June 11, 2011

Rather than be bound by the price hawks of OPEC, Saudi Arabia has informed its refiner customers in Asia that it will increase production by 500,000 barrels next month. Coupled with the stronger dollar, WTI fell 2.6% while Brent fell a more modest 0.7%.

The weekly numbers tell a different story: WTI-93¢,$99.29; Brent+$2.94,$118.78; RBOB+3.46¢,$3.0177; HO+4.84¢,$3.1051.

June 9, 2011

There was a carry over effect today of the OPEC decision not to formally increase production quotas as crude rose to its highest level in a month. Brent continued to increase at a higher rate and the Brent premium is now at $17.64 when all of last year it averaged about less than $1. There is a feeling among analysts that Brent more accurately reflects the market because NYMEX is unduly affected the Cushing storage inventory.

There was also a reduction in the trade deficit and this helped set the tone for the trading today. If there was any pull in the opposite direction it came from the preliminary jobless numbers that showed another increase.

Today, WTI+$1.12,$101.93; Brent+$1.63,$119.57; RBOB+5.95¢,$3.0398; HO+4.43¢,$3.1378.

June 8, 2011

Saudi Arabia and the Arab Gulf States were outvoted by a bloc led by Iran, Venezuela, Libya (Ghaddafi's representative arrived late), Algeria, and Ecuador. It was basically the pro-Western group vs. the anti-Western group and the anti-Western group won. What was voted down was only the formal recognition of the production by members and not necessarily any production increase since most of OPEC cheats by producing more oil than agreed. Coupled with the fall of crude inventory, price rose 1.7% over the previous day's settlement. The rising price reflects analysts' failed expectations but given that crude inventories were drawn down, crude did not really have a big increase.

Today, WTI+$1.72,$100.81; Brent+$1.16,$117.94; RBOB-1.16¢,$2.9803; HO+1.65¢,$3.0935.

44th Anniversary of the reunification of Jerusalem

The direction of prices for the next couple of days depends on what the OPEC countries want more: immediate price gratification and make no moves to increase production or work towards sustained economic growth and announce future production increases. Since OPEC quotas affect Europe more than the U.S., there was greater anxiety there and Brent went up 2% while WTI edged sideways barely in positive territory. OPEC members have been sending out a message that they will increase production but there are no official statements to that effect yet. The dollar fell today and that kept WTI from falling for a 3rd straight day. What happens tomorrow will depend on what OPEC actually plans to do.

Today, WTI+8¢,$99.09; Brent+$2.30,$116.78; RBOB+4.2¢,$2.9919; HO+5.96¢,$3.077.

D-Day + 67 Years

Today there was a hangover from last week's bad economic news. Coupled with loud calls for greater production from OPEC to forestall rising prices and it was likely that prices would fall. And they did.

Today, WTI-$1.21,$99.01; Brent-$1.36,$114.48; RBOB-4.32¢,$2.9499; HO-3.93¢,$3.0174.

June 3, 2011

Crude prices early on were falling because of the unemployment rate increase and the small numbers of jobs created versus the expectations. However, the dollar also fell on news that an agreement was soon to be reached concerning the soverein debt problem facing Greece. These two forces, bad economic news pushing the crude down and the falling dollar pulling crude up, led to a settlement price below yesterday but still above $100. Both gasoline and distillate made definitive increases while Brent presaged WTI but oppositely and barely increasing over yesterday.

Even in a holiday-shortened week, there are a number of price ups and downs but a week to week comparison shows how little the crude market really moved while products both had significant movements but in opposite directions. For the week, WTI-1¢,$100.22; Brent+$1.16,$115.84; RBOB-9.89¢,$2.9931; HO+6.62¢,$3.0567.

June 2, 2011

The supply news for crude and gasoline was bearish while the distillate report was bullish. Economic news was also bearish especially the credit report from Moody's. However, the dollar tanked against the euro and the sideways tilt was slightly to the bulls. Tomorrow's new jobless claims report will affect the market but the dollar's strength/weakness versus the euro so far has proved to be the main determinant of market direction.

Today, WTI+11¢,$100.40; Brent+$1.04,$115.57; RBOB-0.96¢,$2.9677; HO+3.52¢,$3.0439.