The markets closed before S&P issued their credit downgrade of the U.S. It will be interesting to see if there is any effect on crude and product futures pricing on Monday and beyond. Yesterday's positive news about the drop in unemployment from 9.2% to 9.1% was seen as a positive but not by much as crude settled 25¢ lower than the day before. The jobless numbers gave hope that all the bad economic news of the previous week could be overcome. However, demand and supply cannot be ignored for any length of time. Demand has fallen this summer and inventories in the U.S. are at historic highs. Europe has been having a harder time getting any relief from rising prices because of the loss of Libyan production that is greater than just the 1.6 million barrels daily. The Libyan light crude is of very high quality for making motor fuels that even an equivalent amount of Saudi crudes cannot match what is need for the equivalent refinery motor fuel production.
The technical analysts are also redrawing their charts as prices went well below the previously drawn support levels. The volatility of the markets is changing the pricing landscape and more thought has to be given to longer term buying and selling strategies.
This was a big week for falling prices. Gasoline had a big week of a 10% plunge as did West Texas Intermediate plummeting 9.2%. Brent tumbled 6.3% while distillate decreased 5%. For the week, WTI-$8.82,$86.88; Brent-$7.37,$109.37; RBOB-30.77¢,$2.8052; HO-15.45¢,$2.9417.
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