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.