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.