Energy Market Updates

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Mark Pszeniczny

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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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

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Futures end mix as FED disappoints, Irene lurks

On Wednesday we suggested that todays market could be volatile as many investors were eagerly anticipating the FED chairman speech.  The consensus was that new measures would be put in place to spur growth.  It became clear early in the session that this was not going to happen and all pits sold off quickly and RBOB dropped as much as five cents.  Not to be outdone Crude was down over $2 as well.   However, as GDP numbers were released, the pits clawed their way back into positive ground.  GDP grew by only 1% for the second quarter, less than the expected 1.3%,  As the day wore on, pricing did not move all that much as it appeared many may have gotten out of Dodge ahead of Irene.  Currently it appears that the storm will hit the Northeast sometime Sunday as a hurricane and move rapidly through the Northeast over the course of the day, of course making a stop in Wilbraham, Ma.  With high winds and heavy flooding, power outages are expected.  Fear not folks, DKB world headquarters will be staffed and ready to assist.  At the close, Crude added.07 to $85.37, HEAT gained .0246 to $3.0101 and RBOB fell .0333 to $2.9346, while OCT RBOB only lost .0157.  Stay safe.

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Futures Plunge as Data shows Economy Soft

I feel like I have said this before, but what a difference a day makes!  With yesterday market making its own reality, today i would say it got kicked in the pants BY reality.   Futures started the session down hard and sold off heavily as a string of bearish data got reported.  First was the July Home sales report that showed sales fell by roughly 3.5%, second was the jobless report for last week which increased by 9000 new claims.  Generally not a good sign with an already weak economy.  Lastly, Morgan Stanley downgraded their outlook for the remainder of the year, and within the report noted that it was cutting GDP estimates by roughly .3%.  So what does all this mean?  "There is Gold in them there hills"...  Generally, news like this would push Commodities higher as equities would absorb the brunt of the sell off, but with values of Crude and products perceived to be overpriced, the selling carried over to the NYMEX.  Keep in mind what we mentioned a few weeks ago,  in order for things to start to improve, it has to start with cheaper fuel prices.  Where that level is, only time will tell.  At the close, Crude fell$5.20 to $82.38, RBOB lost .0871 to $2.7832 and HEAT shed .0868 to $2.8748

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