Yet again the early morning fake out had most running to the racks early in the day. Overnight action had both products up over four cents with the ongoing Libyan situation heading closer a full out Civil War. Depending on who and when you are watching the news, reports come in from both sides that both the rebels or loyalist have retaken key areas and the latest is the oil port of Ros Lanouf. The West is apparently satisfied at this time to wage a war of words, calling for an end of Gadhafi’s bombings. Also seeking to institute a no-fly zone, speculative money continues to flood the Crude pit. Crude finished higher on the day ending up $1.02 to $105.44. Meanwhile some late day profit taking occurred in RBOB and HEAT. As we mentioned last week, some key resistance on HEAT was pegged at $3.14. Today we got to $3.1372 before falling all the back to finish at 3.0657 down .0236. Not that one day makes a rally but the about face that took place at the 1:00 p.m. hour was impressive, either that or someone decided it was time to cash out. RBOB was the biggest loser on the day falling .0425 to $3.0039. It’s funny how giddy we get now even on the slightest of down days.
Topics: The Market
Futures soared higher again today as all eyes continue to be focused on the Mid East and Northern African Nations and the wave of civil unrest that has gripped that region.
Only a week ago it appeared that the Libyan crisis was cooling with a possible quick exit by its Leader. That was 7 days and 25 cents ago…. As Iran has been said to clamp down and imprison opposition leaders and with Algerian news outlets reporting some growing protest, the main fear is that demand will outpace the supply. With the Saudi’s announcing they will foot the bill for any excess barrels left on the table, who wouldn’t want to be investing in Saudi Arabian refineries right now! Crude goes up $2.66 today to $99.63, jackpot! From the “ No Duh” file, FED chairman Bernanke spoke today and did little for the cause as he declared rising commodity prices would hurt the economy, but not produce massive inflation. More likely a short term rise in consumer gas prices.
With Funds bow controlling roughly 23% of the long positions in the Market; it will be interesting to see where the selling will start, and yes, it will happen. It was interesting to note that a gasoline demand report by Mastercard showed a 3% increase in demand last week, but some of that can be attributed to panic buying as consumers tried to beat the next price increase.
At the close, HEAT jumped .0846 to $3.0235 and RBOB soared .0907 to 2.9834. Let’s hope to find some relief in Wednesday’s DOE report.
Presidents Day is historically a quiet day as most participants are off for the long weekend, but today’s moves have bucked the historical trend.
Values have surged in electronic trading up over .08 cents on HEAT and over .06 cents on RBOB. Crude is currently trading at $91.42 up $5.22! On what do we owe this pleasure? Over the weekend continued political unrest came to a head in Libya as forces fired on crowds marching for the overthrow of the Gadhafi regime. Gadhafi, in recent years, appeared to be kowtowing to the West. As the movements seen in Egypt spread throughout the Mid East and into the OPEC member nation of Libya, many investors are playing it safe and have pushed HEAT back up to the $2.80 level. New reports have Gadhafi fleeing to Venezuela overnight, but have yet to be confirmed. The ultimate fear is not that Democracy will spread to the region, but that a regime worse than what is in place takes power and impedes production. This instability could not have come at a worse time for the Oil markets, already what most contend to be largely overbought trade. Libya exports about 1m bbls per day, certainly one of the smaller OPEC nations, and easily absorbed if the 1.6 billion barrels of strategic reserves were tapped, but significant none the less. Long term, this appears to be a good thing, we just need to live through the short term pains.
I have mentioned often that for many technical analysts the number “3” is significant. After three down days in the Heat pit, the notion of a downward trend was about to pick up some steam. Early this morning HEAT was down over .02 and RBOB was off over .03. With the Egyptian situation cooling off and news of a rate hike in China overnight, there were many taking profits and thus putting pressure on commodities. That all changed as RBOB roared higher with reports of yet another refiner issue at Valero’s massive Port Arthur facility. Refinery problems have been plentiful over the last several days which appear to be supporting gasoline numbers. With Inventories expected to show draws in distillates and builds in Crude and gasolines, a late day sell off cut away a good chunk of the earlier gains. Crude was able to finish negative to $86.94, down .54. RBOB jumped .0437 to $2.4942 and HEAT rose .0257 to $2.7318. To digress to the number 3, notice below that the last time we saw three consecutive down days was mid NOV. That was immediately followed by a 20 cent rise in values over the next fifteen days. With the short term forecast calling for nightly single digits across the region, the possibility exists for a short term run north of $2.80.
Topics: The Market
Futures skyrocketed higher today hitting fresh highs on the heels of optimistic feelings about the economy. After the feel good State of the Union speech, a speculative rally ensued early on and never looked back. All this amid a very bearish Inventory report that totally contradicted the API’s and most estimates. Crude supplies added 4.8mbls, gasolines rose 2.4mbls and distillates fell only 140k, a stark contrast to the 5mbls projected by the API’s. The rally carried over into the equities as well that saw the DOW crest above the 12,000 mark for the first time in almost two years. With the FED saying the economy needs a $600 billion bond buying program; it was somewhat surprising to see the rise. Ultimately the pressure put on the dollar today appears to be the underlying fuel for the speculative run. As New England braces for another round of snow and cold, I would not expect to see any decisive moves in either direction in the short term. At the Close, Crude added $1.14 to $87.33, RBOB soared .0879 to $2.4306, erasing yesterdays losses and HEAT jumped .0769 to $2.6698.
As many New Englanders try to find meaning of our meager existence without any football to watch for the next month, reality got slightly worse as we all tried to commute this morning in snow, sleet and rain. The market reacted strongly early on in the session pushing values up over two cents. As the day progressed, eyes shifted towards this week inventories. While Crude is expected to show slight draws, the products are expected to show moderate builds. The news appeared to be just enough to keep values from soaring to 18 month highs. Somewhat surprising was that the reopening of the Alaskan pipeline did not have the same downward effect as the shutting down did to the upside. Bulls appear to be in control for the short term, as the 15 cent jump in value in the last week exemplifies. We thought we peaked out at the 2.55 level on HEAT, only to move higher. Is 2.75 in the cards? The mixed close suggest otherwise, but we heard that song before. Crude closed down .16 to $91.38, RBOB lost .0154 to $2.4792 and HEAT rose .0007 to $2.6459.
Last Friday we were all excited that the NYMEX appeared to be on the verge of its January thaw. Well, a small pipeline leak on the Alaskan north slope over the weekend turned that jubilation into disappointment. Based on reports, a 5 to 7 barrel leak (yes, that’s 210 to 294 gallons) leaked from the pipeline causing the entire line to be shut down. With normal flow rates expected in the next day or so, early morning action had profit takers pushing the pits down almost 2 cents in electronic trading. The forecast for a crippling mid week snow storm in the Northeast had buyers out in full force and turned the session around at the open. Bulls jumped on when reports of diesel demand surged in December, up over 2%. An indicator to some that our economy is moving in the right direction and business can afford the higher prices seen in the last few weeks. All that was lost in value last week was taken back, and then some, in the last two days. Look for Wednesday to be heavily influenced by the Inventories that again are expected to show Crude levels to fall and products to rise. At the end of the day, Crude jumped $1.86 to $91.11, RBOB added .0241 to $2.4784 and HEAT gained .0527 to $2.6088.