is also bearish. However, crude moved into the $80s in the second week and into the nineties in the last week and seems ensconced there for now. It is curious that gasoline only rose 0.6% in the same time period while distillate jumped to a more reflective level at 8.9%

Japan devalued the yen and that led to a very modest decline for both Brent and WTI. The actions on the yen and the continuing reactions to last week's debt agreement pulled prices lower in today's trading.

For the month, WTI+$13.99; $93.19; Brent+$7.18, $109.56; RBOB+1.69¢, $2.6429; HO+24.81¢,, $3.0429.

October 28, 2011 - 1699th anniversary of the Victory at the Milvian Bridge

A lot of bearish news brought only a 0.7% decline for crude from yesterday's settlement. This was because the initial report on U.S. GDP was a 2.5% increase as compared to the 1.3% growth for the previous quarter. The Feds have always adjusted the initial reports on economic activity and those adjustments have always been negative.

The most bearish news was that Japanese industrial output fell 4% in September which was twice the estimate. The other bearish news was that the growth in consumer spending is outpacing the growth in personal income indicating that Americans are eating into their savings or borrowing more.

Traders are still feeling bullish because of the Euro debt repayment plan approved unanimously yesterday.

Important trend to note is that the spread between NYMEX and Brent has plunged to $16.59. There is a little bit more stability in European markets due to Ghaddafi's death and approval of the Euro debt repayment plan.

This week, WTI+$5.92, $93.92; Brent+35¢, $109.91; RBOB-0.24¢, $2.6822; HO+4.17¢, $3.0592.

October 24, 2011

There is now a real indication that prices may be going up. The market has begun to experience backwardation, i.e., prices are higher today than they are expected to be in the future. The market has been operating in contango with prices higher in the future rather than today. This news as well as the digital imaging if the Cushing Storage Terminal that showed significant inventory drawdowns led to a 4.4% increase and pushed WTI above $90 for the first time since mid-September.

Lending even more credence to greater demand and a more limited supply was news that China's manufacturing is expected to increase and Japanes exports are up.

Today, WTI+$3.87, $91.27; Brent+$1.89, $111.45; RBOB+0.4¢, $2.6888; HO+3.71¢, $3.0546.

October 20, 2011 - MacArthur returns to the Philippines

All analysts' eyes remain focused on Europe as the Europeans struggle with an acceptable agreement on a rescue fund for the sovereign debt problems. The Germans, in particular, seem unsure about taxing their citizens to insure that Greeks can enjoy early retirement. Thus the two crude benchmarks moved in opposite directions with WTI falling 1% and Brent rising 1%. Ghaddafi's death did not figure into the Brent settlement price but probably did help to bring NYMEX prices down with the knowledge that production would now be stepped up and unimpeded by fighting.

Economic news from the U.S. was similar dualistic with news on oil demand being quite bearish while the Philadelphia Fed published a report that the manufaturing index unexpected rose by a rather significant 26.2 which is the highest increase in over 30 years. This number must be followed for the next several months to prove that it is not an outlier.

Today, WTI-81¢, $85.30; Brent+$1.06, $109.63; RBOB+0.4¢, $2.6755; HO+4.89¢, $3.0301.

October 19, 2011 - Scipio Africanus victorious at Zama

Financials trumped fundamentals as crude fell 2.5% following the faltering movement of equities and going counter to the crude and product inventory builds. Further helping the fall of futures prices were the division between Germany and France on a solution for the Greek sovereign debt problem and the Fed's report of a lackluster economy.

Today, WTi-$2.23, $86.11; Brent-$2.58, $108.57; RBOB-7.54¢, $2.6715; HO-4.65¢, $2.9812.

October 19, 2011 -

October 17, 2011

German officials expressed uncertainty on whether a solution could be found for the sovereign debt problem and the Fed revised August GDP numbers to reflect zero growth. Concurrently this stopped a string of increases for crude. More attention will be paid on China's announcement of its economic activity tomorrow.

Today, WTI -42¢, $86.38; Brent -$2.45, 110.17; RBOB -8.18¢, $2.7429; HO -4.22¢, $3.0136.

October 13, 2011

For the second straight day, crude futures fell, if slightly. WTI followed equities but also reacted to the greater than forecasted inventory build. Product inventories saw a draw but that was because refinery utilization was trimmed 3.5% due to falling demand.

Today, WTI -$1.34, $84.23; Brent -25¢, $111.11; RBOB +.088¢, $2.7575; HO +3.67¢, $2.9714.

October 12, 2011 - Anniversary of Columbus landing in the New World

Prices were being pulled up by the decline in the dollar and the rise of equities but were also being dragged down by the news coming out of the Federal Reserve Open Market Meeting where a lot of concern about the economy was raised. However, today's settlement was the first decline in six sessions, if such a small dip can be considered more than a sidelong move, but also was the third consecutive session of sideways movement. It may be that $85 is about as high as the market will allow WTI to go.

Today, WTI -24¢, $85.57; Brent +63¢, $113.36; RBOB +0.11¢, $2.7487; HO +3.06¢, $2.9347.

October 10, 2011 - Anniversary of the Battle of Tours

Analysts are trying to find any positive news that will get prices moving up and today that piece of positive news was the pledge by Merkel and Sarkozy that the sovereign debt problem would be solved. This solution has been in the works for over a year with no end to the problem but the pledge was enough to raise crude 2.9%. Since today was the Columbus Day holiday, trading was light. The increases for crude and products was also probably due to the fall of the dollar as the euro strengthened.

Today, WTI +$2.43, $85.41; Brent +$3.25, $108.95; RBOB 4.77¢, $2.6953; HO +4.51¢, $2.9039.

October 7, 2011 - Anniversary of the Victory at Lepanto

Crude moved up slightly from Thursday but showed a large increase from the middle of the week and a more moderate increase from last week's settlement. The gyrations and volatility of the market are the result of prices following events in Europe, primarily the seemingly inevitable Greek sovereign debt default that Chancellor Merkel and President Sarkozy are trying to avert. However, the problem is Greece. The Greeks are unwilling to pay taxes but they do wish to enjoy their lifestyle especially highly paid retirement. Merkel and Sarkozy now have more problems as Italy and Spain were given credit downgrades yesterday.

Early in the trading day, the Labor Department announced the creation of 103,000 new private sector jobs but the unemployment rate was unmoved at 9.1%. Then came the news that 45,000 of those new jobs were actually old jobs at Verizon being filled by returning stikers and the jobs picture did not look as promising.

For the week, WTI +$3.78, $82.98; Brent +$3.32, $105.70; RBOB +2.16¢, $2.6476; HO +6.4¢, $2.8588.

October 5, 2011

Inventories normally build in the fall as refiners have extra stock from the summer but refiners kept inventories low this summer anticipating low demand. Today's EIA inventory report shows draws for crude, gasoline and diistiilate and that led to big increases in price. Automatic Data Processing published a report that private sector payrolls were up 91,000 jobs in September. ADP is more reliable than the government statistics that are always being revised upward after the initial release.

Today, WTI +$4.01, $79.68; Brent +$2.50, $102.37; RBOB +8.08¢, $2.5692; +5.32¢, $2.7766.

October 1, 2011

The specter of a major economic downturn caused by Greek sovereign debt default overcame slightly good news about U.S. manufacturing and construction starts. Greece seems inexorably headed towards default and an economic crash can only be averted by action from the German government to support the banks that are owed money by the Greek government. However, the overall fundamentals of the oil markets haven't changed as the American economy continues to head toward a double dip recession and joblessness maintains a position above 9%.

Today, WTI-$1.59, $77.61; Brent-67¢, $101.71; RBOB-11.5¢, $2.511; HO-4.195¢, $2.7529.

September 30, 2011

It was bound to happen. China's manufacturing sector is slowing down. If your largest customer is in recession, which the U.S. is, despite the rosy talk from the White House, sooner or later your production will go down if you are looking out over the horizon for economic trends. Manufacturing does not occur in a vacuum, there have to be customers for the goods. As U.S. incomes have been set back 30+ years since the current regime took over, demand for Chinese manufactured goods have to be affected. That is why there is a demand curve and a supply curve. China is starting to get hit by the demand curve as American consumer damand falls.

There was further bad news as German retail sales are down. The Germans carry a double burden, their own economic issues and the Greek sovereign debt.

It has been an incredible quarter with prices steadily falling for the last half month. For the quarter: WTI -$16.22 (17%), $79.20; Brent -$10.10 (9%), #102.38; RBOB -40.56¢ (13.4%), $2.626; HO -13.79¢ (4.7%).

September 28, 2011

German Chancellor Angela Merkel's doubts about Greek compliance with loan covenants sent the markets tumbling. Added to the crude and product inventory build and reduced refinery output, it's surprising that crude did not go below $80. More bearish news came from equities where there was a sharp drop. To round up the bad news were reports that ConocoPhillips plans to sell or close one refinery on the East Coast while Sunoco plans to sell or close two refineries also on the East Coast. These moves by refiners to get out of the business points to even more demand deterioration than we are being led to believe.

Today, WTI -$3.24, $81.21; Brent -$3.32, $103.81; RBOB -4.48¢, $2.6507; HO-5.82¢, $2.8184.

September 26, 2011

The analysts and traders are trying to find a reason to get prices to go up and the anonymous European Central Bank official who says every thing is going to be OK was enough not to go down for the fourth straight day but WTI barely moved up, ending at less than a cent a gallon (39¢/bbl) today. The other news was bearish as US home prices are still falling and the Saudis are threatening to cut production if Brent and affiliated crude prices go below $90/bbl.

Today, WTI+39¢, $80.24; Brent-3¢, $103.94; RBOB+1.47¢, $2.5694; HO-.43¢, $2.7915.

