March 30, 2012

Obama regime undercuts Israel by announcing more future sanctions against Iran. Equities up, dollar down. Markets wary and move sideways today.

For the month, WTI-$4.05, $103.02; Brent-49¢, $122.88; RBOB+34.76¢, $3.3899; HO-1.96¢, $3.1684.

March 29, 2012

NYMEX crude fell significantly today after the Saudis joined in the lower prices jawboning causing traders to be even more cautious about futures contracts. As the largest producer and with the ability to produce even more, the threat of the Saudis placing more product on the market is bound to make all the bulls hesitate. The Sarkozy government, also facing an election this year, is leading the charge for a release of SPR crude that would also bring prices down in the short term. Other factors causing crude to tumble today were the fall in equities and the dollar's jump over other currencies.

Today, WTI-$2.63, $102.78; Brent-$1.69, $122.39; RBOB+0.51¢, $3.4006; HO-4.9¢, $3.1589.

March 28, 2012

Crude fell 1.8% on today's trading as oil now seems to face a barrier prohibiting prices beyond $110 for WTI and $125 for Brent. Every news flash that does not meet the media and regime's standard "the economy is improving" mantra causes traders to head for the exits. Today it was the news that imports had raised crude inventories to levels not seen since mid-year 2010. Refinery utilization is up almost 3% but gasoline and distillate inventories are dwindling as the last of the winter specs are being sold. This should not cause jitters but prices are way too high for global demand and the state of the global economy.

The big news today was that France and the U.S. are both now jawboning prices down with threats to sell crude from the SPR as governments are anxious about high motor fuel prices in an election year. Iran is also making noise about wanting to re-start negotiations about its nuclear capabilities. Taken together traders sold to get out of higher priced contracts.

Today, WTI-$1.92, $105.41; Brent-$1.46, $124.08; RBOB-1.01¢, $3.3955; HO-1.07¢, $3.2079.

March 20, 2012

Big drop in NYMEX crude as Saudis are trying to bring prices down to insure continuing economic recovery as China's economy seems to be slowing down as its export-based economy faces falling demand for its products. Adding to the falling crude price was a strengthening dollar and tumbling equities.

Today, WTI-$2.48; $105.61; Brent-$1.24, $124.12; RBOB-0.47¢, $3.3631; HO-2.46¢, $3.2367.

Strong finish to the week as dollar fell while the regime denied suggesting SPR release it floated yesterday.

For the week, WTI-34¢, $107.06; Brent-17¢, $125.81; RBOB+2.45¢, $3.3569; HO+1.81¢, $3.2819.

March 14, 2012

The stronger dollar led to a modest 1.2% decline for NYMEX futures. There was also a lower than expected inventory build that may be attributable to refiners' caution about the current high prices and that may also be why refinery utilization fell 1.4% as refiners play cautious about manufacturing oil products when the economy still seems to be stagnant.

Today, WTI-$1.28, $105.43; Brent-$1.07, $125.15; RBOB-0.76¢, $3.347; HO-0.94¢, $3.2618.

March 13, 2012

Signals from the economy appeared to be bullish and the crude markets rose very modestly while gasoline continued its spring price run-up. WTI has been operating in a very narrow price band between $105 and $109 while Brent's price band has been between $121 and $126. The market may be overpriced for the actual economic conditions but there is still a worry about the global economy despite the seeming product shortage. Taking a quick look at products and it shows that gasoline has overtaken distillate in price this month and seems to have momentum for even more price increases.

Today, WTI+37¢, $106.71; Brent+$1.11, $126.22; RBOB+3.16¢, $3.3546; HO+2.83¢, $3.2712.

February 29 - Leap Day, 2012

The Fed and the Commerce Dept. both touted a growing economy today and that was enough to overcome an inventory build 4X greater than expected as crude rose 0.5% today. It was a healthy increase of 8.7% for the month despite market trends that should make traders more cautious. The build is likely related to deteriorating demand but more attention was paid to Federal Government reports.

For the month, WTI+$8.59, $107.07; Brent+$11.93, $122.93; RBOB+15.49¢, $3.0423; HO+12.52¢, $3.188.

