Energy Market Updates

Futures surge on proposed European debt plan

You know the Market is searching for direction when values and sentiment shift on an unofficial report of the European debt plan.  The plan is focused on three keys tenets.  First, Greece is going to be allowed to default on 50% of their debts (must be nice, I wish i could default on 50% of my mortgage.)  Second, the size of the European debt relief fund will expand dramatically and Third, the plan will re-capitalize the European Central bank.  Based on the jump in the Dow and in Commodities, the plan is being greeted with open arms.  Coupled with the forecast of draws in inventories again this week, values started up strong and did not look back all day. Technically speaking, we have commented frequently of the 2.80 support level of HEAT. For the fourth time in a year, we have hit the 2.80 level and yet again appear to be poised to bounce off it.  At the close, Crude added $4.21 to $84.45, RBOB screamed higher by .1261 to $2.6955 and HEAT jumped .0851 to $2.8766.  Assuming we ave confirmed another short term bottom, may not be a bad time to look at layering in some sort term fixed pricing.
RBOB CLOSE
                 CLOSE       CHANGE 
  
OCT    26955       +.1261
NOV    26360      +.1076
DEC    26011      +.1003
JAN   25849        +.0936
FEB    25841        +.0888
MAR    25898      +.0860
HEAT CLOSE
          CLOSE    CHANGE
OCT    28766    +.0851
NOV   28857    +.0827
DEC   28898      +.0796
JAN   28936     +.0767
FEB   28838      +.0733
MAR   28662      +.0705
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Massive Crude Draw Overshadowed by MOC news

Another fantastic sell off ahead of the close as much of the day saw values higher on the heels of a massive 7.3 mbl draw in crude stocks.  Distillates added 800k bls while gasolines built by 3.3 mbl.  The Crude numbers were in stark contrast of last nights API report of a roughly 2 mbl build.   The news at 10:30 sent the pits higher as HEAT at one point trader over four cents higher.  As the day wore on and more and more angst on the upcoming FED announcement, values danced around the even mark until right before the close.  The FED announced that they would sell $400 billion in short term assets, buying back longer term securities.  The move is an effort to keep mortgage and interest rates at "uber-low" levels for the extended future.  Apparently this time around the mood is for Commodities to sell off on such news.  Additional bearish tones overpowered the reports of the European Union joining the US in a long standing  Oil import sanction against Syria.  The key is that the sour product rarely sees its way to the US, and should have zero impact on imports. The gesture is yet another measure designed to reshape the Mid East as unrest continues topple regimes.  At the close, Crude fell $1.00 to $85.92, RBOB slipped .0349 to $2.6665 and HEAT fell .0274 to $2.9342.
heat map
RBOB CLOSE
                 CLOSE       CHANGE 
  
OCT    26665       -.0349
NOV    26564      -.0279
DEC    26432      -.0264
JAN   26412        -.0267
FEB    26474        -.0274
MAR    26574      -.0281
HEAT CLOSE
          CLOSE    CHANGE
OCT    29342    -.0274
NOV   29452    -.0261
DEC   29533      -.0253
JAN   29608     -.0246
FEB   29573      -.0236
MAR   29448      -.0225
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NYMEX dips ahead of Presidential Speech, DOE's Mixed

Although the market finished down, it was not until very late in the session that we felt somewhat comfortable that it was a certainty.  Early morning jobs data reported yet another increase in unemployment claims, up 2k to 414k, Commodities fought their way back into positive ground as investors rushed for a safe haven.  The new information will be a key tenet for tonights Presidential address on the state of the economy, which could shift the markets in either direction.  The White House is expected to announce yet another round of stimulus spending, roughly $300 billion, on infrastructure and tax cuts.  Additionally, reports of the European Central Bank reporting what they perceive as "significant downside risk" to the European Economy.  With the mixed DOE report of Crude losing 4mbl and Gas and Distillates adding 198k and 708k respectively, while surprising , kept any major losses in check.  I would expect next weeks numbers to have the full impact of the past weeks weather, specifically in the Northeast.  It has become increasingly more difficult to determine how news will be perceived in the eyes of  market participants, what was once a bullish news day has now turned to a cautiously bearish one.  At the close, Crude slipped .29 to $89.05, RBOB lost .0228 to $2.8852 and HEAT lost .0313 to $3.0443.

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RBOB CLOSE
                 CLOSE       CHANGE 
  
OCT    28852       -.0228
NOV    28351      -.0255
DEC    28044      -.0273
JAN   27976        -.0290
FEB    28020        -.0296
MAR    28099      -.0297
HEAT CLOSE
          CLOSE    CHANGE
OCT    30443    -.0313
NOV   30526     -.0330
DEC   30603      -.0344
JAN   30689     -.0358
FEB   30646      -.0363
MAR   30515      -.0363
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Futures relatively stable as storms pop up

It is scary to think that a four cent swing in gas futures can be termed as "relatively stable".  A somewhat surprising storm popped up in the Gulf of Mexico region this morning that caused the evacuations of most platforms in the area and had many investors buying up the storm premium ahead of the long weekend.  Both products early in the morning were trading down almost 3 cents and only HO was able to remain in the red.  Also churning out in the Atlantic is presently a CAT 3 hurricane Katia, expected to hit the east coast again sometime late next week.  This, on the heels of many East Coast terminals just now coming back on line after Irene.  Expect to see some wild cash moves in the harbor.  As mentioned, RBOB was able to gain .0164 to settle at $2.8927, surprising given the current product situation in the northeast and expected storms.  HEAT fell .0322 to $3.0518, most of which came in the last 20 minutes of the session while WTI added a mere 12 cents to $88.93.  How much of the day is due to the seasonal product switch and cleansing of books will play out on Friday. Other news has unemployment figures to be flat for August, and have European manufacturing rates sliding, both kept the pits in check most of the day.  Looking back on August,  HO started the month off at 3.1360 and closed at 3.084, but after hitting a low 2.70, once again proving that historically it is the most volatile trading months, relatively speaking of course

 

RBOB CLOSE
                 CLOSE       CHANGE 
  
OCT    28927       +.0164
NOV    28372      +.0083
DEC    28060      +.0011
JAN   27986        -.0017
FEB    28019        -.0033
MAR    28081      -.0040
HEAT CLOSE
          CLOSE    CHANGE
OCT    30518    -.0322
NOV   30608     -.0296
DEC   30693      -.0270
JAN   30784     -.0246
FEB   30743      -.0228
MAR   30611      -.0218
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