September 23, 2011

I'm reading (Son of Entropy)2, my friend Pete Mayer's reminiscences of his parents (Mom Maria won the Physics Nobel in 1963 but Pete thinks his father, a chemist, was the better scientist) and I'm struggling with the concept of entropy but if we're entropically supposed to be heading up in crude and product prices, the opposite is happening. Since Obama's jobs speech, prices have been inexorably going downward as traders and analysts more and more believe that Greece will default and Europe will crash and the U.S. seems to be headed into recession alongside Europe. Normally, a lot of heat is generated while the object is moving entropically and maybe we are crashing and burning.

All commodities dropped today as equities seemed to go sideways (marginally positive). This was happening as the G20 pledged to keep their economies moving forward but today's trading results seem to indicate that very few are confident of this pledge. Distillate demand is up and this ordinarily indicates an improving economy as diesel moves the products of the economy but this was ignored by the markets.

For the week, WTI-$8.11, $79.85, Brent-7.73, $103.97; RBOB -22.94¢, $2.5547, HO-21.31¢, $2.7958.

September 21, 2011

The Federal Reserve is trying to bring interest rates down by buying $400 billion of long term debt but their description of their prescription used words associated with a declining economy especially noting "significant downside risk" and "slow growth." The markets acted quickly and brought futures prices down for crude and product despite a crude drawdown in inventory. That drop in crude inventory was attributed to a fall in imports. Distillate inventories fell while gasoline stocks were up. Just as significantly, the dollar went up with news of the the Fed's proposed action.

Analysts are also following the stock market and Dow Jones average dropped 2.5% after Moody's downgraded Bank of America and Wells Fargo. All this news overshadowed the Palestinian bid for U.N. recognition and the continuing fighting in Libya.

Today, WTI-97¢, $85.92; Brent-18¢, $110.36; RBOB-3¢,$2.67; distillate-3¢, $2.93.

September 19, 2011

The European debt crisis is worsening and U.S. unemployment seems to be stuck at 9% and this points to falling demand and the markets reacted today and crude fell 2.6% while gasoline dropped 3.1%. Crude fell even though the market dropped as overall global economic conditions seem to be deteriorating. Crude also tumbled despite OPEC's pronouncement that they were cutting back on production as Libya's capabilities increased.

Today, WTI -$2.26, $85.70; Brent -$2.57, $109.13; RBOB -8.76¢, $2.6965; HO -6.42¢, $2.9447.

September 12, 2011 - Anniversary of the Battle of Vienna, 1683

The euro rebounded vs. the dollar despite the expected Greek sovereign debt default. French banks are especially vulnerable for the amount of loans they hold. Crude went up slightly and there seems to be no boost from President Obama's jobs speech last week. Traders believe that crude will not increase appreciably the rest of the year and are shorting the oil market. Traders do seem bullish on gasoline but that is where demand deterioration shows the most.

Today, WTI+95¢, $88.19; Brent-54¢, $112.23: RBOB-3.28¢, $2.7382; HO-3.83¢, $2.9475.

September 9, 2011

European economic woes arising out of the Greek sovereign debt problem and possible default overshadowed President Obama's prescription for high unemployment levels given last night at a joint session of congress. The focus on the debt problem and the predicament it places on the euro zone and its banks caused the euro and the stock market to fall and this raised the dollar. With the dollar a better buy today, money moved to the dollar and away from commodities like crude. Crude fell 2% from yesterday's settlement.

A side note was the big drop in gasoline, 11.42¢, and to a lesser extent distillate, 5.85¢. Gasoline's fall was due to the growing realization that the summer driving season just past was very weak and as there seems to be no movement in the economy, the fall season would not be any better.

For the week, WTI+79¢, $87.24; Brent-42¢, $112.77; RBOB-6.86¢, $2.771; HO-1.16¢, $2.9858.

September 8, 2011

There's a new storm brewing in the Gulf and pushing crude prices up 4% as production is halted for safety reasons once again after the shut downs of last week due to Tropical Storm Lee. These expected productions shortfalls caused traders to buy oil futures and this paralleled the rise in equities as the dollar fell. These prices increased despite the continuing worries about the debt crisis. Furthermore, emphasizing demand deterioration in the U.S., EIA trimmed their forecast for economic growth to 1.5% from 2.4% this year and to 1.9% from 2.6% next year. This effectively says that the Energy Department sees a stagnant economy for the next year and a half.

Today, WTI+$3.32, $89.34; Brent +$2.91, $$115.80; RBOB+8.54¢, $2.908; HO+6.54¢, $3.0756.

September 2, 2011

The market has hit an interesting point because the bad news today was such that despite the bullish outlook from the lingering effects of Hurricane Irene and the expected effects of Tropical Storm Lee, the bearish stark reality of a recessionary economy really came to the forefront. On Fridays it is normally good to look at price movements from the vantage point of a week to temper the daily volatility of the markets. Today, however, it will be instructive to consider the reality of a failed summer for gasoline demand and the impending fall of more demand deterioration as the double dip recession is more and more accepted as fact and unemployment stays high amid greater economic uncertainty. When the new unemployment numbers were announced today with all media sources talking about the "unexpected" nature of the stagnant job market, it became obvious that the U.S. economy is not getting better. Immediately equities fell and crude followed. One can only speculate what the real number of new jobs and unemployment claims are since they are always revised a week or so later and the time spread cushions the effect on the market.

On a week to week basis, gasoline is down only 1.8% but just from yesterday's settlement to today's gasoline had fallen 3.2%. To be trending positive and then have the bottom fall out is significant. Crude analyzed from week to week shows +1.3%but just looking at the movement from the first day of the month to the second, the fall is -2.8%. Today's jobless numbers, especially no new jobs created during the month of August, reveals a very faltering economy.

For the week, WTI +$1.08, $86.45; Brent +$1.83, $$113.19; RBOB -9.5¢, $2.8396; HO +1.27¢, $2.9974.

August 31, 2011

Crude inventories saw a build while Hurricane Irene cause refinery closures and slow downs and there was a sharp decrease in gasoline inventory. Crude went sideways and fell by 9¢ from yesterday's close. Gasoline rose 2.62¢ as some supply shortages along the East Coast were bound to happen because of flooding. Trading may get volatile as end of the week jobless numbers and end of the month economic reports come in.

It was an excitable month with a genuine drop in crude but much smaller decreases for both products. For August, WTI-$6.89,$88.81; Brent-$2.15,$114.59; RBOB-8.09¢,$3.032; HO-1.8¢,$3.0782.

August 25. 2011

The imminent arrival of damaging winds and rain along the eastern seaboard brought on by Hurricane Irene led to 3% increase in gasoline futures and 1% in distillate but crude inched up only .2%. There is some anticipation of more inflationary action with another quantitative easing by the Fed that is supposed to be announced tomorrow but Bernanke's previous trial balloons have been deflated by the push back from most economists who feel that printing more money may help Wall Street but does not help Main Street. This speculation of QE3 may not be announced.

Unemployment claims are up by 5,000 and GDP growth has been revised downwards 0.2% but since GDP growth was originally estimated at 1.3% the revision is additional bad economic news. Commodity analysts seem to be wary of market reaction to a QE3 announcement.

Today, WTI+16¢,$85.30; Brent+$1.47,$110.62; RBOB+8.95¢,$2.9679; HO+2.48¢,$2.9855.

August 19, 2011

Despite the falling dollar and another down day for equities as well as a pep talk from Goldman Sachs analysts, NYMEX crude inched down from yesterday and settled 4% lower for the week. Reflecting the supply problems that Europe is facing, Brent moved up $1.63 from yesterday but that only made the week's trading just about even as it did for both products. There's fear of a recession but no one wants to be holding expensive crude if the markets should crater because the recession is upon us and demand is less than expected.

The other big news about the oil markets is whether NYMEX accurately reflects world markets or should everyone move to Brent. The current $26.36 premium between the two benchmarks is simply too large to continue as is but both seem to be correctly reflecting their respective markets. U.S. inventories are historically very high while Europe is experiencing supply glitches and there continue to be problems in Libya (no crude exports) and Nigeria.

For the week, WTI-$3.12,$82.26; Brent+11¢,$108.62; RBOB+1.9¢,$2.8412; HO+0.08¢,$2.9045.

August 17, 2011

Analysts misread the gasoline inventory draw today and overlooked the much bigger crude build and crude and products rose moderately. Refiners are unsure where motor fuels prices are headed and have really held down gasoline inventory and when demand was a little higher than they predicted, they had to use up their inventories. If both crude and gasoline fell at the same time, then demand could be said to be up but there is no indication yet that such demand exists. Much of the increased demand is from overseas and that is as likely to fall off as it is to increase. One indication is that distillate inventories showed a build and Europe and the Far East use more distillate than gasoline.

Today, WTI+$1.93,$87.58; Brent+$1.47,$110.60; RBOB+1.65¢,$2.8703; HO+2.9¢,$2.9616.

August 15, 2011

Equities rose again while the dollar dropped and so oil jumped 3% as trading settled today. There is still unease in the market as the New York business conditions index tumbled -7.7%, an even larger fall than the 3.9% drop in July. The market also positively considered the relatively mild 1.3% GDP fall in Japan in the 2Q. Economic uncertainty in the U.S. is holding back any real forecast for high demand the rest of the year and the resulting higher prices.

Today, WTI+$2.50,$87.88; Brent+$1.19,$109.70; RBOB+5.23¢,$2.8745; HO+4.04¢,$2.9441.

August 12, 2010

The slight drop of WTI was blamed on the lower than expected survey of consumer confidence but that 9 percentage point fall was so much greater than the 0.4% decrease for NYMEX. At this point, the decline of WTI may be more mental exhaustion among traders as prices seemed poised to stay in the high $70s range earlier in the week while equities were falling so much so quickly only to see some return to positive territory towards week's end.

For the week, gasoline was slightly positive while distillate and both crudes were moderately negative: WTI-$1.53,$85.38; Brent-86¢,$108.51; RBOB+1.7¢,$2.8222; HO-3.8¢,$2.9037.

