April 29, 2011

The falling dollar remains the big story. The month to month changes are very telling. Befitting the product in most demand for the next four months, gasoline is pulling the market up and shows the greatest increases month to month.

For the month, WTI +$7, +6.6%, $113.72; Brent +$8.49, +7.2%, $125.85; RBOB +37.24¢, +12%, $3.48; HO +16.87¢, +5.5%, $3.2585.

April 28, 2011

The dollar continues to fall and causes crude to ascend, hesitatingly. The hesitation comes from the sluggish economy and the consequent fall in fuel demand. GDP was at 1.8% in the 1Q 2011. Jobless claims went up again this week and the high unemployment rate insures that fuel demand will continue to stagnate and the rising prices only add to the bad news on fuel demand. Fed Chairman Bernanke's inflationary policies may surge the stock market and commodities but rising prices without a strong economy can only bring stagflation in the near or mid-term. Thus there is hesitation about buying higher priced crude futures.

Today, WTI +18¢, $112.96; Brent -12¢, $125.13; RBOB +1.04¢, $3.4298; HO -.04¢, $3.2334.

April 27, 2011

Ben Bernanke insists on diluting Americans' net worth by continuing to weaken the dollar and thus making commodities more expensive. Bernanke's articulation of Fed policy caused crude to rise to the heights it reached on April 8 and leaves the market on the upswing similar to 2008. Analysts seem to misunderstand the draw down in gasoline and distillate inventories and ignored the continuing increase in crude inventory and the decrease in gasoline demand the past week. Refiners are obviously keeping refinery utilization down, 82.7 this week compared to 89 a year ago, in order not to oversupply the market and this has allowed them to enjoy crack spreads of of $28+. Refiners are able to do this because demand is so low and they feel no need to dilute their crack spreads by producing more.

Today, WTI +57¢, $112.78; Brent +99¢, $125.13; RBOB +6.27¢, $3.4194; HO +2.26¢, $3.2338.

April 26, 2011

The markets are clearly uneasy about the Fed's inflationary policies, the Middle East and North African violence, the falling dollar, and the high prices of commodities especially oil and its products. Today the CEO of the Saudi national oil company publicly expressed concern about high prices and its possible effects on the gobal economy. Even refinery problems reported today could not bring WTI into positive territory. Brent did move up earlier as did gasoline and distillate.

Today, WTI -7¢, $112.21; Brent +48¢, $124.14; RBOB +3.38¢, $3.3567; HO +2.92¢, $3.2112.

April 25, 2011 (96th Anniversary of the Battle of Gallipoli)

There seemed to be a holiday hangover in today's light trading that saw WTI hardly move but gasoline went up 1.43¢ while distillate fell 2¢. There is still a feeling of unease about high prices causing demand destruction despite growing demand in China. The pot of unrest in North Africa and the Middle east continues to boil as the Libyan situation remains unsettled while Syria's regime continues to command its security forces to shoot at anti-regime demonstrators. There was even the murder of an Israeli at Joseph's tomb in the West Bank by Palestian Authority security forces as a reminder of the tensions in the entire region. Today, however, was about the dollar's continuing fall and Bernanke's inflationary policies causing commodities to rise to the current heights with the possibility of even higher prices.

Today, WTI -1¢, $112.28; Brent -33¢, $123.66; RBOB +1.43¢, $3.229; HO -1.92¢, $3.18.

April 21, 2011

The weak dollar and the Good Friday-shortened week led traders to buy contracts that raised the price of crude. The Fed's inflationary policies have weakened the dollar and the markets are using commodities like oil to hedge against the diminishing greenback. Supporting oil's rise are the surging stock market and the continued fighting in North Africa and the Middle East. This week's inventory report pointed out demand that had not been previously obvious and that has also helped crude's climb.

Today, WTI +91¢, $112.29; Brent +15¢, $123.99; RBOB +3.36¢. $3.3086; HO -2.04¢, $3.1992.

April 20, 2011

Equities are surging. The dollar is falling. There were significant inventory drawdowns for crude and products. Home sales were also reported as being up. The other factor raising prices is the risk premium. All these factors led to big increases in crude and products.

The total shutdown of Libyan production and the current instability in Nigeria are not the only problems facing oil markets. There seems to be no way to confirm how much is being produced by the Saudis as their reports have not been consistent. This lack of transparency makes the markets very nervous and this disquiet shows up in higher prices.

Today, WTI +$4.23, $111.38; Brent +$2.51, $123.84; RBOB +4.19¢, $3.275; HO +6.11¢, $3.2196.