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.