February 28, 2012

NYMEX crude fell 1.9% as bearish economic news hit the markets. Sales of durable goods fell in January and U.S. home sales are slack while prices continue to fall. It is noteworthy that traders have raised the price of crude and products very high this year on hopes of a strongly recovering economy and yet provable and steady good news about the economy has not been forthcoming.

Today, WTI-$2.01, $106.55; Brent-$2.09, $121.86; RBOB-8.82¢, $3.0401; HO-6.26¢, $3.2238.

February 24, 2012

Iran is very confrontational this week because the Ayatollahs wish to get the West to back down from the economic sanctions being imposed and that now seem to have an effect on the Iranian economy. Iran is the second largest exporter of crude and any cuts in exports are bound to affect the European economy that is also navigating around the Greek sovereign debt problem. The fear premium is likely $15 - $20 per barrel because American demand for oil has shown continued signs of deterioration as witness the fall of home sales in January.

The markets seem to focus on Iranian supply but the Iranian economy is not in good shape and the regime could face serious opposition once again if sanctions are working and having a real effect. NYMEX has jumped 6.3% this week and Brent 4.7% as the markets try to understand where prices are headed.

For the week, WTI+$6.35, $109.77; Brent+$5.65, $125.23; RBOB+13.72¢, $3.1528; HO+12.6¢, $3.3159.

February 23, 2012

Crude jumped 1.5% from yesterday and is now at the highest price level since May 4, 2011. Obviously there is an Iranian threat premium and refiners have been watching their inventories so that they don't get caught holding old, expensive product. The markets are always looking for the silver lining in economic news and today that was the jobless number that had not moved from last month. Additionally, German business confidence was ahead of forecasts. Equities and the euro were also up.

The worry is really about demand and the most recent four week trailing numbers show continuing demand deterioration of 1.4%.

Today, WTI+$1.55, $107.83; Brent+73¢, $123.62; RBOB+2.59¢, $3.1136; HO+2.23¢, $3.2949.

February 15, 2012

Iran reportedly halted shipments to six European countries but later denied any cuts to European customers. Also on the mind of analysts was the unexpected draw on crude and distillate inventories but pulling in the opposite direction was today's stock market plunge.

Today, WTI+$1.06, $101.80; Brent+73¢, $118.91; RBOB+2.42¢, $3.0067; HO+2.68¢, $3.1916.

February 13, 2012 - 320th Anniversary of the Massacre at Glencoe

NYMEX crude rose 2.3% today as markets disregarded the riots in the streets and the burning buildings in Athens while giving greater weight to the Parliamentary approval of austerity measures. Added to that is the new war premium for crude as suspected Iranian assassination attempts were made on Israeli diplomatic staff and dependents in India and Georgia. Compounding the assassination attempts was news that oil tanker companies were getting ready to halt shipments from Iran.

Today, WTI+$2.24, $100.91; Brent+47¢, $117.79; RBOB+3.76¢, #3.0125; HO-2.21¢, $3.16.

February 11, 2012

Since January 23, a period of 15 trading days, crude has been in a narrow channel where the high is $99.70 and the low is $96.36. There has been a lot of movement within that price range but there seems to be no breakthrough possible higher or lower. Falling through the floor is made difficult by the strength of equities and the dollar. Breaking through the ceiling is hard because of the continuing inventory build at Cushing and the deteriorating demand for oil products in the U.S. Yesterday's settlement prices compared to a week ago and the day before are instructive.

On a comparison of day to day settlements, NYMEX increased 0.8%. Comparing to the previous week's final settlement, crude actually dropped 1.2%. Brent moved similarly, increasing 2.6 from the day before and decreasing 0.9% week to week.

For the week, WTI+83¢, $$98.67; Brent+$2.93, $117.32; RBOB+6.05¢, $2.9749; HO+6.77¢, $3.1821.

February 8, 2012

Crude inventories rose minimally but demand remains weak and NYMEX futures reflected an unsure market direction. The dollar's increase did not pull crude prices down the way it normally does.

Today, WTI+30¢, $98.71; Brent+$1.16, $117.39; RBOB+3.77¢, $2.9652: HO-0.14¢, $3.1895.

