Market Finally Falls after Calm Weekend

Posted by Mark Pszeniczny on Apr 11, 2011 9:58:00 AM

Futures tumbled today after seeing double digit increases in the HEAT pit on Friday as fear of prolonged unrest overseas and the possibilty of a Governmental shut down loomed.  At the eleventh hour a deal was struck to keep the U.S. Government running with both sides claiming victory.  New reports this morning had Libya tension cooling as a proposed peace deal is on the table.  The problem is, the deal calls for Gadhafi to remain in power.  As one would expect, the deal has been accepted by the current regime but rejected by rebel forces.  It was somewhat relieving to see our first down day in the last nine sessions.  We are all looking for a healthy correction of the speculative buying that has pushed HEAT higher by almost 20 cents in the last 10 days.  With warm air finally making its way into the Northeast, we should see some length get pulled out of the HEAT pit.  At the Close, CRUDE fell $2.87 to $109.92, RBOB lost .0602 to $3.2005 and HEAT tumbled .0672 to $3.2525.  As we have said many times, one day does not make a trend, but it would be nice if this was the start. 

 
Daily Heat Chart
heat map
RBOB CLOSE
                 CLOSE       CHANGE MAY    32005       -.0602
JUN    31867        -.0595
JUL    31741        -.0590
AUG    31562       -.0589
SEP     31305        -.0597
OCT    29909        -.0625
HEAT CLOSE
          CLOSE    CHANGE
MAY    32525       -.0672
JUN    32647       -.0645
JUL    32784       -.0620
AUG    32931        -.0591
SEP    33085       -.0571
OCT    33230        -.0556
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Topics: HEAT, government shutdown, Libya, Market analysis

Bulls remain in control ahead of Inventory Data

Posted by Mark Pszeniczny on Apr 5, 2011 1:02:00 PM

What appeared to be a solid retreat this morning turned into another solid up day for the NYMEX.  The early morning session had both pits down over two cents in electronic trading as word of a Chinese rate hike hit the wires and a possible slow down in demand for the worlds second largest consumers.  Additionally minutes from last month FED Reserve meeting realeased today noted several members voicing concern over the rapidly rising energy costs and the effects that would have on the growth pattern of the country.  But by mid morning, sentiment had changed with news once again surfacing that the oil port town of Brega in Libya was back in control of loyalist forces.  Intensified fighting between France and Ivory Coast over the areas rightful President also pushed prices higher as the growing fear of worldly strife has many investors searching for the one investment that is insulated.  At the close, Crude actually fell .13 to $108.34 while RBOB jumped another .0325 to $3.2013 and HEAT topped out at $3.1850 up .0136.

Daily HEAT Chart
heat chart
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Topics: CRUDE falls, Libya, Bull Market, Daily Heating Chart

NYMEX rises on jobs and overseas risk

Posted by Mark Pszeniczny on Apr 4, 2011 12:55:00 PM

RBOB spent much of the day bouncing back and forth from positive to negative before finally ending stronger.   Heating Oil never broke negative but did tease with it about mid day.  Depending upon which news wire you read, Libyan rebelshave either lost control of a major oil port city or regained full control.  The lack of credible reports coming from the crisis is playing into the risk premium.   New data was released this morning that shouwed the economy grew by 3.1% in Q4, slightly above the expected 3.0%.  Also psuhing values higer was data showing the economy created an addtional 31k jobs in the last month.  How much of that is seasonal workers is yet to be determined.  The rosey view and geopolitical risk that continues to spread over northern Africa and the Mid East has pushed HO above the $3.14 level, closing up .0369 to $3.1714.  RBOB moved higher by .0175 to close at $3.1688.  Crude reached an 18 month high before closing up .53 to $108.47.  We had said that the market appears to fade after HEAT touched $3.14, the breakthrough of that resistance level today lends to higher prices in the future. 

Daily HEAT Chart:
heat chart
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Topics: Jobless numbers, Libya, Daily Heating Chart

Markets find strength ahead of Spring storm

Posted by Mark Pszeniczny on Mar 31, 2011 10:47:00 AM

With what appears to be a cruel joke by Mother Nature, sending us another 6 to 12 inches of snow for Friday, markets got the fuel they needed to push higher today.  While the winter weather may be a simple coincidence, the real driver today appears to the ongoing unrest in Libya.  After the President adressed the Nation Monday night, and all but assured us that NATO forces would take command and ground troops would not be committed, that plan is begining to look suspect.  Over the last few days, Rebel forces have made little if any ground against the Gaddafi regime.  Their reliance upon US and NATO air strikes to make any advances has put their chances of an overthrow in jeapordy.  This, even on the heels of a long time supporter of Gaddafi defecting.  Overnight the Lybian Foriegn Minister sought refuge, signaling to the West that the power appears to be fracturing.  However, with the President authorizing use of covert operations, many point to this as the first step in a drawn out conflict.  With Lybian product shut in, and Japaneese demand expected to pick up, we cant be all that surprised to see the bumps.  The key will be in how long it will take for the jump to be peeled off.  Speculative money appears in control for the time being and the slight drop in jobless claims is not facilitating a sell off by any means.  At the close, Crude rose $2.45 to $106.72, RBOB jumped .0436 to $$3.1076 and HEAT led the charge adding .0502 to $3.0898.
heat map
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Topics: HEAT, Libya, CRUDE, RBOB, Ghaddafi

Crude rises as Products sell off late

Posted by Mark Pszeniczny on Mar 8, 2011 10:10:00 PM

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.

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Topics: The Market

Rally pushes on as strife continues

Posted by Mark Pszeniczny on Mar 1, 2011 10:09:00 PM

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.

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Topics: Libya, The Market, rising gas prices

Middle East turmoil causing price surge

Posted by Mark Pszeniczny on Feb 21, 2011 10:08:00 PM

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.

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Topics: Libya, Market analysis, OPEC

Markets turn early end higher

Posted by Mark Pszeniczny on Feb 8, 2011 10:07:00 PM

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.

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Topics: The Market

NYMEX surges to new highs

Posted by Mark Pszeniczny on Jan 26, 2011 10:06:00 PM

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.

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Topics: The Market, API report, NYMEX

NYMEX finds strength to move higher

Posted by Mark Pszeniczny on Jan 18, 2011 10:04:00 PM

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.

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Topics: The Market, NYMEX, Alaska Pipeline

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