August 10, 2011

The draw on inventory of over 5 million barrels points to increased demand and this set traders towards a substantial 4.5% rally for WTI and a 5.2% rise for Brent. Refinery utilization was also up 0.7% to 90%. Gasoline and distillate followed suit but at more moderate levels. All this bidding of the prices up despite the IEA's forecast downgrade. What has traders excited is that Fed Chairman Bernanke announced two days ago of the Fed's intention to keep interest rates at their current low levels till after the 2012 elections. There has been some talk of QE3 but that was walked back the day after it was first revealed only to rear its head again yesterday.

Today, WTI+$3.59,$82.89; Brent+$5.29,$106.68; RBOB+11.49¢,$2.7825; HO+10.05¢,$2.8653.

August 9, 2011

Crude and products were already falling prior to the credit downgrade issued last Friday. The credit downgrade, however, accentuates the poor economy and the accompanying weak demand for fuel. Analysts have been waiting for the demand surge for gasoline and distillate but it never came. Even after the Fed announcement about holding the very low interest rate for another couple of years, crude and products continued their seemingly inexorable march towards lower prices.

OPEC is as unsure about what to do as the markets. Brent has been keeping up and following WTI's lead in dropping prices and roughly maintaining the premium between the two crudes.

Today, WTI-$2.01;$79.30; Brent-$2.35;$101.39; RBOB-2.4¢,$2.6676; HO-3.69¢,$2.7648.

August 6, 2011

The markets closed before S&P issued their credit downgrade of the U.S. It will be interesting to see if there is any effect on crude and product futures pricing on Monday and beyond. Yesterday's positive news about the drop in unemployment from 9.2% to 9.1% was seen as a positive but not by much as crude settled 25¢ lower than the day before. The jobless numbers gave hope that all the bad economic news of the previous week could be overcome. However, demand and supply cannot be ignored for any length of time. Demand has fallen this summer and inventories in the U.S. are at historic highs. Europe has been having a harder time getting any relief from rising prices because of the loss of Libyan production that is greater than just the 1.6 million barrels daily. The Libyan light crude is of very high quality for making motor fuels that even an equivalent amount of Saudi crudes cannot match what is need for the equivalent refinery motor fuel production.

The technical analysts are also redrawing their charts as prices went well below the previously drawn support levels. The volatility of the markets is changing the pricing landscape and more thought has to be given to longer term buying and selling strategies.

This was a big week for falling prices. Gasoline had a big week of a 10% plunge as did West Texas Intermediate plummeting 9.2%. Brent tumbled 6.3% while distillate decreased 5%. For the week, WTI-$8.82,$86.88; Brent-$7.37,$109.37; RBOB-30.77¢,$2.8052; HO-15.45¢,$2.9417.

August 4, 2011

After yesterday's 3.5% sharp fall in the gasoline market, we could be forgiven for thinking that the market would correct itself upward today. However, equities fell precipitously and the dollar showing unusual strength while both crudes and products experienced major declines in value. When taken over the past two days, it is hard to believe that gasoline has fallen 10%, distillate 6.4%, and both crude bench marks fell 7.6%. The bad economic news is accompanied by the appalling numbers in demand. The only silver lining amid these dark clouds is that gasoline prices will likely fall and marketers may make some profit.

Today, WTI-$5.30,$86.63; Brent-$5.58,$107.65; RBOB-19.41¢,$2.7372; HO-12.5¢,$2.8939.

August 3, 2011

While Washington was fixated on the debt ceiling, traders have been taking the pulse of the economy and felt that it was weak and now weakening even further. Demand for motor fuels has been stagnant all summer when drivers should be buying lots of gasoline and truckers lots of diesel. The weak economy today, highlighted by the falling economic numbers such as the ISM's index of non-manufacturing businesses and the slowdown in the service industry, joined the climbing inventory numbers to bring WTI down 2% while gasoline plummeted 3.5% and diesel tumbled 2.4%.

Today, WTI-$1.86,$91.93; Brent$3.23,$113.23; RBOB-10.6¢,$2.9313; Distillate-7.27¢,$3.0189.

August 1, 2011

The debt ceiling crisis may have been averted with a last minute deal between the Obama regime and congressional Republicans but today that bullish news was quickly overcome by the bearish news that the factory index posted by the ISM was down 4.4 to 50.9 in July from 55.3 in June. If factory output is down, this confirms the GDP numbers released last week that showed little growth in the national economy. The inventory numbers released last week make more sense now and point to continued stagnant, if any, growth.

Today, WTI-81¢,$94.89; Brent+14¢,$116.88; RBOB-5.89¢,$3.054; HO+0.12,$3.0974.

July 29, 2011

There was a lot bearish talk today about the debt ceiling impasse, less than forecast economic growth, falling demand, technical suppor level breaches, and an over-supplied market but the facts when examined from a month-to-month view point reveal something quite different. WTI barely moved up 0.3% reflecting the large inventories carried in the U.S. Brent jumped up 4% indicating that markets outside of the U.S. are facing supply shortages. The shocker is that gasoline rose 3% while distillate, the harbinger of the economy, climbed 6%.

There is concern that Tropical Storm Don may cause some damage on refineries and rigs in the Gulf of Mexico but the threat seems to be dissipating. For the month, WTI+28¢, $95.70; Brent+$4.26,$116.74; RBOB+8.13¢,$3.1129; HO+16.35¢,$3.0962.

July 27, 2011

Crude inventories saw a build when a draw was expected and gasoline and distillate inventories also saw increases and this surprised the market and there were decreases in crude and product pricing. Adding to the general unease is that durable goods orders were down significantly and that seems to confirm a stagnant economy and moribund fuel demand. Also adding to the bearish movement in the fuel markets was news that around 25% of the SPR crude has now entered the market. The effect of the SPR on market prices will be temporary but it will have some effect on price at least for a day.

Today, WTI-$2.59,$97.40; Brent-85¢,$117.43; RBOB-1.13¢,$3.1423; HO-3.08¢,$3.0826.

July 25, 2011

There is no real effect of the debt ceiling impasse noticeable in today's futures' trading. Although crude and products dropped, the fall was not precipitous but this may just be a down payment of a bigger fall depending on how analysts view the debt ceiling and deficit reduction talks with the bigger euphemism, increase revenues.

There is a lot of talk about a market reaction but neither equities nor commodities had much a reaction today. However, the situation could become very volatile very quickly.

Today, WTI-67¢,$99.20; Brent-62¢,$117.90; RBOB-0.37¢,$3.1264; HO-1.02¢,$3.1078.

July 23, 2011

It is interesting to think how different the markets would feel today after last night's news of the break down of talks between Obama and Boehner and the manner in which Obama seemed to be demanding that the talks fall apart so that the markets would react negatively. The markets closed hours before this happened and they were heartened by the positive news about the Greek debt talks. However, the market viewed yesterday's moves mostly from the currency versus commodities view point and not from the fundamentals of oil demand and supply. U.S. demand for fuels remains weak but there is moderately strong demand for distillate overseas and it seems that U.S. refiners are finding a market for their distillate output. This seems to infer that the economies outside of the U.S. are doing better and thus showing more demand for distillate which is needed more for industrial and distribution uses than gasoline.

There was much movement during the week but at the end of the week, except for crude there was relatively little real movement. For the week, WTI+$2.63,$99.87; Brent+$1.26,$118.52; RBOB+0.08¢,$3.1301; HO+1¢, $3.128.

July 20, 2011

There's a lot of news affecting the markets and the markets were somewhat conflicted but slightly to moderately trending upwards. Crude inventories were down but gasoline and distillate inventories were up. Refinery utilization is up to 90.3 but demand is down. Crack spreads are now approaching $35 when hypotheticals say they should be at $32 and this points to growing demand but not in the U.S.

China seems to be slowing down as its manufacturing is significantly below the average of the last 12 months. As usual, there seems to be progress but not an agreement about what to do about Greece. AS far as the U.S. debt ceiling and deficit reduction talks go, it all depends on the news source.

Today, WTI+64¢,$98.14; Brent+$1.09,$118.15; RBOB+3.21¢,$3.147; HO+2.04¢,$3.1184.

July 18, 2011

Europe has a PIIGS problem and the market was worrying about the euro while the dollar gained strength throughout the day. Both WTI and Brent showed modest decreases as did gasoline and distillate. The European banks holding Greek debt did not do particularly well with the stress tests administered last week. Greece, Portugal and Ireland are small economies but Spain and Italy have much bigger economies and then there is the cumulative effect of five Euro zone countries with sovereign debt problems and thus the great concern for the Euro economy. Additionally, there are no replacements yet for Libyan crude and thus the high premium for Brent over WTI and this premium is now over $20.

There continues to be no solution to the debt ceiling question here in the U.S. and this is also putting a crimp on demand forecasts.

Today, WTI-$1.31,$97.24; Brent-$1.23,$116.03; RBOB-3.19¢,$3.0974; HO-4.03¢,$3.0777.

July 15, 2011 - 912th Anniversary of Jerusalem's Recapture

Deus Vult!

All the players in the market are confused. Earlier this week Fed Chairman Bernanke announces that QE3 and inflation are likely. Two days later he walks that statement back and says that the Fed is not likely to print money to buy bonds and print money. At the beginning of the week price spiked at $98.69 and fell the very next day to $95.69 and closed $1.55 higher today. From mid-June until after the July 4th holiday, crude was in a channel between $90 and $95; in July the channel is now $95 to $99.

As the debt ceiling talks deadlock, the dollar falls and its inverse dance partner, crude, rises. The more the deadline approaches without resolution, the more likely that the dollar is pressured downward. As the dollar falls, commodities are where investors place their bets. If there should be even greater failures of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) and the euro falls while Washington is in gridlock then the market is in uncharted territory and no one quite knows where things are headed.

For the week, WTI+$2.09,$97.24; Brent+$1.16,$117.26; RBOB+5.88¢,$3.1293; HO+3.05¢,$3.1180.