The markets have been fretting over Greece for more than a year and no resolution is in sight. This affected U.S. and European markets differently as West Texas Intermediate fell 1% today while Brent went up 1.65% increasing the Brent premium to $19.13 when it was under $10 just a month ago. U.S. inventories continue to build while there is a supply shortage in Europe. Another interesting development is the severe cold in Europe has increased the demand for distillate and NYMEX distillate zoomed 5.63¢ today.

Today, WTI-93¢, $96.91; Brent+$1.65, $116.04; RBOB+1.35¢, $2.9279; HO+5.63¢, $3.1707.

February 3, 2012

Most analysts accepted the jobless numbers published by the Labor Department on face value that there wer 243,000 new jobs in January and a commensurate drop in unemployment to 8.3% making crude rise 1.7% over yesterday's close. Also helping the climbing price was the dollar's drop during the day. However, the unemployment news is really mixed because total jobs available dropped significantly and the unemployment rate is not really falling because of more jobs but because fewer of the jobless are counted.

As a cautionary note, the elephant in the room is the precipitous drop in demand to pre-21st century figures (supporting our hypothesis that the economy is not growing and there are fewer working people out there). The economy cannot be kicking on all eight cylinders if fuel demand is falling. Europe is not enjoying the big inventories in Cushing and the premium between NYMEX and Brent has grown $4.65 this past week. Another indicator that the markets have not fully bought into the all's well jobless report is the growing contango movement where prices are falling over time.

This week, WTI-$1.72, $97.84; Brent+$2.93, $114.39; RBOB-1.24¢, $2.9144; HO+4.4¢, $3.1144.

February 1, 2012

Today's EIA inventory report showed unexpectedly high builds in crude and gasoline and a modest draw in distillate and this news led to another fall in crude and distillate while gasoline showed a very modest increase. Supply is not getting any more bullish in the markets and refinery utilization is down 0.4% to 81.8%. The only anomaly is the continued rise of gasoline prices as crude falls and demand drops.

Today, WTI-87¢, $97.61; Brent+56¢, $111.56; RBOB+0.48¢, $2.8922; HO-1.73¢, $3.0455.

January 31, 2012

Equities fell and the dollar rose and these two factors and continuing worry about the Europe's economy led to small increases in crude and products. It is interesting that Brent and both products have experienced large increases this month whereas at month's end WTI was pretty much where it was a month ago at the end December 2011 when looking at month end January 2012:

Commodity January 31 January 30 Δ December 30 Δ

WTI $98.48 $98.78 -30¢ $98.83 -35¢
Brent $111.00 $110.75 +25¢ $107.35 +$3.65
RBOB $2.8874 $2.8707 +1.67¢ $2.6863 +1.67¢
Distillate $3.0628 $3.0518 +1.10¢ $2.9350 +12.78

January 27, 2012

Shrinking refinery capacity represents supply when it intersects falling gasoline demand as the market settled at highest NYMEX price for gasoline in 5 months. This 14¢ uptick over the past week occurred when there was barely any NYMEX crude price movement in the same week. The industry decided that only the most efficient could continue refining and refinery closures are being felt in the form of higher prices.

For the week, WTI+$1.10, $99.56; Brent+$1.60, $111.46; RBOB+14.24¢, $2.9268; HO+8.2¢, $3.0704.

January 25, 2012

NYMEX and Brent crudes went in opposite directions today as the Fed announcement on continuing low interest rates aided a small rally for WTI while negative news on Britain's GDP caused concern for Brent traders. Futures fell initially with the release of the EIA reports but the Fed's announcement reversed course and caused a modest rally.

Inventory and demand reports came out today. Crude built inventory as imports increased while gasoline and distillate inventories drew down as demand was better than forecast. However, refinery utilization was at 82.2%, a drop of 1.5%.

Today, WTI+45¢, $99.40; Brent-34¢, $109.81; RBOB+2.88¢, $2.8338; HO-0.5¢, $3.0192.

January 23, 2012

European Union agrees to ban Iranian oil despite Iran's threats to close Straits of Hormuz should embargo be enforced. Saudis promise to increase production to make up for losses while China and India remained poised to buy more from Iran. Euro strengthens despite euro zone inability to make a deal with Greeks concerning sovereign debt problem.

