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.