July 14, 2011

Fed Chairman Bernanke, under the lights in a Senate committe room, walked back the inflationary proposal of another quantitative easing. The past two days of negative commentary has caused Mr. Bernanke to quickly change his mind. This news quickly led to a rise for the dollar and thus a fall of crude futures. Crude normally moves inversely to the dollar. What took second place as the cause for the fall was the fall of demand for gasoline and diesel in what is normally high fuel demand summer. Obviously this leads to a drop in crude demand.

Today, WTI-$2.36,$95.69; Brent-46¢,$118.32; RBOB-2.68¢,$3.1248; HO-1.48¢,$3.0849.

July 13, 2011 - Anniversary of Fr. Jesus Baza Duenas

Analysts may have misread the inventory reports especially for gasoline because even though inventories were down, so were imports. Today was the second day with buzz about Bernanke threatening even more inflationary actions via QE3. This caused the dollar to drop and therefore commodities rose but the big mover today was gasoline, over 5 cents higher.

The falling imports may have to do more with order timing than with demand or available supply. IEA reported that the Saudis are producing more than before in an attempt to keep the supply available. It is interesting to note that in these times of seeming transparency we can't seem to know what is really causing the fall in imports.

Today, WTI+62¢,$98.05; Brent+$1.54,$118.78; RBOB+5.34¢,$3.1516; HO+1.21¢,$3.0997.

July 11, 2011

Both crudes fell moderately today and products followed. The Greek sovereign debt problem continues to hang Damocles-like over the euro-zone and that caused the dollar to gain on the euro and thus commodities like crude fell as they followed the inverse dance of currency vs. commodity. There is also an uneasy feeling about Chinese oil demand as Chinese oil imports fell in June. Together with the worries about the U.S. economy these factors spelled a fall for the oil sector.

Today, WTI-$1.05,$95.15; Brent-$2.23,$116.10; RBOB-2.21¢,$3.0705; HO-0.89¢,$3.0875.

July 8, 2011

The Obama regime does not need to release SPR crude to drop prices. It just needs to release the jobless numbers alongside the jobs created numbers, the real numbers that were published today and not the illusory numbers that were released yesterday. This is the gift that will keep on giving as far as futures pricing is concerned because now the revised numbers for April and May are being issued and the figures are even worse as far as job growth is concerned. As a consequence, NYMEX dropped almost $2.50 but Brent barely showed a blip dropping less than 35¢/barrel. Unless and until the employment numbers become truly positive, they will continue to be a drag on prices.

The jobless numbers are important because they are the predictors of fuel demand. No new jobs presages no fuel demand growth. The unemployed do not have money to buy gasoline and drive their cars.

For the week, WTI+$1.26,$96.20; Brent +$6.94,$118.33; RBOB+12¢,$3.0926; HO+17.19¢,$3.0964.

July 6, 2011

The day before the publication of the industry inventory reports is often the day of treading water. Since Monday was a holiday, the release of inventory was pushed back a day until Thursday. China raised interest rates to counter inflation in their economy. Portugal is one of the PIIGS, European countries struggling with debt, and Moody's has now downgraded their bond rating to Ba2, down four levels. Greece remains in the news because it has been given the lowest bond rating and Portugal seems on the way to the same level. All of this news led to weak movements in the futures markets.

Today, WTI-24¢,$69.65; Brent-4¢,$113.68; RBOB+1.96¢,$2.997; HO+.84¢,$2.965

July 5, 2011

When the Obama regime and the IEA announced two weeks ago that 60 million barrels of the strategic petroleum reserve would be released and prices dropped, everyone thought that it was the wrong timing because prices were falling anyway. Today prices leaped to almost $97 and there is a feeling that the economy is really rebounding as is the demand for fuel. Those two sentiments intersected today in the markets and even the strengthening dollar could not bring the price of crude down.

The bidding for the SPR barrels to be released has been brisk but there are fears that outside of the U.S. these barrels may not enter the market and thus cause genuine shortages for the very areas of the world that need the SPR release most. There also seem to be big problems with the Exxon Mobil handling of the leak into the Yellowstone River. Industry officials believe that the anti-oil bias of the Obama regime may be given even freer rein to tighten production and supply in the U.S.

Today, WTI+$1.94, $96.98; Brent+$2.25,$113.64; RBOB+0.48¢,$2.9774; HO+3.21¢,$2.9566.

June 30, 2011

At quarter's end, we need to take a look at how prices have been moving in the 2Q since all the factors that were evident at the end of March were still in play today.
The Greek sovereign debt crisis is still with us even if the Greek parliament has passed austerity measures. The dollar is still in a dance with the euro and right now the dollar is falling while the euro is rising because analysts believe that the Eurozone will find a way to solve the debt problems even while demonstrators are in the streets clashing with police.

It is worth noting that NYMEX crude has fallen much more in the 2Q than Brent or gasoline or distillate. U.S. refiners may be able to make greater margins since this is the driving season and they may be taking advantage of the seasonal driving patterns and supply and demand. IEA and the U.S. government may have jumped the gun on the SPR release as today NYMEX passed its settlement position on June 22 the day before the SPR release was announced.

For the quarter, WTI-$11.30,$95.42; Brent-$4.88,$112.48; RBOB-7.6¢,$3.0316; HO-15.71¢,$2.9327.

June 29, 2011

EIA publication of the previous week's numbers led to crude and product increases as the inventory draws for crude and gasoline were greater than expected. Though distillate saw a build in inventory it was significantly less than expected and New York harbor heating oil also jumped up. Early in the day news of the austerity measure passage by the Greek parliament caused the dollar to fall and consequently crude prices started to rise. The effect of the IEA release is now alsmost negligible.

Today, WTI+$1.88,$94.77; Brent+$3.62,$112.40; RBOB+12.01¢,$3.0097; HO+9.45¢,$2.9202.

June 28, 2011

The effects of last week's announcement that IEA would release 60 million barrels over a thirty day period seem to be dissipating very quickly. Today's settlements for WTI and Brent showed a 52% and 41% increases from last week's lows. The fall of the dollar caused by the impending resolution of the Greek sovereign debt problem proved to be a stronger push than the pull of more supply.

Last week's gasoline consumption was up 1.9% to 19MBD and the next two weeks will show even more consumption because of the July 4th holiday. QE2 ends Thursday and that may ease the inflationary push of higher commodity prices. Tomorrow's release of the Cushing inventory figures will be contrasted with the moves in the financial markets in a market that still does not know its direction.

Today, WTI+$2.28,$92.89; Brent+$2.79,$108.78; RBOB+8.21¢,$2.8896; HO+6.08¢,$2.8257.

June 27, 2011

The U.S. Commerce Department published data on stagnant consumer spending but the dollar fell against the euro and so WTI fell marginally and Brent rose marginally. There is probably still some carry over from the IEA release of strategic petroleum reserve but the greater effect would have been on Brent as there is abundant inventory in the U.S.

Today, WTI-55¢,$90.61; Brent+47¢,$105.99; RBOB+3.039¢,$2.89075; HO+1.46¢,$2.7649.

June 24, 2011 - 697th Anniversary of the Battle of Bannockburn

The announcement of the SPR release had only a one day effect on NYMEX crude because of the large inventory in Cushing. Brent continued to fall because there will be a greater effect of the IEA release in Europe where there is no large inventory being held. Since the release is sometime in the near future, Brent has started to trade in contango. Contango trading patterns occur when traders believe that supplies will be adequate in the future. The opposite is backwardation where traders act on the belief that supply will be tight in the future.

The dollar's continued strength versus the euro help to keep WTI prices above yesterday's settlement. It is hard to forecast the direction of crude prices as releases of SPR is so infrequent and the market conditions are very different. Prices were already heading lower and this action by the IEA countries only seems to make analysis more difficult. There is an added effect on the Brent premium because Brent is falling at a greater rate and reducing its premium over WTI.

For the week, WTI-$1.85,$91.16; Brent-$7.69,$105.52; RBOB-16.94¢,$2.7766; HO-23.33¢,$2.7503.

June 23, 2011 - 2

The IEA announcement caused a major change in the movement of the two crude bench marks today. Because the shortfall for Europe is caused by the Libyan Civil War, the IEA's move also caused the premium for Brent over WTI to shrink from $18.80 to $16.32in one trading session. The problems in North Africa and the Middle East have raised the premium from an average of $0.76 last year to $15 to $20 most of this year. Today, WTI-$4.39,$91.02; Brent-$6.87,$107.34; RBOB-13.57¢,$2.8376; HO-17.32¢,$2.7817.

June 23, 2011

The International Energy Agency (IEA), the "autonomous" intergovernmental organization dedicated to responding to physical disruptions in the oil markets, unexpectedly announced today that it would be releasing 60 million barrels of crude over 30 days to make up for the loss of supply of Libyan light sweet crude. This led to a 4.6% decrease in NYMEX crude futures and 6% drop in Brent. Gasoline also fell 4/6% while distillate declined 6%. The market is generally wary of non-commercial interference and the lack of prior notification is causing unease among traders.

The market unease is that such interference normally leads to greater volatility and this move is less about bolstering supply which is at all time highs in the U.S. but more about the politics of gasoline prices. Gasoline prices were approaching $4 as a national average and this would leave an indelible mark on the minds of U.S. voters already struggling with food inflation caused by quantitative easing. People believe gasoline price increases at the pump and food price escalation at the check stand no matter what economists say about the low growth of the consumer price index.

The U.S. share of this release is 30 million barrels. The fact that the dollar rose while the euro fell today also helped to push prices down. The bad economic news has kept crude prices low this month as unemployment seems inflexibly high and housing starts are intractably low. When Fed Chairman Bernanke announced that he was clueless about the economy, there was no longer much optimism about the economy.

