March 29, 2010

The European Union seems closer today to agreeing to further subsidize Greek workers at the level they have become accustomed no matter the cost and no matter the productivity. This led to an uptick for the Euro and a consequent down tick for the dollar. Added to this news were reports that economic activity in Asia was increasing and thus leading to greater petroleum demand. There is also good news from refiners as they have better margins this year than the past couple of years past and are able to produce more gasoline as there were a number of refineries shut down or not producing gasoline that will keep the margins profitable at an increased level of production. The prospects for crude look so good that OPEC announced that members are investing more money in drilling. All of this good news in combination led to a strong increase in crude and distillate futures and a modest increase in gasoline.

Today, crude +$2.56, $82.41, gasoline +2.85 cents, $2.2285, distillate +5.53 cents, $2.1215. Street price at $2.599.

March 26, 2010

Crude's futures market price is falling in small steps this week as NYMEX fell $0.72 even though the dollar dropped. What concerned analysts today was the downward revision of economic growth forecast in 4Q 2009 to 5.6% from 5.9%. The increase in inventory and the drop in gasoline demand also helped to bring prices down. European governments now seem willing to work with the IMF to subsidize Greece's labor force and are working on a bailout plan. So far no one is mentioning any possible effect of the attack by the North Koreans on a South Korean vessel causing significant casualties.

Today, crude -$0.72 to$79.85, gasoline -1.14 cents to $2.20, distillate +0.14 cents to $2.0662.

March 25, 2010

The French and Germans don't want to subsidize the Greeks and their lifestyle and their work habits and it's getting less likely that they will bail Greece out despite the desperation from Greek workers who don't work but still want the lifestyle they have become accustomed to. Consequently, the Euro is falling and the dollar is rising. This caused crude futures to fall though very slightly. Traders and analysts are still working the technicals despite the fundamentals being very bearish. The markets were positive all day but in the end caution entered the market.

Today, crude -$0.07 to $80.64, gasoline -0.94 cents to $2.2114, distillate -0.57 cents to $2.0648.

March 24, 2010

Crude dropped $1.16 at the close as crude inventories rose mostly due to increased imports while product inventories fell due to some increased demand and refinery product inventories being drawn down. The dollar gained in value and that would have deepen crude's decrease but analysts and traders are trying to understand where the economy is headed and thus decide if they should buy or sell. Fuel demand seems to have increased over last year but analysts are showing caution because of EIA's forecast model problems revealed last week. Another note of caution is European debt raising the dollar's value. Writing the buy/sell programs for commodities is made harder because of the great number of variables you have to include in your formulas.

Today, crude -$1.16 to $80.64, gasoline -3.55 cents to $2.2208, distillate -2.65 cents to $2.2208. Street at $2.659.

March 23, 2010

There was mixed news about the dollar, the economy, and Greece, and there are expectations that last week's inventories will show a decline with the release of the EIA report tomorrow. This led to a volatile trading day but in the end there were slight increases for crude and product. In February only one trading day ended over $80 and that was on February 22. January started strongly in the low $80s including a high of $82.93 on January 6. However, March has seen only one day close below $80 and that was on March 15 at $79.89. Traders have continued to ignore the oil market fundamentals and are trading that the Spring driving season will see demand strengthen to historical or near historical levels and thus their futures buys would have paid off. Despite last week's news that there were errors in the EIA estimates, everyone still awaits the mid-week release of inventory. We'll see what tomorrow brings.

Today, crude +$0.55 to $81.80, gasoline +0.27 cents to $2.2763, distillate +1.1 cents to $2.2563. Street was at $2.549.

March 19, 2010

It was all about the dollar's strong showing today. The continuing Greece problem and the fall of equities also led to more investment in the dollar and thus a fall in commodities. All measures of demand remain weak worldwide. Eyes are now turned to what kind of inventory reports come out next week.

It seems, however, that there may be problems with the way data is gathered by the EIA and released mid-week every week. More people trust the EIA data than that released by API but with today's revelation of data problems the markets will have to adjust how it views those reports.

Another volatile week that saw both a significant rise and a significant fall but week to week prices were not that far off from each other. For the week, crude -$0.69 to $80.55, gasoline +0.18 cents, distillate -2.18 cents to $2.0742.

March 18, 2010

Crude dropped on news that the dollar was strengthening and commodities were falling. In addition, there was more bearish news for crude with inventories being at their highest level since late last summer. Crude supply is high because of rampant cheating by OPEC members producing and delivering oil at discounted prices below those posted in futures markets. If demand does not rise appreciably in the Spring and Summer, prices could begin to fall beyond the current 12 month lows in the mid $60s as the cost of holding inventory becomes too high.

Today, crude -$0.54 to $82.23, gasoline -0.7 cents to $2.301, and distillate -2.02 cents to $2.1175. Street prices were up to $2.599.