The Securities and Exchange Commission (SEC) charged Goldman Sachs with fraud today. Goldman is one of the oil market's largest traders and one of the biggest boosters of higher prices with the possible exception of OPEC. The SEC accuses Goldman Sachs of misleading investors about financial products connected to sub-prime mortgages. If this becomes a bigger story, there may be significant downward pressure on crude and products.
Early in 2008 Goldman forecast $100 crude. Later in 2008's first quarter, Goldman predicted $150 crude. These forecasts seem to be self-fulfilling as Goldman kept the pressure up with its buys during the first half of that year. Goldman is so far only charged with fraud in the sub-prime mortgage matter.
Refinery utilization is up and inventories are down and that should normally lead to price increases but with economic reports sending mixed messages it is hard to determine the profitable mix of refining and importation. Add to that the drop in equities and the rise of the dollar and there is more to consider than just supply and demand. The market continues in contango and despite or maybe because of the relative high price levels in the $80s, traders and analysts are wary of long positions.
Today, crude-$2.29, $83.30, gasoline -5.13 cents, $2.2745, distillate -3.49 cents, $$2.215.
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