June 22, 2011

It may be that summer is really here and gasoline demand will now be stronger until Labor Day. It was reported that gasoline consumption was up last week 1% while supplies were down 500 thousand barrels. WTI rose 2.2% following the gasoline supply drawdown and a crude inventory draw of 1.71 million barrels. Supporting this increase was the Papandreou government's vote of confidence victory which sets the stage for more austerity moves by that government to comply with the requirements of the French and German governments for loans to cover the sovereign debt problem. Another bullish news item was the 3.1% increase in refinery utilization to 89.2, the highest in almost a year.

Today, WTI+$2.01,$95.41; Brent+$3.26,$114.21; RBOB+9.07¢,$2.9733; HO+6.49¢,$2.9549.

June 21, 2011 - Summer Solstice

Looking for good news amid all the negative economic reports, analysts determined that the vote of confidence in the government in Greece deserves a mention especially as it led to a rise in the euro and the consequent fall of the dollar. Unless something big happens, Tuesday is a day in limbo while the market waits for the publication of last week's inventory. There are expectations of an inventory decline but the two crudes have been going in opposite directions for most of the past week as WTI ekes its way up while Brent seems to want to close the premium gap by dropping more significantly. This seems to indicate that Europeans don't see supply as a big problem in the near term.

Today, WTI+14¢,$93.40; Brent-74¢,$110.95; RBOB-2.89¢,$2.8826; HO-4.2¢,$2.89.

June 20, 2011 - 67th Anniversary of the Marianas Turkey Shoot

There was no turkey shoot today. WTI barely advanced while Brent continued to fall for the 4th day. There seemed to be some forward movement in resolving the Greek sovereign debt problem and the dollar got stronger and equities were in the positive territory. There is no clear direction for the market at this time though the trend is bearish because supply is plentiful and demand growth is weak.

Today, WTI+25¢,$93.26; Brent-$1.52,$111.69; RBOB-3.45¢,$2.9115; HO-5.13¢,$2.932.

June 17, 2011

The Greek sovereign debt problem continues to be problematic. This problem affects the entire euro zone because European banks have made large loans to the Greek government and the Greek public opposes any downsizing of their entitlements. The riots in the streets are giving politicians second thoughts about making the necessary actions that will make Greece solvent.

Today the IMF has reduced its forecast for American economic growth. It is getting harder and harder to spin the poor state of the American economy. Consequently, despite the lack of additional OPEC production, demand in the US is not seen to grow in the second half of the year and the additional production may not be needed.

For the week, WTI-$6.28,$93.01; Brent-$5.57,$113.21; RBOB-7.17¢,$2.946; HO-12.18¢,$2.9833.

June 16, 2011

New unemployment claims down, housing starts up but at very low levels, WTI flat while Brent dropped as the debt problem with Greece continues and threatens greater economic problems for Europe as the euro fell again and the dollar rose. Right now WTI is in a holding pattern because most analysts believe it should not go lower while Brent is being pushed by potential tightening of supply and pulled by the falling euro.

Today, WTI+14¢,$94.95; Brent-$3.08,$114.02; RBOB+2.59¢,$2.9494; HO+1.9¢,$3.0038.

June 15, 2011

There was only bearish news for oil today. Average demand fell 3.2% when compared to the same period last year. Refinery utilization was down to 86.1% from 87.2%. The New York Federal Reserve manufacturing index fell to -7.8 from 11.9. More telling for the industry was that distillate demand, both jet and diesel, fell 5.2%. Thus crude fell below $95 for the first time since early February. With the Greek debt problem hanging over Europe, the euro fell and the dollar rose. The bad economic news led the DJIA to fall 1.5%.

Today WTI-$4.56,$94.81; Brent-$3.11,$117.10; RBOB-14.11¢,$2.9235; HO-14.1¢,$2.9848.

Flag Day, 2011

Are analysts clutching at straws when they base buying decisions on the fact that sales were not as bad as expected? Or was it the fall of the dollar and the news that China's government is trying to curb inflation and facing worker unrest in Southern China? Whatever the reason, crude and products all rose today. Everyone's attention now turns to the EIA inventory report that comes out tomorrow morning.

Today, WTI+$2.07,$99.37; Brent+$1.11,$120.21; RBOB+5.78¢,$3.0646; HO+2¢,$3.1258.

June 11, 2011

Rather than be bound by the price hawks of OPEC, Saudi Arabia has informed its refiner customers in Asia that it will increase production by 500,000 barrels next month. Coupled with the stronger dollar, WTI fell 2.6% while Brent fell a more modest 0.7%.

The weekly numbers tell a different story: WTI-93¢,$99.29; Brent+$2.94,$118.78; RBOB+3.46¢,$3.0177; HO+4.84¢,$3.1051.

June 9, 2011

There was a carry over effect today of the OPEC decision not to formally increase production quotas as crude rose to its highest level in a month. Brent continued to increase at a higher rate and the Brent premium is now at $17.64 when all of last year it averaged about less than $1. There is a feeling among analysts that Brent more accurately reflects the market because NYMEX is unduly affected the Cushing storage inventory.

There was also a reduction in the trade deficit and this helped set the tone for the trading today. If there was any pull in the opposite direction it came from the preliminary jobless numbers that showed another increase.

Today, WTI+$1.12,$101.93; Brent+$1.63,$119.57; RBOB+5.95¢,$3.0398; HO+4.43¢,$3.1378.

June 8, 2011

Saudi Arabia and the Arab Gulf States were outvoted by a bloc led by Iran, Venezuela, Libya (Ghaddafi's representative arrived late), Algeria, and Ecuador. It was basically the pro-Western group vs. the anti-Western group and the anti-Western group won. What was voted down was only the formal recognition of the production by members and not necessarily any production increase since most of OPEC cheats by producing more oil than agreed. Coupled with the fall of crude inventory, price rose 1.7% over the previous day's settlement. The rising price reflects analysts' failed expectations but given that crude inventories were drawn down, crude did not really have a big increase.

Today, WTI+$1.72,$100.81; Brent+$1.16,$117.94; RBOB-1.16¢,$2.9803; HO+1.65¢,$3.0935.

44th Anniversary of the reunification of Jerusalem

The direction of prices for the next couple of days depends on what the OPEC countries want more: immediate price gratification and make no moves to increase production or work towards sustained economic growth and announce future production increases. Since OPEC quotas affect Europe more than the U.S., there was greater anxiety there and Brent went up 2% while WTI edged sideways barely in positive territory. OPEC members have been sending out a message that they will increase production but there are no official statements to that effect yet. The dollar fell today and that kept WTI from falling for a 3rd straight day. What happens tomorrow will depend on what OPEC actually plans to do.

Today, WTI+8¢,$99.09; Brent+$2.30,$116.78; RBOB+4.2¢,$2.9919; HO+5.96¢,$3.077.

D-Day + 67 Years

Today there was a hangover from last week's bad economic news. Coupled with loud calls for greater production from OPEC to forestall rising prices and it was likely that prices would fall. And they did.

Today, WTI-$1.21,$99.01; Brent-$1.36,$114.48; RBOB-4.32¢,$2.9499; HO-3.93¢,$3.0174.

June 3, 2011

Crude prices early on were falling because of the unemployment rate increase and the small numbers of jobs created versus the expectations. However, the dollar also fell on news that an agreement was soon to be reached concerning the soverein debt problem facing Greece. These two forces, bad economic news pushing the crude down and the falling dollar pulling crude up, led to a settlement price below yesterday but still above $100. Both gasoline and distillate made definitive increases while Brent presaged WTI but oppositely and barely increasing over yesterday.

Even in a holiday-shortened week, there are a number of price ups and downs but a week to week comparison shows how little the crude market really moved while products both had significant movements but in opposite directions. For the week, WTI-1¢,$100.22; Brent+$1.16,$115.84; RBOB-9.89¢,$2.9931; HO+6.62¢,$3.0567.

June 2, 2011

The supply news for crude and gasoline was bearish while the distillate report was bullish. Economic news was also bearish especially the credit report from Moody's. However, the dollar tanked against the euro and the sideways tilt was slightly to the bulls. Tomorrow's new jobless claims report will affect the market but the dollar's strength/weakness versus the euro so far has proved to be the main determinant of market direction.

Today, WTI+11¢,$100.40; Brent+$1.04,$115.57; RBOB-0.96¢,$2.9677; HO+3.52¢,$3.0439.

May 27, 2011

WTI reversed course after three days of increases and fell 1.1% in yesterday's trading. Bad economic news came in two forms: the first time claims for unemployment was up by 10,000 job seekers; and, GDP growth was an anemic 1.8%, even less than the non-stellar 2.2% rate that the Commerce Department had forecast. The dollar's fall only cushioned crude's fall from an even lower settlement.

Yesterday, WTI-$1.09, $100.23; Brent+12¢, $115.05; RBOB+3.21¢, $3.0483; HO+0.26¢, $2.9829.

May 25, 2011

Crude has struggled to stay above $100/barrel this month. Today, despite the rising inventories and falling demand, crude and product prices all rose and WTI led the way. The dive that the dollar is taking is overcoming market fundamentals but it remains to be seen whether prices can continue to rise when demand is falling and supply is abundant.

Today, WTI+$1.73,$101.32; Brent+$2.47,$114.93; RBOB+2.34¢,$114.93; HO+7.06¢, $2.9803.

May 24, 2011

The dollar weakened throughout the day and Goldman Sachs has started talking up prices again. There was a report about China not doing as well as expected but Goldman talking up the price similar to what they did in 2008 and the years prior to that led to traders buying higher.

Today, WTI+$1.89, $99.59; Brent+$2.36, $112.46; RBOB+5.47¢, $2.9928; HO+6.26¢, $2.9097.

May 23, 2011

The sovereign debt problem in Greece has resurfaced. WAdded to the Greek problem was the news that Spain's voters threw the Socialists out in the latest election, the ability of Europe to solve the debt crisis is once again in doubt. This led to the euro's fall and the dollar's rise and the subsequent drop for crude.

