August 31, 2009

China was the news today as the tremors caused by the report that lending in China may slow down and thus slow down economic activity in the world's second largest energy user. More telling about where the economy is headed is the report on crack spreads. Crack spreads have fallen to $6.58 down 30% from this year's high and are not forecasted to go above $10. This is definitely the story on demand. It is not just national demand but international demand as the spot prices are most affected by the cost of the final 10% bought every day, If the international economy is hurting demand, prices will fall.

Crude and product both fell substantially today. Gasoline wasn't able to bring crude up for the summer. Will distillate demand for the winter be able to bring the price of crude up?

August 28, 2009

All price movements up but only gasoline moved significantly upwards at 4 cents. Crude briefly touched $73 but even though heating oil trading is moving to October, HO barely moved today.

August 27, 2009

Crude and product prices rose slightly over yesterday's futures prices at the very end of the trading session today. It is amazing when negative news such as a 1% GDP loss is considered good news because a drop of 1.5% was expected.

I wonder what is the significance of Brent trading a couple of dollars below WTI.

Also to be pondered is the effect of the closing of so many biodiesel and ethanol plants and the other biofuels plants that are on life support. Today's WSJ article on the biofuels brings the renewables issue to the forefront.

August 26, 2009

It's was inventory day and the bearish inventory news pulled prices down despite some wishful thinking by some traders looking at early economic news. The bearish inventory reports are significant because Labor Day weekend is only ten days away and crude, gasoline and diesel inventories are not only higher than expected they are growing when consumption should be at its highest. The actual decreases in futures prices were small but crude was flirting with $75 early in the day and fell once the market understood the nature and the size of the inventory build.

August 25, 2009

Back today from helping our college sophomore settle in her new digs.

All the talk last week about prices going up all went the other way today. Crude down $2.50, distillate fell almost 7 cents and gasoline dropped 4 cents. Interesting that Brent is now lower than Nymex. Street fell 2 cents.

Let's see what inventory does to the numbers tomorrow.

August 21, 2009

Highest crude futures price of the year at $73.89 due to unexpected housing starts announced early in the day may be followed by fierce drive downwards as the causes of greater than expected unemployment claims announced late today. Seems there is a lot of wishful thinking for an economic turnaround.

As this was the first day of the October contract Heating Oil rose 2 cents. Gasoline also rose 1.3 cents. Funny thing was street prices dropped 3 cents.

August 20,2009

Minimal drop in crude. 4 cent decrease in distillate and 5 cent fall in gas. Supposedly the new unemployment numbers caused the fall. The decreases do not seem related. Crude works off economic numbers but product is more likely related to supply and demand. What will be the reason for movement tomorrow? Street is starting to fall again in its typical lag.