August 31, 2011

Crude inventories saw a build while Hurricane Irene cause refinery closures and slow downs and there was a sharp decrease in gasoline inventory. Crude went sideways and fell by 9¢ from yesterday's close. Gasoline rose 2.62¢ as some supply shortages along the East Coast were bound to happen because of flooding. Trading may get volatile as end of the week jobless numbers and end of the month economic reports come in.

It was an excitable month with a genuine drop in crude but much smaller decreases for both products. For August, WTI-$6.89,$88.81; Brent-$2.15,$114.59; RBOB-8.09¢,$3.032; HO-1.8¢,$3.0782.

August 25. 2011

The imminent arrival of damaging winds and rain along the eastern seaboard brought on by Hurricane Irene led to 3% increase in gasoline futures and 1% in distillate but crude inched up only .2%. There is some anticipation of more inflationary action with another quantitative easing by the Fed that is supposed to be announced tomorrow but Bernanke's previous trial balloons have been deflated by the push back from most economists who feel that printing more money may help Wall Street but does not help Main Street. This speculation of QE3 may not be announced.

Unemployment claims are up by 5,000 and GDP growth has been revised downwards 0.2% but since GDP growth was originally estimated at 1.3% the revision is additional bad economic news. Commodity analysts seem to be wary of market reaction to a QE3 announcement.

Today, WTI+16¢,$85.30; Brent+$1.47,$110.62; RBOB+8.95¢,$2.9679; HO+2.48¢,$2.9855.

August 19, 2011

Despite the falling dollar and another down day for equities as well as a pep talk from Goldman Sachs analysts, NYMEX crude inched down from yesterday and settled 4% lower for the week. Reflecting the supply problems that Europe is facing, Brent moved up $1.63 from yesterday but that only made the week's trading just about even as it did for both products. There's fear of a recession but no one wants to be holding expensive crude if the markets should crater because the recession is upon us and demand is less than expected.

The other big news about the oil markets is whether NYMEX accurately reflects world markets or should everyone move to Brent. The current $26.36 premium between the two benchmarks is simply too large to continue as is but both seem to be correctly reflecting their respective markets. U.S. inventories are historically very high while Europe is experiencing supply glitches and there continue to be problems in Libya (no crude exports) and Nigeria.

For the week, WTI-$3.12,$82.26; Brent+11¢,$108.62; RBOB+1.9¢,$2.8412; HO+0.08¢,$2.9045.

August 17, 2011

Analysts misread the gasoline inventory draw today and overlooked the much bigger crude build and crude and products rose moderately. Refiners are unsure where motor fuels prices are headed and have really held down gasoline inventory and when demand was a little higher than they predicted, they had to use up their inventories. If both crude and gasoline fell at the same time, then demand could be said to be up but there is no indication yet that such demand exists. Much of the increased demand is from overseas and that is as likely to fall off as it is to increase. One indication is that distillate inventories showed a build and Europe and the Far East use more distillate than gasoline.

Today, WTI+$1.93,$87.58; Brent+$1.47,$110.60; RBOB+1.65¢,$2.8703; HO+2.9¢,$2.9616.

August 15, 2011

Equities rose again while the dollar dropped and so oil jumped 3% as trading settled today. There is still unease in the market as the New York business conditions index tumbled -7.7%, an even larger fall than the 3.9% drop in July. The market also positively considered the relatively mild 1.3% GDP fall in Japan in the 2Q. Economic uncertainty in the U.S. is holding back any real forecast for high demand the rest of the year and the resulting higher prices.

Today, WTI+$2.50,$87.88; Brent+$1.19,$109.70; RBOB+5.23¢,$2.8745; HO+4.04¢,$2.9441.

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.