Today, WTI-$2.40, $97.70; Brent-$2.29, $110.10; RBOB+0.23¢, $2.9381; HO-7.12¢, $2.8471.

May 21, 2011

This is the month that you need a longer perspective about prices than just what happened yesterday and all the events that occurred that led to the way prices moved that day. In just the settlement amounts the past three weeks there was high of $113.56 and a low of $96.91; there were six days in which the price was above $100 and 9 days when the price was below $100. Obviously there are many factors tugging and pulling at the market and influencing prices and what analysts say out loud may not be how they are acting.

The positives have been that demand seems to be picking up and the rise in refinery utilization has been tracking that increased demand. The euro and the dollar continue to do their dance and there are no long term movements as the Fed continues to inflate the economy and weaken the dollar while Europe has significant sovereign debt problems that sap the strength of the euro. It did not help that one of Europe's top financiers involved in getting the sovereign debt problems fixed was literally caught with his pants down.

For the week, WTI-16¢,$99.49; Brent-$1.44,$112.39; RBOB-13.86¢,$2.9358; HO-2.39¢,$2.9183.

May 19, 2011

Today was full of bad news. Politically, Obama sold out Israel with a call for a return to the pre-Six Day War 1967 borders. Economically, the index of leading indicators dropped, as did the sales of existing homes in April. The Federal Reserve of Philadelphia's index of general business activity fell to 3.9 from 18.5 and was at 43.4 not too long ago. Japan's GDP shrank 3.7%, greater than expectations. Even AAA estimates less auto travel over the Memorial Day weekend, a less than auspicious way to start the summer travel-by-car season. About the only good news that was published was that new jobless claims fell by 29,000. However, those numbers are frequently subject to revision and it remains to be seen if that has any real effect on the market.

Today, WTI-$1.66, $98.44; Brent-88¢, $111.42; RBOB-2.95¢, $2.926; HO-1.12¢, $2.8947.

May 18, 2011

All the market signals are bullish. Falling inventories for crude and product, increased demand and utilization, reduced imports and continued unrest in North Africa and the Middle East. Multi-dollar shifts every day have been common in May as volatility seems to be writ large this month.

Today, WTI+$3.19, $100.10; Brent+$2.31, $112.30; RBOB+3.62¢, $2.9555; HO+6.08¢, $2.9059.

May 17, 2011

Housing starts are falling and industrial output is dropping and this leads analysts to the conclusion that the economy is not doing well and thus demand will not be rising any time soon. This is most obvious in the gasoline markets as gasoline is now 46¢ lower than a week ago when it stood at $3.3785. Even the dollar's fall during the day could not raise crude's price as stagnant gasoline demand would seem to dictate lower prices. The direction of the market now depends on tomorrow's publication of last week's inventory report.

Today, WTI-44¢, $96.91; Brent-88¢, $109.99; RBOB-2.3¢, $2.9113; HO-2.88¢, $2.8451.

May 16, 2011

The gasoline futures price roller coaster continues. Gasoline dropped 4.6% or 14¢ today as fears of refinery shutdowns due to flooding along the refinery corridor were allayed by the opening of a floodway in Lousiana. The gasoline crack spread has also fallen from $40 last week to around $26 today. The arrest of IMF managing director Strauss-Kahn leads to speculation that there may greater difficulties in providing Greece with additional aid and thus there will be greater pressure on the euro and raising the dollar's value.

Today, WTI -$2.30, $97.35; Brent -$2.96, $110.87; RBOB -14.01¢, $2.9343; HO -6.79¢, $2.8743.

May 14, 2011

Crude and products edged upward yesterday as analysts tried to determine where demand and supply are headed amidst the rising Mississippi and the growing European economies. The movement throughout the day was falling prices and only a last minute surge brought prices up. There's a strange dynamic brought about by a fragile economy seemingly unable to get positive traction despite the inflationary quantitative easing that has poured billions of dollars into the economy and reflated Wall Street and commodities and not much else. If the economy remains weakened and fuel prices continue to rise, there will be a big fall that will be a reprise of 2008 but with the inflationary tensions making matters even worse.

Since food is not part of the consumer price index in determining inflation, not much has been written about the destruction of productive farmland in Missouri, Arkansas, Mississippi, and Lousiana, farmland all along the Mississippi Delta by record-setting floods. Thousands of acres of corn (ethanol), rice, soy beans, and cotton have been inundated and the crops destroyed. The local news outlets also talk of milo but I have not seen much milo growing in the immediate area since 2007. If the water should recede by early June and the fields workable, there may be a lot of late soy bean planting if the seed companies can come up with enough seed. Corn and soy beans have so many agribusiness uses that the loss of thousands of acres may add to the price of chicken, hamburger and milk and continue to put steak out of reach for millions.

For the week, gasoline actualy dropped but it has truly been volatile and had large fluctuations within that time period, twice fallling over 22¢ but also rising in large numeral fashion. Gasoline seems to mirror the many conflicted views of the economy and never more so than the past week. A surprise is the nearly 10¢ rise in distillate that could presage more diesel demand (a growing economy?). This week: WTI +$2.47, $99.65; Brent +$4.14, $113.83; RBOB -1.57¢, $3.0744; HO +9.65¢, $2.9422.

May 11, 2011

Even the most bullish analysts could not ignore the huge inventory builds for crude, gasoline and distillate. Facing falling demand and a rising dollar, the market went all the way the other way expecially gasoline. For the second time in four trading sessions, gasoline fell more than 25¢. Gasoline was falling all morning. Around noon CME called a 5 minute trading timeout for crude and both related products. When trading resumed gasoline stayed 25¢ below yesterday's settlement price. WTI and distillate also had significant price drops.

Previous to today, everyone was assuming that with the floods about to inundate the Mississippi River Delta's refineries, there would be product shortages. The EIA inventory figures released today, however, showed continued demand deterioration and inventory builds. You can only spin supply and demand for so long and sooner or later you have to face reality. Despite all the natural disasters and the North African political unrest, the world has more than abundant supplies of crude at this time. The refiners can cut back production to adjust for falling product demand but the historic build at Cushing only means that demand has not caught up with supply.

Today, WTI -$5.60, $98.23; Brent -$5.07, $112.59; RBOB -25.55¢, $3.123; HO -10.37¢, $2.8981.

May 9, 2011

Traders are invested (literally) in rising prices. Today they saw their chance to get prices moving up again and there were big gains for crude and especially for gasoline. The surge of German exports in March and the concern that refineries along the Mississippi would be flooded made this an opportune time to bid higher. The 22¢ drop of gasoline last Thursday was just about wiped out by the 19¢ jump today.

Today, WTI +$5.36, $102.54; Brent +$6.17, $115.86; RBOB +18.8¢, $3.2781; HO +11.65¢, $2.9622.

May 6, 2011

After a big drop in price such as happened yesterday, there would be normally be expectations of a bounce back to correct the previous day's rather precipitous fall. The market started out that way today with positive trading but could not keep positive. The dollar beat up on the euro and despite claims of job gains, the unemployment rate rose to 9%. The euro was especially hit hard by the news that Greece wants out of the euro consortium.

For the week, WTI -$16.54(-14.5%), $97.18; Brent -$16.16(-12.8%), $109.69; RBOB -38.99¢(-11.2%), $3.0901; -41.28¢(12.7%), $2.8457.

May 5, 2011

After a high last Friday that seemed to point at $120 crude, futures prices dropped below $100 today for the first time since March 16. The one day numbers are staggering and the view from a week's worth of trades is even greater. The dollar was stronger today but the news of the day about increased first time jobless claims and stagnant demand both pointed at an economy going nowhere and bringing fuel demand along with it.

Today, WTI -$9.44(-8.6%), $99.80; Brent -$10.71(8.8%), $110.48; RBOB -22.71¢(6.8%), $3.0954; HO -25.61¢(8.1%), $2.8869.

April 29, 2011

The falling dollar remains the big story. The month to month changes are very telling. Befitting the product in most demand for the next four months, gasoline is pulling the market up and shows the greatest increases month to month.

For the month, WTI +$7, +6.6%, $113.72; Brent +$8.49, +7.2%, $125.85; RBOB +37.24¢, +12%, $3.48; HO +16.87¢, +5.5%, $3.2585.

April 28, 2011

The dollar continues to fall and causes crude to ascend, hesitatingly. The hesitation comes from the sluggish economy and the consequent fall in fuel demand. GDP was at 1.8% in the 1Q 2011. Jobless claims went up again this week and the high unemployment rate insures that fuel demand will continue to stagnate and the rising prices only add to the bad news on fuel demand. Fed Chairman Bernanke's inflationary policies may surge the stock market and commodities but rising prices without a strong economy can only bring stagflation in the near or mid-term. Thus there is hesitation about buying higher priced crude futures.

Today, WTI +18¢, $112.96; Brent -12¢, $125.13; RBOB +1.04¢, $3.4298; HO -.04¢, $3.2334.

April 27, 2011

Ben Bernanke insists on diluting Americans' net worth by continuing to weaken the dollar and thus making commodities more expensive. Bernanke's articulation of Fed policy caused crude to rise to the heights it reached on April 8 and leaves the market on the upswing similar to 2008. Analysts seem to misunderstand the draw down in gasoline and distillate inventories and ignored the continuing increase in crude inventory and the decrease in gasoline demand the past week. Refiners are obviously keeping refinery utilization down, 82.7 this week compared to 89 a year ago, in order not to oversupply the market and this has allowed them to enjoy crack spreads of of $28+. Refiners are able to do this because demand is so low and they feel no need to dilute their crack spreads by producing more.

Today, WTI +57¢, $112.78; Brent +99¢, $125.13; RBOB +6.27¢, $3.4194; HO +2.26¢, $3.2338.

April 26, 2011

The markets are clearly uneasy about the Fed's inflationary policies, the Middle East and North African violence, the falling dollar, and the high prices of commodities especially oil and its products. Today the CEO of the Saudi national oil company publicly expressed concern about high prices and its possible effects on the gobal economy. Even refinery problems reported today could not bring WTI into positive territory. Brent did move up earlier as did gasoline and distillate.

