November 30, 2010

On the last day of the month, we continue to talk about the daily movements but we also point out what happened over the past 30 days. There's continued concern about the sovereign debt problems of Portugal and Spain and now Italy and this has pushed the dollar higher and crude followed in the opposite direction. With Ireland's bailout now being worked out, the problem with the southern European countries' debt is now in the forefront. Added on top of this is the concern for inventories. The release of the EIA's report tomorrow should inform the markets where inventories were last Friday and prices should be set by the report.

As interesting as the day to day movements are, the month to month movements show some interesting facts. Crude gained $1.45, gasoline jumped 15.77¢, and distillate rose only 2.52¢. This seems to indicate a return of gasoline buying at retail while diesel, heating oil and jet seem to really stand still with such a modest gain in price and with winter having already arrived in many states.

November 29, 2010

Crude went contrarian today by going up even when the dollar got stronger while equities dropped. Increased retail sales over the weekend and a colder-than-expected winter temperature prediction have all led to a positive attitude about the direction of the economy and petroleum demand.

Today, crude +$2.02, $85.78; gasoline +7.42¢, $2.2845; distillate +4.32¢, $2.3594.

November 24, 2010

The fall in weekly jobless claims trumped the decline in crude stocks. Gasoline also showed a build while distillate showed a decline; as winter approaches distillate will continue to show greater demand. Equities and the dollar also rose. The dollar's rise normally would see crude going in the opposite direction but the good news on unemployment was foremost in traders' minds. Both gasoline and distillate showed major gains for the day.

Today, crude +$2.64, $83.89; gasosline 7.9¢, $2.214; distillate +7.12¢, $2.3214.

November 23, 2010

The first time I went to South Korea in the 1970s, a Korean friend pointed out to me that all the highways were constructed so that they could also be used as runways in case the North Koreans did something crazy. Park Chung Hee was the president of South Korea then and it was my thought that this was the way a general thinks when he is developing the resources of a country. The North Koreans have now done something crazy again this year by shelling an island off the west coast of Korea and killing two people while earlier this year sinking a South Korean warship an killed 46 sailors.

The artillery shelling and the South Korean return bombardment are causing jitters around the world and set off a fall in equities and help the dollar increase. The primary reason the dollar gained versus other currencies is concern about the Irish debt problem. We're back to worrying about the PIGS' (Portugal, Ireland, Greece, Spain) debt problem. The most worrisome of the PIGS is the Spanish requirements should a bailout be necessary. The tension caused by the Korean armed conflict and the Irish debt problem caused crude and products to fall even though it is anticipated that there will be an inventory draw in tomorrow's inventory report.

Today, crude -45¢, $81.25; gasoline -1.49¢, $2.135; distillate -1.65¢, $2.2502.

November 18, 2010

Once the news came out that the Irish were to agree to a bail-out, the dollar began to fall versus the euro and crude rose to complete the cycle. As product supplies tighten, gasoline futures increased sharply 3.33% in one day. Normally distillate would be leading the charge upward with cold weather moving in.

Today, crude +$1.44, $81.91; gasoline +7.2¢, $2.2312; distillate +4.29¢, $2.2959.

November 17, 2010

Everyone expected crude to rise when the EIA inventory report came out today showing another large draw. However, the Irish debt problem and the Chinese deciding to increase interest rates to dampen inflation are global worries and those events set up another fall in crude prices. The analysts are also paying attention to fundamentals. The refiners are buying less hoping to cut back on carrying costs and that is why inventory is down while demand is marginally better than a year ago. Since going to nearly $88 last week, crude has dropped four straight sessions and is now knocking on the door of $80 and below.

Today, crude -$1.75, $80.47; gasoline +0.35¢, $2.1592; distillate -5.6¢, $2.253.

November 16, 2010

When we think of volatility, we often think of the physical movement of prices in the markets. We should also think of the volatility of the mind. Yesterday, analysts said they were waiting for Wednesday's EIA report before making any big moves in the market. Today, prices fell by a lot. And there is a lot to think about.

Overriding all concerns is the Fed's intention to inflate the economy with quantitative easing. It did not work for Diocletian and it won't work for Bernanke. I don't think that Ben will be able to retire to his cabbages any time soon as Diocletian did after he issued his Edict on Coinage.

The Chinese and the South Koreans are doing the reasonable thing and using monetary policy to fight inflation. The Europeans are trying to find solutions to their debt problems and this has caused the euro to fall versus the dollar. Added to this news was the rumor that crude and product inventories have built once again and prices had to fall significantly.

Today, crude -$2.53, $82.22; gasoline 3.88¢, $2.1557; distillate -6.17¢, $2.307.