August 12, 2010

The slight drop of WTI was blamed on the lower than expected survey of consumer confidence but that 9 percentage point fall was so much greater than the 0.4% decrease for NYMEX. At this point, the decline of WTI may be more mental exhaustion among traders as prices seemed poised to stay in the high $70s range earlier in the week while equities were falling so much so quickly only to see some return to positive territory towards week's end.

For the week, gasoline was slightly positive while distillate and both crudes were moderately negative: WTI-$1.53,$85.38; Brent-86¢,$108.51; RBOB+1.7¢,$2.8222; HO-3.8¢,$2.9037.

August 10, 2011

The draw on inventory of over 5 million barrels points to increased demand and this set traders towards a substantial 4.5% rally for WTI and a 5.2% rise for Brent. Refinery utilization was also up 0.7% to 90%. Gasoline and distillate followed suit but at more moderate levels. All this bidding of the prices up despite the IEA's forecast downgrade. What has traders excited is that Fed Chairman Bernanke announced two days ago of the Fed's intention to keep interest rates at their current low levels till after the 2012 elections. There has been some talk of QE3 but that was walked back the day after it was first revealed only to rear its head again yesterday.

Today, WTI+$3.59,$82.89; Brent+$5.29,$106.68; RBOB+11.49¢,$2.7825; HO+10.05¢,$2.8653.

August 9, 2011

Crude and products were already falling prior to the credit downgrade issued last Friday. The credit downgrade, however, accentuates the poor economy and the accompanying weak demand for fuel. Analysts have been waiting for the demand surge for gasoline and distillate but it never came. Even after the Fed announcement about holding the very low interest rate for another couple of years, crude and products continued their seemingly inexorable march towards lower prices.

OPEC is as unsure about what to do as the markets. Brent has been keeping up and following WTI's lead in dropping prices and roughly maintaining the premium between the two crudes.

Today, WTI-$2.01;$79.30; Brent-$2.35;$101.39; RBOB-2.4¢,$2.6676; HO-3.69¢,$2.7648.

August 6, 2011

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.

August 4, 2011

After yesterday's 3.5% sharp fall in the gasoline market, we could be forgiven for thinking that the market would correct itself upward today. However, equities fell precipitously and the dollar showing unusual strength while both crudes and products experienced major declines in value. When taken over the past two days, it is hard to believe that gasoline has fallen 10%, distillate 6.4%, and both crude bench marks fell 7.6%. The bad economic news is accompanied by the appalling numbers in demand. The only silver lining amid these dark clouds is that gasoline prices will likely fall and marketers may make some profit.

Today, WTI-$5.30,$86.63; Brent-$5.58,$107.65; RBOB-19.41¢,$2.7372; HO-12.5¢,$2.8939.

August 3, 2011

While Washington was fixated on the debt ceiling, traders have been taking the pulse of the economy and felt that it was weak and now weakening even further. Demand for motor fuels has been stagnant all summer when drivers should be buying lots of gasoline and truckers lots of diesel. The weak economy today, highlighted by the falling economic numbers such as the ISM's index of non-manufacturing businesses and the slowdown in the service industry, joined the climbing inventory numbers to bring WTI down 2% while gasoline plummeted 3.5% and diesel tumbled 2.4%.

Today, WTI-$1.86,$91.93; Brent$3.23,$113.23; RBOB-10.6¢,$2.9313; Distillate-7.27¢,$3.0189.

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.