Today, WTI -7¢, $112.21; Brent +48¢, $124.14; RBOB +3.38¢, $3.3567; HO +2.92¢, $3.2112.

April 25, 2011 (96th Anniversary of the Battle of Gallipoli)

There seemed to be a holiday hangover in today's light trading that saw WTI hardly move but gasoline went up 1.43¢ while distillate fell 2¢. There is still a feeling of unease about high prices causing demand destruction despite growing demand in China. The pot of unrest in North Africa and the Middle east continues to boil as the Libyan situation remains unsettled while Syria's regime continues to command its security forces to shoot at anti-regime demonstrators. There was even the murder of an Israeli at Joseph's tomb in the West Bank by Palestian Authority security forces as a reminder of the tensions in the entire region. Today, however, was about the dollar's continuing fall and Bernanke's inflationary policies causing commodities to rise to the current heights with the possibility of even higher prices.

Today, WTI -1¢, $112.28; Brent -33¢, $123.66; RBOB +1.43¢, $3.229; HO -1.92¢, $3.18.

April 21, 2011

The weak dollar and the Good Friday-shortened week led traders to buy contracts that raised the price of crude. The Fed's inflationary policies have weakened the dollar and the markets are using commodities like oil to hedge against the diminishing greenback. Supporting oil's rise are the surging stock market and the continued fighting in North Africa and the Middle East. This week's inventory report pointed out demand that had not been previously obvious and that has also helped crude's climb.

Today, WTI +91¢, $112.29; Brent +15¢, $123.99; RBOB +3.36¢. $3.3086; HO -2.04¢, $3.1992.

April 20, 2011

Equities are surging. The dollar is falling. There were significant inventory drawdowns for crude and products. Home sales were also reported as being up. The other factor raising prices is the risk premium. All these factors led to big increases in crude and products.

The total shutdown of Libyan production and the current instability in Nigeria are not the only problems facing oil markets. There seems to be no way to confirm how much is being produced by the Saudis as their reports have not been consistent. This lack of transparency makes the markets very nervous and this disquiet shows up in higher prices.

Today, WTI +$4.23, $111.38; Brent +$2.51, $123.84; RBOB +4.19¢, $3.275; HO +6.11¢, $3.2196.

April 19, 2011

A weaker dollar pushed crude futures higher today. Initially, futures were down as analysts considered the effects of the S&P evaluation of the Federal Government's debt and the likely increase in interest rates for money to be borrowed to pay the debt. The unrest associated with elections in Nigeria also have caused the market to add additional premium to the cost of risk. Tomorrow's release of inventory statistics will probably have a great effect on price as crude and HO are expected to build while RBOB is expected to draw down as it is the season for greater gasoline demand while diesel demand tapers off.

Today, WTI +98¢, $108.15; Brent -27¢, $121.33; RBOB -1.98¢, $3.2331; HO -2.46¢, $3.1585.

236th Anniversary of the Battles of Concord and Lexington

The U.S. Government's increasing deficits and the fact that the current administration seems totally unconcerned about, in fact welcomes, growing deficits, has led to a credit downgrade and caused fears of an economic downturn. The other news was also bearish as the dollar was stronger against other currencies and the Saudis announced a cutback on production because of slack demand. The quick rise in fuel prices to near 2008 levels when crude is still $40 off the highs of that year leads to fears of demand destruction and further economic slowdowns.

Today, WTI -$2.28, $107.17; Brent -$1.60, $121.60; RBOB -2.93¢, $3.2529; HO -3.8¢, $3.1831.

April 12, 2011, afternoon ed.

When Goldman Sachs starts talking prices down, there may be bigger price issues coming up than are now visible. GS did just that today and joined the IMF in alerting investors and traders that the current price for crude may not be economically sustainable. When prices started climbing to these heights before Christmas, it was all about the risk premium necessary to be added on to the price of oil because conventional wisdom held that you never know what can happen to the region if one government falls.

Two governments, Tunisia's Ben Ali and Egypt's Mubarak, have fallen. There is still a supply glut in the market. Libya is in the midst of a bloody civil with the fortunes of Ghaddafi and the Libyan rebels changing every day and the loss of 1.6 million barrels of production. The supply glut continues. Demonstrators are shot by security forces in Syria and Yemen and the supply of crude actually grows so that Saudi Arabia has now stopped over-production. Prices may be artificially higher as risks are seen as greater than they actually are.

Gasoline prices are now approaching the heights of the 2008 pricing and the U.S. government is now predicting a 40% price increase in gasoline over the summer. Inflationary economic policies combined with prohibitions on drilling are now coming home to roost. Prices may go higher despite demand destruction because supplies will be tight even though economic activity may be lower than forecast.

Today, WTI -$3.82, $106.06; Brent -$3.47, $120.68; RBOB -$4.94, $3.1559; HO -8.99¢, $3.1675.

April 12, 2011

Despite abundant global supply, the price of oil has been climbing higher and higher for more than three months based on the risk that the Middle East would break out in greater unrest and production there would be severely limited. However, now that fuel prices are approaching 2008 levels, the greater risk may be that these high prices will destroy demand in the U.S. and Japan as those economies struggel with inflation and stagnating economic activity. Today, for the first time, analysts realized that higher prices may not be without consequences as both crude and products fell significantly.

Yesterday, WTI -$2.91, $109.88; Brent -$2.50, $124.15; RBOB -5.54¢, $3.2053; HO -6.23¢, $3.2574.

April 8, 2011

Crude and product prices are now in 2008 mode. Any news is the traders' rationale for bidding the price higher and higher. Who can blame them? The middle east is in turmoil. The Libyan regime is now targeting oil fields and NATO may have inadvertently killed rebels. The Syrian dictatorship has killed ten people in the latest round of unrest. Yemen faces more face to face fights between factions. In the U.S., there seems no solution to the budget battle and a partial government shutdown is now imminent.

The real culprit for the majority of this huge rise in crude futures and gasoline street prices is government inflationary policy. QE2 has debased the dollar in an attempt to keep equities high but it has also driven commodities higher and the dollar lower. People selling oil get paid in dollars and want to be paid without Bernanke's inflation discount. This is why gasoline street prices continue to rise despite less than stellar economic performance.

The weekly tally tells the story: WTI +$4.85 (+4.5%), $112.79; Brent +$7.96 (+6.7%), $126.65; RBOB +10.94¢ (+3.5%), $3.2607; HO +18.42¢ (+5.9%), $3.3197.

April 7, 2011

The news is conflicting. The economy continues to improve with joblessness seeming to abate and higher oil prices have not dampened demand. The dollar gained on the euro as Europe struggles to solve the Portuguese debt problem. Libya and Nigeria are still considered problematic for short and mid-term supply.

Today: WTI +$1.59, $110.30; Brent +48¢, $122.67; RBOB -0.53¢, $3.18; HO +2.35¢, $3.21

April 6. 2011

Crude is supposed to be fungible and the discounts/premiums for one or the other crude will reflect the blend demand. The current premium paid for Brent has nothing to do with specific demand but more to do with the geographic issues since most Middle Eastern crudes are the basis for the supply to Europe and the risk premium for European supply is greater. Today's $14.52 premium for Brent is approaching the highest premium levels since just before Mubarak's fall.

The other issue weighing in on the market is the high price of gasoline and the probable demand destruction for the product as prices stay at the $3.50/gallon level or rise upwards to $4.00. Cushing inventories continue to be at the highest levels ever and despite the loss of Libyan production, global crude supply is more than sufficient.

The increases today were muted despite the Libyan stalemate and the likelihood of little, if any production, coming from there. The Nigerian elections are set for April 16 and more than 50 people have been killed since the election season began.

Today, WTI +47¢, $108.71; Brent +27¢, $122.19; RBOB -1.22¢, $3.1853; HO +0.20¢, $3.1865.

April 4, 2011

As the military stalemate continues in Libya, production there has ground down to zero. The Saudis seem unable to make up the shortfall to make good on their promise. In the meantime, Nigeria and Algeria are having political problems that place their production in jeopardy. There are two contradictory forces at work here, the oversupply in the U.S. that the Cushing terminals so vividly indicate with every weekly report and the instability of Middle Eastern supply that the Brent premium denotes.

There's a general feeling that prices are too high for the demand and supply. Even technical analysts are saying that their numbers don't point to higher prices. Yet prices seem to inexorably rise and the war risk premium is what fuels the increases. However, with global demand weaker than expected, it is hard to justify prices that recall 2008's heights.

Today, WTI +60¢, $108.54; Brent +$2.47, $121.16; RBOB +1.48¢, $3.1661; HO +3.55¢, $3.171.

April 1, 2011

As the situation for the Libyan rebels worsens, the U.S. economy seems to be improving as the latest job report shows a big jump in non-farm new jobs. Also, with more money in the economy due to quantitative easing, more money goes towards the commodities including oil. These three factors together have driven crude to levels the market had not seen since the beginning of autumn 2008. With continuing bloody unrest in Syria and Yemen on top of the Libyan crisis, the risk premium continues to put upward pressure on prices.

For the week, crude +$2.54, $107.94; Brent +$3.10, $118.69; RBOB +10.68¢, $3.1513; HO +8.08¢, $3.1355.

March 31, 2011

Ghaddafi's forces have taken over the oil port city of Ras Lanuf and the dollar fell in trading versus the euro causing crude and products to increase significantly. Today's prices are the highest since the summer of 2008 and there is no end in sight for the Libyan fighting and Middle Eastern unrest. The QE2 has devalued the dollar and currency experts believe that the dollar is overvalued. Since the dollar is the denomination of choice for crude, its devaluation will be balanced by a rise in commodity prices including oil. Demand for products is also being forecast to increase with the summer driving season set to start in two months.

