Energy Market Updates

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Greece

Oil Slides on Economic Data, Dragging Stocks Along for the Ride

This morning Brent Crude dropped under $50 for the first time in 6 months, and WTI fell below $45/bbl to within $2 of a 6 year low. Shortly after noon, the NYMEX showed ULSD down .0452 cents, and gas down almost 9 (-.0882).

What's going on?

Lackluster economic data out of both China and the US seems to indicate that overall oil demand is unlikely to spike to levels able to compensate for the immense glut of oil we're seeing now. As we've discussed, OPEC and others have kept production at record levels to both retain market share, and attempt to slow production (and therefore competition for market share) by higher cost-of-production nations, most notably, the U.S.

Domestically, S&P Energy stocks dragged that index down in response to falling oil prices. US stock indexes trended downward today across the board on other non-thrilling economic data as well as some major single stock tumbles (Apple, Tyson, Lowe's, etc).Overall data showed consumer spending gains were anemic, labor costs increased, and now we all wait with baited breath for the jobs report due out on Friday. 

Across the pond, the Greek stock market re-opened today and promptly tumbled almost 30%, essentially reigniting concerns about the stability of the Eurozone and the odds that the Greek debt deals in their current iterations will solve the ongoing debt crisis. (They ended up rebounding to cap out about a 16% loss on the day)

The data from China this morning was arguably the main catalyst for the drop today, as all eyes were focused on their manufacturing reporting to show a gain, but it instead showed a major slow down. Chinese economic growth had been essentially the last hope for demand ramping up and stemming the price sliding. Traders and Investors have been looking for signs to confirm their hopes of a positive second half of the year in terms of growth, and today's data essentially put those hopes to rest.

At the close, September ULSD dropped -.0584 to 1.5305, RBOB dropped -.0975 to 1.6745. WTI closed out at $45.17. Last prints for Brent are 49.54-50.17 range. 

Stay Tuned!

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Greece Nears Default, Sends Global Stocks & Commodity Prices Reeling

Sillouettes of people infront of charts showing Greek Debt

Stock Markets across the Globe dropped sharply on worries over Greece's potential (and frankly, very likely) default. Greece owes the IMF  a 1.8 billion dollar payment tommorow, but their Prime Minister has pushed voting on whether to accept referendums to July 5th, making it pretty clear Greece is unwilling and unable to make their required payments. 

European stocks dropped on fear that Greece will vote to leave the European Union rather than work with creditors and the European Central Bank to structure repayment obligations. If Greece leaves the union it could impact the Euro currency and that uncertainty will probably continue to impact the market on some level until we see how it all plays out. 

Greek banks and markets are closed this week, after a rush on banks and ATMs nationwide sparked fears of the system collapsing under the weight of citizens pulling all their money out simultaneously. This morning the Greek stock market was down over 15% despite not even being open. 

Closer to home, the Governor of Puerto Rico has announced it is "simply not possible" for the province to pay its required obligations. They owe 94 million by July 15, with another 140 million due by August 1 on bond principal. 

This weekend also saw three seperate terrorist attacks in 3 seperate countries, all of which ISIS claimed responsibility for. 

Needless to say, things are not looking good globally, both in terms of safety and economics. 

In terms of commodities, Greece seems to be the focus, while terrorism attacks are being ignored as evidenced by the across the board drops we are seeing. WTI and Brent Crude were both down over 2% in this mornings trading. ULSD and RBOB front month are both trending down today, with ULSD closing out at 1.8366 (-.0262) and RBOB settling at 2.0303 (-.0182) 

Stay Tuned!

 

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Wild Week on Wall Street & The NYMEX; Everything Keeps on Tumbling!

 

Today was another wild day on the market, with ULSD closing down another .0376 to 2.0464, and RBOB closing out down a whopping .0818 to 1.6418. Analysts are crediting this with an "unexpected" increase in Crude stockpiles. WTI fell -2.60/bbl to 60.94, well below the previous 5 year low.

Monday was down as well, closing out -.0529 on ULSD and -.0668 on RBOB gasoline.

We saw a small jump up yesterday (ULSD +.0291 and RBOB +.0170) - likely just a bump-in-the-road overcorrection to stocks tanking on some bad news from Greece and China. This week saw Greek markets tank worse than they did before the crash a few years ago - obviously not good news for the European economy. 

OPEC also became a factor again with Iran railing against falling oil prices as a "conspiracy" and OPEC cutting its output estimate for 2015 to 2.89 million barrels per day, 300K lower than they originally forecast. However, despite the announcement Crude keeps right on plummeting. 

Wall Street Traders have been shouting about the Dow's inevitable march to 18,000, but today saw it close down for the third day in a row. Continuing pressure on stocks given that Fed rate hikes look like they may happen within the 6 month period doesnt bode well for the 18K mark, especially when you factor the weakness in foreign markets into the equation.

