August 1, 2011

The debt ceiling crisis may have been averted with a last minute deal between the Obama regime and congressional Republicans but today that bullish news was quickly overcome by the bearish news that the factory index posted by the ISM was down 4.4 to 50.9 in July from 55.3 in June. If factory output is down, this confirms the GDP numbers released last week that showed little growth in the national economy. The inventory numbers released last week make more sense now and point to continued stagnant, if any, growth.

Today, WTI-81¢,$94.89; Brent+14¢,$116.88; RBOB-5.89¢,$3.054; HO+0.12,$3.0974.

July 29, 2011

There was a lot bearish talk today about the debt ceiling impasse, less than forecast economic growth, falling demand, technical suppor level breaches, and an over-supplied market but the facts when examined from a month-to-month view point reveal something quite different. WTI barely moved up 0.3% reflecting the large inventories carried in the U.S. Brent jumped up 4% indicating that markets outside of the U.S. are facing supply shortages. The shocker is that gasoline rose 3% while distillate, the harbinger of the economy, climbed 6%.

There is concern that Tropical Storm Don may cause some damage on refineries and rigs in the Gulf of Mexico but the threat seems to be dissipating. For the month, WTI+28¢, $95.70; Brent+$4.26,$116.74; RBOB+8.13¢,$3.1129; HO+16.35¢,$3.0962.

July 27, 2011

Crude inventories saw a build when a draw was expected and gasoline and distillate inventories also saw increases and this surprised the market and there were decreases in crude and product pricing. Adding to the general unease is that durable goods orders were down significantly and that seems to confirm a stagnant economy and moribund fuel demand. Also adding to the bearish movement in the fuel markets was news that around 25% of the SPR crude has now entered the market. The effect of the SPR on market prices will be temporary but it will have some effect on price at least for a day.

Today, WTI-$2.59,$97.40; Brent-85¢,$117.43; RBOB-1.13¢,$3.1423; HO-3.08¢,$3.0826.

July 25, 2011

There is no real effect of the debt ceiling impasse noticeable in today's futures' trading. Although crude and products dropped, the fall was not precipitous but this may just be a down payment of a bigger fall depending on how analysts view the debt ceiling and deficit reduction talks with the bigger euphemism, increase revenues.

There is a lot of talk about a market reaction but neither equities nor commodities had much a reaction today. However, the situation could become very volatile very quickly.

Today, WTI-67¢,$99.20; Brent-62¢,$117.90; RBOB-0.37¢,$3.1264; HO-1.02¢,$3.1078.

July 23, 2011

It is interesting to think how different the markets would feel today after last night's news of the break down of talks between Obama and Boehner and the manner in which Obama seemed to be demanding that the talks fall apart so that the markets would react negatively. The markets closed hours before this happened and they were heartened by the positive news about the Greek debt talks. However, the market viewed yesterday's moves mostly from the currency versus commodities view point and not from the fundamentals of oil demand and supply. U.S. demand for fuels remains weak but there is moderately strong demand for distillate overseas and it seems that U.S. refiners are finding a market for their distillate output. This seems to infer that the economies outside of the U.S. are doing better and thus showing more demand for distillate which is needed more for industrial and distribution uses than gasoline.

There was much movement during the week but at the end of the week, except for crude there was relatively little real movement. For the week, WTI+$2.63,$99.87; Brent+$1.26,$118.52; RBOB+0.08¢,$3.1301; HO+1¢, $3.128.

July 20, 2011

There's a lot of news affecting the markets and the markets were somewhat conflicted but slightly to moderately trending upwards. Crude inventories were down but gasoline and distillate inventories were up. Refinery utilization is up to 90.3 but demand is down. Crack spreads are now approaching $35 when hypotheticals say they should be at $32 and this points to growing demand but not in the U.S.

China seems to be slowing down as its manufacturing is significantly below the average of the last 12 months. As usual, there seems to be progress but not an agreement about what to do about Greece. AS far as the U.S. debt ceiling and deficit reduction talks go, it all depends on the news source.

Today, WTI+64¢,$98.14; Brent+$1.09,$118.15; RBOB+3.21¢,$3.147; HO+2.04¢,$3.1184.

July 18, 2011

Europe has a PIIGS problem and the market was worrying about the euro while the dollar gained strength throughout the day. Both WTI and Brent showed modest decreases as did gasoline and distillate. The European banks holding Greek debt did not do particularly well with the stress tests administered last week. Greece, Portugal and Ireland are small economies but Spain and Italy have much bigger economies and then there is the cumulative effect of five Euro zone countries with sovereign debt problems and thus the great concern for the Euro economy. Additionally, there are no replacements yet for Libyan crude and thus the high premium for Brent over WTI and this premium is now over $20.

There continues to be no solution to the debt ceiling question here in the U.S. and this is also putting a crimp on demand forecasts.

Today, WTI-$1.31,$97.24; Brent-$1.23,$116.03; RBOB-3.19¢,$3.0974; HO-4.03¢,$3.0777.