Energy Market Updates

Gasoline futures continued to sell off today after starting the early morning in the green. RBOB was up as much as 2 cents prior to the opening bell on news of Spain having a successful bond sell off to avoid yet another European debt scare. That bullishness turned however as Germany was said to be at odds with other Nations on how to proceed with the European Zone bailout plan. Simultaneously, Moodys was said to be ready to announce a downgrade of France's debt rating that caused the US dollar to push higher. A higher Dollar generally has a negative affect ( or positive affect from some viewpoints) on Commodities. Crude looks to be poised to fall below $100 for some time, getting as low as $101.67 before closing at $102.27, down .40. NatGas inventories were in line with estimates and on a whole remain roughly 700 bcf higher than the 5 year average. Even with the sessions slight bump in HO, finishing up .0069 to $3.1251, we are still roughly .15 less than two weeks ago. RBOB continues to be the dog falling another .0486(almost .25 in two weeks) to $3.1541. While it is nice to see the prices fall, realistically most think another .25 needs to be pulled off to get back to a "normal" state.

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.

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

The levee broke once again as world markets reacted to S&P's decision to downgrade the US credit rating.  Commodities opened down over 7 cents on Sunday night and didn't look back.  Trading in negative territory all day and then banging the close with about 20 minutes left in the session.  HEAT fell as much as .1530 before clawing its way back to finish down .14 to 2.8017.  RBOB  coincidentally, was holding up for much of the day as it languished down around 4 cents before falling .1136 to $2.6916.   WTI  fell  a staggering $5.57 to $81.31.  The devil is in the details though, the 2.80 level on HEAT, while breached, held for the close, same can be said for the $80 mark on WTI.  Look for a buy back on Tuesday with further downside to come the remainder of the week as money continues to get pulled out of commodities.

It was one of those days in the pits as the market opened positive and stayed there all day. After yesterday’s impressive construction spending report and today’s strong...