October 22, 2009

Crude down 99 cents, distillate minus 4.2 cents, gasoline falls 4.4 cents. New unemployment figures were up and the dollar was down. No talk of fundamentals only market movements. Street prices also went up 4 cents. OPEC talking about increasing production.

October 21, 2009

The significant decline of gasoline inventory pushed crude and product futures higher. Gasoline inventories recorded a tripling of the expected draw while crude supplies rose and distillate experienced the estimated draw. The fall in gasoline inventory is not attributed to rising demand but rather the decrease in refinery production and lower imports. Demand actually fell 1.4% last week and was the lowest in 5 months. The falling dollar is also given consideration in crude's rise.

October 20, 2009

Lots of people wished but very few believed that crude would actually break the sideways track of $65-$75, especially with the kind of strong upward push as we've seen in the past 9 days. The 45 cent drop at settlement time was greeted with almost relief by analysts who don't quite believe the good economic news. Tomorrow's inventory report is forecast to be a crude build and a product draw.

As noted in an earlier post, there seems to be significant storage of crude in supertankers. However demand has not shown any real signs of positive movement and refiners are not yet showing any appetite for increasing capacity.

October 19, 2009

The trend is definitely upward. Just 2 weeks ago, crude was settling at $69.66 and could have been headed any way including sideways but 8 trading sessions later the price is $10 higher at $79.60 and finished the third straight day above the $75 line. Distillate, as expected, is also up significantly 24.62 cents in the same time period while gasoline has risen 22.11 cents. Locally, street prices have risen 25 cents in the past week including 10 cents over the weekend.

Some news affecting prices:

• more supertankers are being chartered, no word yet on whether these supertankers are slated to move cargo or to serve as floating storage.
• 3Q economic data including industrial production is positive.
• China claims 9% 3Q growth.
• Demand is still not robust. Inventories are low because of fewer imports and refinery shutdowns. Economic growth and falling unemployment are the keys for greater demand.
  

October 16, 2009

The 31 cent increase in crude to $77.83 solidified an 8.5% ascent the past week. Technical analysts are now talking about $85 crude. Gasoline rose 19.8 cents or 11.2% in the same time frame. The draw on gasoline inventory last week has energized the market for gasoline and driven crude and products up. Despite this being the middle of October distillate almost seems in slow motion and moving in tandem with crude rather than being the prime mover of the market the way it normally is at this season. The draw on distillate inventory was so much smaller than gasoline's that inventory levels are still higher than the average of the last 25. The market may be misreading fundamentals because demand remains weak and only supply has been cut.

Listening to Los Angeles radio announce the average gas price in America's second largest city is at $3.02 made me appreciate the best local price at $2.26. What a disparity between the Gulf and the West Coast.

October 15, 2009

A decline in gasoline stocks powered a 3.6% increase in crude futures to $77.52. The decrease could have been foreseen as refineries have been idled due to deteriorating demand and unprofitable crack spreads. Refinery utilization is at 80% and crude imports are also down. Cracks are just above $5.

Distillate stocks also decreased but remain at 25 year highs. Gasoline followed crude and jumped 9.2 cents while distillate was up 7.8 cents.

October 14, 2009

Apologize for stating that inventories would be revealed today. Columbus Day, Monday, was a holiday in New York and EIA must also have taken the day off. Inventory will be reported tomorrow. Anyway, no surprise as street prices here climbed up several rungs on the ladder by 15 cents. Talk about waking up with a vengeance.

Lots of talk about how technicals are now pointing up to $78 now and then they'll point to $80 and then $85. Crude reached $75+ before settling at $74.81. I am not sure that is the real path because of inventory but we'll know better tomorrow. This crude futures price is still in the $65 - $75 range but there is irrational exuberance from traders about where prices are headed.

Distillate climbed 2 cents and gasoline was up 2.3 cents.