For the month, WTI +$9.66(+10%), $106.72; Brent +$5.34(+4.8%), $117.36; gasoline +37.75¢(+13.8%), $3.1076; distillate +16.18¢(+5.5%), $3.0898.

march 29, 2011

The political situation in Libya remains unsettled as both Ghaddafi and the rebels are intent on continuing the struggle towards a victorious end and only one side can win. The longer the struggle continues, the more cracks appear in other governments such as Syria, Yemen, and Bahrain. Of course, the biggest problem for world markets would be if troubles were to surface in Saudi Arabia but so far the Kingdom has shown both its largesse towards the greater population as well as armed strength and that has left the opposition unable to bring greater numbers of demonstrators to anhy public place.

The U.S. economy seems to be improving as the equities markets is on the rebound but inventories have been building and that indicates weaker than expected demand.

Japan, the world's third largest economy, is still trying to grapple with the looming nuclear disaster at the Fukushima Dai Ichi power plant. News that there was a major plutonium leak at the plant cannot make recovery efforts move forward and the economy with it.

With all these world events in mind, the biggest contributor to the pricing equation is the Middle East risk premium. Today, WTI +80¢, $104.78; Brent +47¢, $115.27; gasoline +2.25¢, $3.0458; distillate +1.98¢, $3.0415.

March 28, 2011

NATO's air forces have effectively changed the momentum of the Libyan Civil War against Ghaddafi in favor of the rebels. There was news today that the rebels could begin exporting production in a week. This positive, for greater supply, news led to a fall in both crudes and both products. There has been a feeling among analysts that prices are a bit high for the weaker than expected global demand and because of the considerable supply around the globe, especially in the bench mark storage point in Cushing. The risk premium will not yet disappear but there is strong indication that prices are too high for the fundamentals.

Today: WTI -$1.42, $103.40; Brent -79¢, $114.80; gasoline -2.12¢, $3.0233; distillate -2.3¢, $3.217.

March 24, 2011

PIGS and their debt issues have not factored into the price of oil for so long but today news that Portugal needed to be bailed out of its sovereign debt problem restrained prices. Also restraining prices was the news that the orders for durable goods had decreased meaning that the economy might be slowing down and demand for oil may not increase. The fallback in prices was tempered by the continuing violence in Libya. Deaths in Syria were also reported and there is word that Yemen's president and the top army general were negotiating their resignation.

Today, WTI -17¢, $105.58; Brent +22¢, $115.76; gasoline +2.47¢, $3.0459; distillate +0.68¢, $3.0629.

March 23, 2011

Rather than calm the waters, the no-fly zone set up by the U.S. and its allies and the bombing of pro-government forces have caused crude prices to rise even higher amid expectations of greater civil unrest elsewhere in the Middle East. Supply is not the problem and is not the problem in the foreseeable future. Crude inventories continue to build while gasoline had a larger than expected draw and distillate was flat in today's EIA report. Ever since political unrest drove out the regimes in Tunisia and Egypt, the market has been skittish about the political problem spilling out onto Saudi Arabia. The market knows that these high prices may not be sustainable but clearly is worried about being surprised by the fall of a pro-Western supplier such as Saudi Arabia.

Today: WTI +$1.29, $105.75; Brent -15¢, $115.54; gasoline +1.61¢, $3.0212; distillate -1.9¢, $3.0561.

March 22, 2011

Certain Japanese recovery with additional demand for oil and the continuing battle in Libya led NYMEX prices up in light trading. Brent and both products followed suit. The renewed fighting despite the no-fly zone indicates that there will be little if any flow of crude out of Libya any time soon. Meanwhile, the problems for the Yemeni regime continue to grow as generals have now defected to the opposition. This fighting raise the risk premium because of Saudi Arabia's proximity to Yemen.

Today, WTI +$2.06, $104.46; Brent +75¢, $115.69; gasoline +0.77¢, $3.0051; distillate +2.33¢, $3.0751.

March 18, 2011

Some analysts are beginning to believe the Tokyo Electric Power Co. (Tepco) that they are making progress and starting to cool down the Fukushima nuclear reactors because yesterday most of the market's attention was turned towards Libya and Bahrain. Ghaddafi continues to bomb his own people, however, today he unilaterally declared a cease-fire after Britain announced that it would deploy planes to stop Ghaddafi from bombing rebel positions and civilians. Bahrain also continues to be problematic as the Shia continue to demonstrate against the Sunni regime despite the deployment of Saudi and other Gulf State forces in support of the Bahraini government.

All these events have led to a resurgence of the risk premium. The potential for a quick Japanese economic recovery will lead to greater mid- and long term demand for oil as it is likely that Japan will turn to oil-fired power plants to generate electic power. The Libyan crisis, even if Ghaddafi returns to power, will likely take its toll on future production. The continued Shia turbulence in Bahrain and Saudi Arabia will raise the likelihood of greater violence and instability in the region.

Yesterday: WTI +$3.35, $101.33; Brent +$4.03, $114.72; gasoline +10.18¢, $2.946; distillate +6.26¢, $3.0592.

March16, 2011

The market is being pushed and pulled in different directions and it is hard to determine how to prioritize the factors affecting the markets. Crude inventory continued its inexorable build while both products saw significant draws because we are in early spring there will be greater demand for gasoline and diesel. Bahraini security forces reinforced by Gulf States military have had violent clashes with demonstrators and because this is next door to Saudi Arabia the risk premium must be added to prices. Ghaddafi seems poised to retake all of the rebel-held areas in Libya and this may mean that oil will once again be flowing even at a great human cost. Japan is pulling prices down because no one understands the full extent of the nuclear meltdown and its effects on the Japanese economy and whether future Japanese demand for oil will increase. A lot of push for prices to go up and a major pull to bring prices down consequently products moved big while crudes move moderately.

Today, WTI +58¢, $97.98; Brent +$2.14, $110.69; gasoline +3.82¢, $2.8442; distillate +4.02¢, $2.9966.

March 14, 2011

I'm worried about the fallout from the Fukushima plant blowing radiation down to Guam even though it is unlikely that Air Mike will be sending planes to Sendai. The markets are worried that Japan's economy is going to take a hit from the devastation of the earthquake, the tsunami, and the nuclear plant meltdown. No one seems to know if Japan will need more oil to keep the economy going and build oil or coal-fired power plants to replace the nuclear plants that have been damaged by the earthquake and tsunami or whether economic activity in Japan will fall so much that extra energy will be unnecessary.

It was because of this thinking that WTI prices went down then went up during the trading day before ending virtually flat. Brent also barely moved from last Friday while gasoline went down while distillate went up. Today: WTI +25¢, $101.19; Brent -5¢, $113.64; gasoline -2.36¢, $2.9603; distillate +3.56¢, $3.0609.

March 10, 2011

WTI and Brent were both headed for significant falls when news about Saudi police shooting rubber bullets at protesters was broadcast. Prices were headed below $100 not today but in the near future but now no one is sure what level of violence will occur in Saudi Arabia, the world's largest exporter of crude. The other news affecting the economy and crude prices were bearish. Unemployment claims went up last week and Greece's credit rating was downgraded. Analysts are worried that such a high price increase will cause the foreseen economic uptick to falter.

Today, WTI $1.73, $102.65; Brent -69¢, $115.25; gasoline -0.23¢, $3.0185; distillate -2.13¢, $3.0444.

March 9, 2011

Geopolitical events and the fundamentals of demand and supply find the two crude products in the market going in different directions. NYMEX WTI futures fell while Brent futures in Europe rose. WTI and Brent both moved upwards in the morning because of Ghaddafi's renewed attacks on Ras Lanuf, Libya's largest petroleum complex. When the EIA released the inventory figures late in the morning showing an increase of 2.5 million barrels and stocks totalling over 40 million barrels, the highest ever reported, WTI fell. The story became more complicated because both products, gasoline and distillate, showed large jumps upward when normally they would move parallel to WTI.

Today: WTI -73¢, $104.38; Brent +$2.80, $115.94; gasoline +7.19¢, $3.0208; distillate +5.42¢, $3.0657.

March 8, 2011

A week ago WTI settled under $100 but the fighting in Libya has gotten hotter and Ghaddafi seems to be making a comeback with overwhelming artillery and air power. Europeans seem unsure if they should implement a no-fly zone and the Obama administration seems uninterested and wishing only to do nothing. Only the fast rising price of gasoline seems to be pushing the White House into making any statement at all. The latest statement was to suggest to open up the strategic reserve but you don't use a short supply strategic reserve to flood an already oversupplied market with crude bought when WTI was under $30. However, the Obama administration wants to get prices to fall without approving more drilling and without interfering in the Libyan civil war.

Today's slight price decrease seems to have been caused by OPEC's continuing assurance that the Libyan short fall can be made up. I mentioned OPEC because Kuwait, the UAE and Nigeria have now joined Saudi Arabia in trying to calm the markets down. However, Saudi Arabia faces demonstrations in a couple of days and Nigeria is about to have an election and that always causes unrest throughout the country.

Today: WTI -34¢, $105.11; Brent -87¢, $113.14; gasoline -5.54¢, $2.9489; distillate -5.4¢, $3.0115.

March 7, 2011

The conflict in Libya now seems to be headed towards a prolonged struggle and the fight is now at production and marine terminal sites as well as near a refinery. Should fighting continue and affect those facilities, the damage may be unrepaired for an extended period of time and use up spare capacity currently available. Ghaddafi has proven he is not willing to go into exile and continues to bring in foreign mercenaries to fight the rebels. He has also shown a willingness to bomb these facilities from the air while NATO dithers about setting up a no-fly zone. The biggest fear is that the unrest will erupt next in Saudi Arabia and Nigeria. Nigeria is scheduled to have elections in April and violence could erupt there to stymie the flow of crude.

Today: WTI +$1.15, $105.45; Brent -92¢, $115.04; gasoline -3.92¢, $3.0043; distillate -2.06¢, $3.0655.