The European sovereign debt crisis exemplified by the predicament in Greece continues to drag the euro down and raises the dollar causing oil to decline in the market. Fundamental factors such as the high levels of inventory push the price down further and today crude's price almost ended below $70. Crude has now fallen 5 sessions consecutively. Already there are expectations of even more inventory build at the Cushing Terminal but the limit of 40 million barrels is already being approached as last week's inventory was over 37 million barrels.
The biggest worry is that there is no economic recovery is really occurring and therefore fuel demand will not rebound later this year. The $5 premium on contango is predicated on demand increase later this year due to improving economic activity.
Today, crude -$0.89, $70.08, gasoline -7.82¢, $2.0422, distillate -7.01¢, $2.0422. Street -6¢, $2.509.
Monday, May 17, 2010
Friday, May 14, 2010
May 14, 2010
The European sovereign debt crisis is making the euro fall and the dollar rise. The world economy still has not recovered and thus demand is down causing a record inventory build in the US. Crude is now down 5.6% from yesterday and 17.6% from the first of the month as prices ended at their lowest point since December 15. Products are now falling sharply in tandem with crude after trending up most of the past week.
For the week, crude -$4.34, $70.97, distillate -2.94 cents, $2.0545, gasoline -0.8 cents, $2.1204. Street unchanged at $2.569.
For the week, crude -$4.34, $70.97, distillate -2.94 cents, $2.0545, gasoline -0.8 cents, $2.1204. Street unchanged at $2.569.
Thursday, May 13, 2010
May 13, 2010
Crude continued to fall and both products followed the downward movement today. Yesterday's crude inventory level report for Cushing showed the highest levels ever for inventory and this is worrying traders. The dollar also continues to rise while the euro persists in its downward spiral as southern European countries try to come to grips with their respective deficits.
Refineries are trying to make the most of a bad situation and cut back on utilization 1.2% last week to 88.4%. This has led to an 9.3% increase in the crack spread to $16.45. The contango premium is now at $4.55 between front month and the further month caused by the extraordinarily large inventory.
Today, crude -$0.42, $74.97, gasoline -1.04 cents, $2.1955, distillate -1.19 cents, $2.1385. Street steady at $2.539.
Refineries are trying to make the most of a bad situation and cut back on utilization 1.2% last week to 88.4%. This has led to an 9.3% increase in the crack spread to $16.45. The contango premium is now at $4.55 between front month and the further month caused by the extraordinarily large inventory.
Today, crude -$0.42, $74.97, gasoline -1.04 cents, $2.1955, distillate -1.19 cents, $2.1385. Street steady at $2.539.
Monday, May 10, 2010
May 10, 2010
Moderate gains in crude and product today as the markets reacted to the $1 trillion dollar bail out plan for Europe's financially strapped southern tier. The euro was up slightly and thus the dollar was down slightly. There's more optimism about the direction the economy is taking and this led to today's price increases.
The past couple of weeks have seen a number of "mood swings" as analysts and traders try to understand what is driving the market. There have been a number of indicators that have been spun to make them seem positive but the continued increase in US supply despite logistics problems in the Gulf is a worrying negative factor. The other is the talk of a jobless recovery. People who have no jobs don't have money and don't buy gasoline.
Today, crude +$1.19, $76.50, gasoline +4.4 cents, $2.1724, distillate +3.56 cents, $2.1195.
The past couple of weeks have seen a number of "mood swings" as analysts and traders try to understand what is driving the market. There have been a number of indicators that have been spun to make them seem positive but the continued increase in US supply despite logistics problems in the Gulf is a worrying negative factor. The other is the talk of a jobless recovery. People who have no jobs don't have money and don't buy gasoline.
Today, crude +$1.19, $76.50, gasoline +4.4 cents, $2.1724, distillate +3.56 cents, $2.1195.
Thursday, May 6, 2010
May 6, 2010
The dollar is surging against the euro and since the financial markets are so much bigger than the oil market, crude fell for a 3rd day and has fallen 10.8% in 3 trading days. The Greece debt problem foreshadows even bigger problems with Portugal, Spain and Italy and is punctuated by the continued violence in the streets. Today's stock market descent of almost 1,000 points was due to some kind of error but it has made all markets nervous. With the continuing inventory build and uncertain future demand, price really has no place to go but down.
Today, crude -$2.97, $76.90, gasoline -8.14 cents, $2.1424, distillate -7.92, $2.1035. Gasoline retailers are intent on making some margins while prices fall and street prices have remained unchanged at $2.699.
Today, crude -$2.97, $76.90, gasoline -8.14 cents, $2.1424, distillate -7.92, $2.1035. Gasoline retailers are intent on making some margins while prices fall and street prices have remained unchanged at $2.699.
Wednesday, May 5, 2010
May 5, 2010
The psychology of the market has radically changed recently. All of the good economic news last week and the oil leak in the Gulf seemed to indicate that prices would go even higher perhaps to $90. Yesterday, the riots in Greece broke out and the euro began to fall again as the problems in Portugal, Spain and Italy are also under greater scrutiny. This has caused the dollar to rise and thus commodities fall as investors run to the dollar.
The size of the two day fall is also about the continuing increase of crude supply despite positive economic indicators. Crude has fallen the equivalent of 15 cents a gallon the past two days while gasoline has fallen 21 cents because of a significant build in inventory when a modest draw was expected. Refinery utilization rates have also increased to 89.6%. No one talked about contango today as so many had bought into an improving demand picture but there's considerable doubt about that now.
Today, crude -$2.76, $79.87, gasoline -9.71 cents, $2.2238, distillate -7.64 cents, $2.1827.
The size of the two day fall is also about the continuing increase of crude supply despite positive economic indicators. Crude has fallen the equivalent of 15 cents a gallon the past two days while gasoline has fallen 21 cents because of a significant build in inventory when a modest draw was expected. Refinery utilization rates have also increased to 89.6%. No one talked about contango today as so many had bought into an improving demand picture but there's considerable doubt about that now.
Today, crude -$2.76, $79.87, gasoline -9.71 cents, $2.2238, distillate -7.64 cents, $2.1827.
Monday, May 3, 2010
May 3, 2010
Crude moved sideways while product prices jumped as positive news on improved manufacturing results came in from the U.S., China and Europe. However, the dollar gained on the euro and the market remains in contango with the premium between front month and the farther out month expanding. No one yet knows what the effect of the BP oil spill in the Gulf will be.
Today, crude +$0.07, $86.18, gasoline +3.62 cents, $2.4309, distillate +5.85 cents, $2.3455, street $2.759.
Today, crude +$0.07, $86.18, gasoline +3.62 cents, $2.4309, distillate +5.85 cents, $2.3455, street $2.759.
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