Today, WTI+$1.12, $99.58; Brent+72¢, $110.58; RBOB-0.65¢, $2.7779; HO+2.14¢, $3.0098.

January 20, 2012

Hong Kong Shanghai Bank released China's manufacturing index showing a third straight month of falling output and exposing the reality behind the Chinese government's publication of 8.9% GDP growth at earlier this week. The dollar rose over the euro based on the continuing debt negotiations with Greece makes the dollar a better investment than oil and this further aided crude's decline. These developments further highlight the fundamentals of weak U.S. gasoline demand and sufficient supply availability given the economic activity.

A lot of price movement mostly down towards week's end: WTI-24¢, $98.46; Brent-18¢, $109.86; RBOB+5.02¢, $2.7844; HO-3.88¢, $2.9844.

January 17, 2012

China's announcement of 8.9% GDP growth in 4Q 2011 and the fall of the dollar vs. the euro in currency trading led to a 2% jump in NYMEX prices and the earlier 1.2% increase in Brent.

Today, WTI+$2.01, $100.71; Brent+$1.35, $111.39; RBOB+3.71¢, $2.7713; HO+1¢, $3.0372.

January 13, 2012

France's credit rating was downgraded one level causing the euro to falter and bringing crude down as well. WTI fell 0.4% from yesterday while Brent dropped 0.9%. Fears of a Western embargo of Iranian oil were allayed by more European dithering and secret negotiations about the nature of Iran's nuclear program. Goldman Sachs is once again talking up prices as they announced their forecasts for the year including $123.50/barrel NYMEX crude by year's end.

For the week, WTI-$2.86, 98.70; Brent-$3.02, $110.04; RBOB-1.74¢, $2.7342; HO-4.3¢, $3.0272.

January 12, 2012

There seems to be a lessening of tension between Iran and the West despite the crazy statements Hugo Chavez and Mahmoud Ahmadinejad are making about bombing the U.S. The Obama Regime seems to want to play down the threats made by the Iranian President and the Venezuelan Dictator and this allows the Europeans to feel that supplies are more secure. These events led to the second straight day of falling prices and today's settlement dropped below the $100 level for the first time since two days before the New Year's. Traders are ignoring the threat of a strike by oil workers in Nigeria and settling for the good news about the Straits of Hormuz.

Today, WTI-$1.77, $99.10; Brent-$1.17, $111.07; RBOB-3.2¢, R2.7633; HO-1.0¢, $3.0541.

January 9, 2012

Today saw a rare event when the dollar and crude both dropped in the markets. German manufacturing fell in November and that is certainly bearish news for the euro watchers but there seems to be a lessening of tension about the Iranian threats to close the Straits of Hormuz since the Saudis have announced they would provide for any loss of supply. There are oil related problems everywhere but analysts are focused on economic and currency issues rather than oil fundamentals and the crude and product declines were quite moderate.

Today, WTI-25¢, $101.31; Brent-88¢, $112.18; RBOB+0.74¢, $2,759; HO+0.28¢, $3.073.

January 6, 2012

Traders placed more importance on the falling euro and the threat of a European recession than on very good news on the number of new jobs created in December. Hungary's bond downgrade may not directly affect the euro but it does affect European banks and thus the euro fell. It is also likely that traders discounted the first wave of jobs created news awaiting the downward revisions next week as well as being aware of the temporary nature of the Christmas season job growth. The market also seems to be discounting all the Iranian threats to close the straits of Hormuz and close off 20% of the world's crude supply.

Despite the second straight day of decreases in a short trading week, NYMEX rose 2.8% and Brent jumped 5.3% in four days of trading while heating oil shot up 4.9% and gasoline rose 2.4%.

For the week, WTI+$2.73, $101.56; Brent+$5.71, $113.06; RBOB+6.53¢, $2.7516; HO+14.32¢, $3.0702.

January 3, 2012

The weakening dollar, higher stock prices and reports of improved economic performance led to a 7 month high for crude. The year is starting out strong but it was also a day when there was little news about the euro and the debt problems across the pond. The Iranians continue to rattle their sabers and that is factored into the riskiness of supply.

Today, WTI+$4.13, $102.96; Brent+$4.78, $112.13; RBOB+6.23¢; $2.7486; HO+10.32, $3.0382.