Energy Market Updates

FOMC Stance pushes Commodities Higher

Late yesterday we saw the overnight pits shoot higher once news surfaced that the FED was of the position to keep fund rate very low through the foreseeable future.  Citing continued slow economic growth, a European debt crisis, (that I recently read to be compare to "a pimple on a teenage boy") and a persistent unemployment rate that is still around 8.5%, the FED is still considering another round of quantitative easing later this winter.  Commodities have responded positively as the greenback fell to a six week low early this morning.  Still positive signs of an improving economy are are out there as durable good orders for December showed a 3% increase which unfortunately has a bullish effective on Futures.  The range for Heat has not broke and we continue to see sideways action as shown in the chart below.  At the end of the day, Crude added .30 to $99.70, RBOB gained .0128 to $2.8466 and HEAT jumped .0343 to $3.0535.

heat chart

RBOB CLOSE
                 CLOSE       CHANGE 
  
FEB    28466       +.0128
MAR   28508      +.0134
APR    29794      +.0165
MAY   29664       +.0173
JUN   29368       +.0167
JUL    29008       +.0167
HEAT CLOSE
          CLOSE    CHANGE
FEB     30535     +.0343
MAR    30446      +.0342
APR     30244      +.0318
MAY   30043      +.0288
JUN    29911     +.0268
JUL     29899      +.0246
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Late Rally pushed Futures higher ahead of the Close

Futures danced along the even mark most of the day with little news pushing the market for much of the session.  Greece is still trying to get a break on the 14.5 billion it owes creditors come mid March.  US Carriers have moved through the Straits of Hormuz with little in the way of disruptions.  A European refiner filed for bankruptcy, Petroplus, as margins disappeared.  Two of the most notable market moving stories were that the IMF revised down the world economic growth pointing to a slower than expected growth rate over the last five months.  Ahead of the close, the spendingpulse survey (a Mastercard service) pointed to higher gas demand last week.  How much credence is given to this survey has always been a debate, a weekend snow event in the northeast might have boosted sales on Friday.  Nonetheless, most will be looking at Wednesday's DOE report which is expected to show moderate builds across the board.  It looked like heat was on a pretty good downward slide until the last two sessions, which really doesn't make sense if you look at the 7 to 10 day outlook which has temperatures in the Northeast well above normal levels.  At the close Crude lost .63 to $98.95, RBOB rose .0271 to 2.8050 and HEAT added .0144 to $3.0242.heat map
RBOB CLOSE
                 CLOSE       CHANGE 
  
FEB    28050       +.0271
MAR   28105      +.0249
APR    29399      +.0161
MAY   29264      +.0118
JUN   28979      +.0091
JUL    28633      +.0081
HEAT CLOSE
          CLOSE    CHANGE
FEB     30242     +.0144
MAR    30151      +.0116
APR     29951      +.0073
MAY   29741      +.0051
JUN    29611     +.0022
JUL     29612      +.0000
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NYMEX Stumbles with Stonger Dollar

Fears of yet another Greece loan default were on the minds of many investors today as futures showed moderate losses as the dollar strengthened.  Greece is hoping that banks will forgive roughly $130 billion in debt due in the next few months.  If only my bank would forgive half of my mortgage, I would be a happy man!  Positive news from the housing industry was reported as existing home sales increased 5% in December.  The market couldn't rally enough today and with gasoline demand falling over 6% in a month on month comparison, the threat of demand destruction in a slightly improving economy is a real concern.  It is hard to believe that we have seen six down days in the last seven sessions in the Heat pit.  We have peeled off almost 10 cents during that time frame.  This following our prediction that once we touch 3.10ish we should pull back.  As this has been the pattern for the year.  Looming over the weekend is a European vote on accepting Iranian oil, as reports of US ships moving out of the region.  As a quick snow event moves through the region this weekend, lets all remember to keep those fills clear and accessible.  Crude fell $1.93 to $98.46, RBOB lost .0310 and HEAT lost .0476 to $2.9884.

heat chart

RBOB CLOSE
                 CLOSE       CHANGE 
  
FEB    27844       -.0314
MAR   27903      -.0325
APR    29242      -.0293
MAY   29128      -.0295
JUN   28843      -.0297
JUL    28490      -.0303
HEAT CLOSE
          CLOSE    CHANGE
FEB     29884     -.0476
MAR    29848      -.0487
APR     29720      -.0475
MAY   29550      -.0469
JUN    29460     -.0469
JUL     29485      -.0462
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RBOB surges, HEAT ends lower

Early morning news of Hess shutting down its St. Croix facility from producing gas to strictly an oil storage facility sent RBOB futures higher some seven cents before the opening bell even rang.  Fear of tightening eastcoast gasoline supplies could not have hit at a worst time as ongoing tensions with Iran have again made headlines.  Iran appears to have got the eye, or wallet, the Saudis as they have gestured they are unwilling to pick up additional pumping left by removing Iranian barrels from the market place.  Realistically, this means that the Kingdom is comfortable with Crude above $100.  The trade seemed to cool off as the day moved on with large builds expected across all products in the delayed DOE report.  Additionally, looming concerns over the long term demand continue to be a bearish influence on any price breakouts beyond our current range.  At the Close, Crude fell 12 cents to finish at $100.59, RBOB surged .0541 to $2.8254 and Heat fell .0238 to $3.0134.

heat map

RBOB CLOSE
                 CLOSE       CHANGE 
  
FEB    28254       +.0541
MAR   28292      +.0496
APR    29480      +.0391
MAY   29340      +.0319
JUN   29053      +.0245
JUL    28713      +.0195

HEAT CLOSE
          CLOSE    CHANGE
FEB     30134     -.0238
MAR    30112      -.0223
APR     29995      -.0233
MAY   29859      -.0235
JUN    29808     -.0231
JUL     29850      -.0244
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Late session sell off pushes Futues into the Red

Overnight action saw pits slightly higher as the market weighed the continued threat of Nigerian oil workers to join the General Strike that has paralyzed the Nation for the last several days.  Prior to the release of inventories, which many were still digesting the much less bearish EIA numbers from Tuesday night, the housing market got a boost with a report showing applications for homes were up 4.5% this period.  A bullish indicator for the economy in general. This kept the market trading on both sides of 0.00 much of the morning.  With the large builds across the board on the DOE report, the initial sell off fizzled away as the day wore on.  Again, only to late session heroics, as in the last 15 minutes pushed HO down .0368 to 3.0646, RBOB slipped .0095 to 2.7633 and Crude fell 1.37 to $100.87.  Adding to my notes yesterday, many commented on the disbelief of how range bound the Heat pit has been this year.  Below is an eight month snap shot and shows the caterpillar like chart.  A solidly defined range of 2.70 to 3.15.  Currently sitting at 3.06, lets hope that this pattern continues.

DAILY HEATING OIL CHART

daily heating chart

RBOB CLOSE
                 CLOSE       CHANGE 
  
FEB    27633       -.0095
MAR   27703      -.0089
APR    28954      -.0088
MAY   28905      -.0088
JUN   28706       -.0086
JUL    28442      -.0083

HEAT CLOSE
          CLOSE    CHANGE
FEB     30646     -.0368
MAR    30593      -.0346
APR     30409      -.0337
MAY   30195      -.0329
JUN    30090     -.0301
JUL     30090      -.0285
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