October 31, 2009

It is All Hallow's Eve and we should look not just at the daily movement but the week's and the month's movements as well to see the trends.

Crude fell $3.04 in one day, lost $3.34 over a week but rose $6.39 over the September 30 close. This looks like definite movement. There is much talk of macroeconomic trends such as the loss of consumer confidence but demand and supply fundamentals had a say with refinery cutbacks and lower imports.

Gasoline fell 5.9 cents Friday over Thursday, declined 8.2 cents from last Friday, and rocketed 23.4 cents for the month. That is 8 cents better than what crude increased for the month if you make the barrel to gallon adjustments. The refinery strategy of cutting back on utilization seems to be working.

Distillate had a one day fall of 5.4 cents, a one week loss of 6.3 cents, but also gained 16.4 cents for the month. Here the numbers say that distillate is following crude. I would have thought there would be greater increases here because winter is around the corner and colder weather is expected for this winter.

October 29, 2009

What the market takes, it gives back. Yesterday, crude fell $2.34 and today it rose $2.64. The catalyst for the upsurge was the economic report that announced a 3.5% growth in GDP. Jobless numbers were also down minimally. This may be a jobless recovery and, if so, it would also be a demand-less growth economy. People at work and confident about tomorrow spend money and some money will be spent on fuel. No job, why take the road trip? Since so much of driving is discretionary, how much will be cut back?

Gasoline rose 3.2 cents and distillate also rose 6.2 cents.

The announcement by Argus that its Sour Crude Index will be adopted by Saudi Aramco to set prices for oil sold in the US is a move against the NYMEX benchmark based on the Cushing, OK, barrels. Is this movement away from Cushing and following a Gulf benchmark going to be able to help measure risk against volatility?

What about NY Harbor pricing for heating oil that is used to index all distillate?

October 28, 2009

Crude dropped $2.34, gasoline fell 8.4 cents, distillate decreased 5.75 cents after gasoline supplies rose 1.62 million barrels and crude supplies grew 800,000 barrels. Distillate is following seasonal inventory trends and increased but followed crude and gasoline futures prices up. Capacity was up 0.7% and gasoline production was 4.5% higher. This inventory and demand trend is what is worrisome to analysts and traders and begins to dampen the movement towards higher prices.

October 27, 2009

$1.19 up for crude, 2 cent increase distillate, 3.7 cent rise gasoline. Street price went down 6 cents yesterday and back up 3 cents today. Don't understand why street moved the way it did.

API forecasts draw on crude and products. Market paid some attention but everyone awaits tomorrow's government inventory report as the market takes greater account for the government numbers.

October 23, 2009

Crude fell for the second straight day going in inverse direction to the dollar but still rose 3.2% over last week's ending price. Distillate also lost for the second straight day but still was 2.8% over last week's Friday close. Gasoline rose above yesterday's loss and is 4% above a week ago. It was the decline in gasoline inventory that helped to cement the rise of crude and gasoline. The inventory decrease is not due to increased demand but because of reduced supply due to lower refinery utilization.

Interesting article in today's WSJ concerning falling natural gas prices and drilling that leads to lower production prices for crude. This helps producing companies but not refiners. Crack spreads are still lower than profitable which is why refiners are reducing utilization.

October 22, 2009

Crude down 99 cents, distillate minus 4.2 cents, gasoline falls 4.4 cents. New unemployment figures were up and the dollar was down. No talk of fundamentals only market movements. Street prices also went up 4 cents. OPEC talking about increasing production.

October 21, 2009

The significant decline of gasoline inventory pushed crude and product futures higher. Gasoline inventories recorded a tripling of the expected draw while crude supplies rose and distillate experienced the estimated draw. The fall in gasoline inventory is not attributed to rising demand but rather the decrease in refinery production and lower imports. Demand actually fell 1.4% last week and was the lowest in 5 months. The falling dollar is also given consideration in crude's rise.