Energy Market Updates

Morning Losses Erased with Jobs News

  

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For the second day in a row, early session losses were erased with strong closes. Todays bullish action came on the heals of a surprise increase in jobless claims and some cautiously upbeat comments the Federal Reserve. Commenting on the role of the Fed, Bernanke said ultra low rates would remain in effect through 2014 and did not rule out additional measures to pump up the economic situation. Commodities are the collateral damage of such news as the dollar again took a hit and caused the pits to show strong gains as the day wore on. Crude settled at $104.55 up .43, RBOB added .0276 to close at $3.1833 and HO took the lead gaining .0333 to $3.1944. Heat has come back with vengeance after touching 3.09 on the prompt month just over a week ago. There is fair amount of commentary out there that we should see substantially lower numbers in the coming sessions. Support for HO looks to be at the 3.15, then a 3.05 level.

Daily Heating Oil Chart

RBOB Continues Plunge as HEAT Stalls

  

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Gasoline futures continued to sell off today after starting the early morning in the green. RBOB was up as much as 2 cents prior to the opening bell on news of Spain having a successful bond sell off to avoid yet another European debt scare. That bullishness turned however as Germany was said to be at odds with other Nations on how to proceed with the European Zone bailout plan. Simultaneously, Moodys was said to be ready to announce a downgrade of France's debt rating that caused the US dollar to push higher. A higher Dollar generally has a negative affect ( or positive affect from some viewpoints) on Commodities. Crude looks to be poised to fall below $100 for some time, getting as low as $101.67 before closing at $102.27, down .40. NatGas inventories were in line with estimates and on a whole remain roughly 700 bcf higher than the 5 year average. Even with the sessions slight bump in HO, finishing up .0069 to $3.1251, we are still roughly .15 less than two weeks ago. RBOB continues to be the dog falling another .0486(almost .25 in two weeks) to $3.1541. While it is nice to see the prices fall, realistically most think another .25 needs to be pulled off to get back to a "normal" state.

Daily Heat Chart

NYMEX Surges with Better Than Expected Growth

  

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You hear us talk about it all the time. Expectations. What do a certain group of people expect to happen or be reported versus what is in fact reality. In a world economy that has taken one hit after another, when "reality" exceeds expectations, it is cause for celebration. In our case, speculation. Todays wild reversal was primarily due to the Purchasing Managers Index, PMI. This benchmark is used by many economist to gauge growth and or contraction. And just like any report, pundits put their spin on what is to be expected. Today showed that the US economy grew at a more robust rate in March than was to be expected, and at a higher rate than February. This caused many who got out of positions last week, to load the back up this today. Even more wild was that the markets were down over .02 early in the session. By the time the closing bell rang, a weeks worth of losses were wiped away with RBOB surging .0741 to $3.3822, HEAT adding .0795 to $3.296 and Crude tacking on $2.21 to $105.23. With a short week on tap due to Good Friday and another set of Job data due out Wednesday, investors were not willing to let the buying opportunity pass. Again, the overall theory being that a growing economy can continue to support higher fuel prices. I tend to believe history on this topic rather than investors.