Energy Market Updates

Futures Dip as GDP Report Shows Flat Economy

Last week we mentioned that it was going to be a sloppy back and forth week if a debt ceiling resolution was not passed.  As shown below, that was exactly what materialized.  Starting the week, HEAT was at 3.1280 and finished today at 3.0962 with all sorts of gyrations in between.  As traders are not willing to commit either way as a resolution  still looms and a tropical storm hitting the gulf region, it was somewhat surprising to see the market fall off as much as it did mid session.  Both products were down as much as 4 cents on the heals of GDP data being released which showed the economy was basically flat.  Furthermore, it notes that the recession  was deeper than first thought and the economy is obviously growing at a much slower rate.  There is growing sentiment that we will begin to encounter demand destruction at a growing rate if prices do not ease relatively quickly. At the close Crude fell $1.74 to $95.70, RBOB lost .0047 to $3.1129 and HEAT fell .0090 to $3.0962. This weekend will be critical as to how the Markets will shake out for the next few months, as a resolution should see lower prices

heat chart

RBOB CLOSE
                 CLOSE       CHANGE 
  
AUG    31129       -.0047
SEP    30579      -.0059
OCT    29211     -.0129
NOV   28852       -.0148
DEC    28691       -.0152
JAN    28708      -.0153
HEAT CLOSE
          CLOSE    CHANGE
AUG  30962     -.0090
SEP   30994       -.0150
OCT    31130      -.0156
NOV   31282      -.0169
DEC   31429       -.0176
JAN   31570       -.0183
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Crude Rises as Products Fade in Late Sell Off

Crude once again danced above the $100 a barrel mark today as many speculated that the economy is showing signs of improving.  Furthermore a marathon meeting session on Greece of European Leaders ended with a consensus that they will throw more money into the debt strapped country.  The Euro rose on the news as the dollar fell, thus pushing money into Crude.  The products failed to follow the rally.  RBOB slipped .0475 to $3.0995 while HEAT lost .0192 to $3.0992.  All while Crude managed to gain .73 to close at $99.13, more than a full buck off its high of $100.16.  Holding down products appear to be the fact that demand is still soft, and retail gas stations are still in the high $3 range.  Additionally, our friends at the IEA stated that they are willing to release more product to the market to stave off any spike in futures.  HEAT remains in a congested selling pattern and looking back over the last few months, you have seen healthy corrections after these periods.  In laymen terms, nobody is willing to make a move either way until an event pushes us too.  This event will likely be in the form of how the US debt ceiling issue is resolved, meaning we probably have another week of sloppy back and forth days

heat chart

RBOB CLOSE
                 CLOSE       CHANGE 
  
AUG    30995       -.0475
SEP    30567      -.0379
OCT    29285     -.0277
NOV   28959       -.0235
DEC    28801       -.0215
JAN    28832      -.0200
HEAT CLOSE
          CLOSE    CHANGE
AUG  30992     -.0192
SEP   31129       -.0191
OCT    31273      -.0188
NOV   31437       -.0191
DEC   31600       -.0191
JAN   31753       -.0190
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Futures shed value, outpaced by Crude

Crude values have tumbled over the last two sessions outpacing the products which has many Americans wondering why.  Crude fell another $1.05 today to close at $95.15 while HEAT managed to lose only 89pts to $3.0875 and RBOB dropped .0221 to $3.0705. HEAT actually traded positive briefly with about 20 minutes lef tin the session.  The complex as a whole opened up with strong losses across the board as China released reports that inflation has hit a 3 year high, while seeing Crude imports drop 6%, thus sending the dollar higher.  As Friday's news lingered this morning of a mere 18k jobs being added last month, the lowest in over 9 months, and the apparent stalemate with the debt reduction resolutions, many were taking profits.  Should be of no surprise that many market managers added length in the last week according to the most recent CFTC report.  The common theme is that once again we are in an overbought market with a very wide range.  That range for HEAT has been from 2.80 to 3.35.  The complex has been unwilling to breakout in either direction, primarily based on fear of the unknown.  Once again, an event will need to happen to have it break through the high or fall below the low.   
heat chart
RBOB CLOSE
                 CLOSE       CHANGE 
  
AUG     30705       -.0221
SEP    30249     -.0282
OCT    28915      -.0310
NOV    28561       -.0321
DEC     28446      -.0297
JAN    28506      -.0269
HEAT CLOSE
          CLOSE    CHANGE
AUG    30875       -.0089
SEP    30982      -.0099
OCT    31106     -.0111
NOV   31262     -.0119
DEC   31416     -.0129
JAN   31560      -.0141
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