The S&P slumped on energy stocks as well, as some companies came out with plans to move on layoffs, restructuring, or selling shale plays. Despite a few plays going up for sale though, production domestically doesnt seem to be slowing down. However, a slow down in production in countries that have a high production cost is probably inevitable if the price hits a certain level - that includes the US and Venezuela. 

So it was a tough week for Wall Street, but the bright spot was for the average consumers as downward pressure keeps pushing down the price of gasoline. The Energy Department dropped its price forecast for retail gasoline to for next year at this time to $2.60/gallon, the second time its been revised down by over 30 cents a gallon since oil began its slide. Another bright spot domestically was an unexpectedly good jobs report on Friday, which is a good signal for the overall economy. 

 

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European Zone Crisis pushes Futures Lower

For the last several days NYMEX values have been on the losing end of good Ol' fashion Donny Brook coming at the hands of the ongoing European debt crisis. With new Leadership installed in several countries, investors are not taking any chances and removing cash as quickly as possible. The latest round today had the European Central Bank preparing for Greece's exit from the Euro sending the currency to a four month low versus the US dollar. Commodities again were the collateral damage as money continues to exit the pits. Japans signs of economic recovery from their recent natural disasters, reports showed a 1% increase in their economy, along with an anemic Jobless claim report ( statically flat) could not stop the bleeding in the pits today. When prompt Heat was at 3.30,we noted the major support level to be at 2.75 with a few stop along the way and a key being 2.95. As those levels have been broken, it will be interesting to see where we stop. Interesting to note the seaway pipeline that runs Crude north to Cushing, OK has just finished a flow reversal that will allow product to move south from Cushing to the Gulf region for refining. Product is expected to flow this weekend, alleviating the glut of WTI in the US, should also play a role in reducing the Brent - WTI spread. At the close Crude lost .25 to $92.56, HEAT fell .0486 to $2.8490 and RBOB lost .0427 to settle at $2.8782.

 

Daily Heating Oil Chart

daily heat map

RBOB CLOSE
CLOSE CHANGE
 
JUN 28782 -.0427
JUL 28174 -.0477
AUG 27737 -.0494
SEPT 27354 -.0497
OCT 25962 -.0482
NOV 25643 -.0477
HEAT CLOSE
CLOSE CHANGE
JUN 28490 -.0486
JUL 28556 -.0483
AUG 28641 -.0478
SEPT 28723 -.0474
OCT 28804 -.0467
NOV 28889 -.0462
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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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Futures Slip with Mixed Inventory Report

Much of the morning session saw values bounce around from positive to negative as pre DOE posturing held court.  Also holding weight was the curiosity factor of what was going to happen at the European Summit to discuss the ongoing debt issue.  As the news of a Crude build of 4.7mbl, a Distillate draw of 4.3mbl and a Gasoline draw of 1.4mbl hit the wires the initial reaction was bearish as the huge glut of Crude took center stage.  That was short lived as many looked to distillates as the leading pit and another large draw has now put distillates stocks smack dab in the middle of the 10 year range.  Over the past several weeks we have operated on the higher end of that range.  The selling only hit the floor with about 30 minutes left in the session as continued optimism remained that a long term solution to Europe's debt crisis will be agreed upon.  Signs pointed that way as earlier in the day, Germany, a key figure in the deal, voted to add more to its growing rescue fund.  An effort in that other nations will follow.  While we still are on the high end of the range, and a solid down day is refreshing, nothing out there is a clear signal that we are ripe for another pull back.  Again, the HEAT pit appears to be comfortable trading in the wide range from 2.70 to 3.10.  At the close, Crude lost $2.97 to $90.20, RBOB fell .0482 to $2.6516 and HEAT lost .0344 to $3.0158. 
heat map
RBOB CLOSE
                 CLOSE       CHANGE 
  
NOV    26516       -.0482
DEC    26253      -.0494
JAN    26111      -.0474
FEB   26049      -.0445
MAR   26075      -.0416
APR    27387      -.0374
HEAT CLOSE
          CLOSE    CHANGE
NOV    30158     -.0344
DEC   30210      -.0302
JAN   30101       -.0304
FEB   29929      -.0316
MAR   29663     -.0323
APR   29260      -.0312
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Futures surge on proposed European debt plan

You know the Market is searching for direction when values and sentiment shift on an unofficial report of the European debt plan.  The plan is focused on three keys tenets.  First, Greece is going to be allowed to default on 50% of their debts (must be nice, I wish i could default on 50% of my mortgage.)  Second, the size of the European debt relief fund will expand dramatically and Third, the plan will re-capitalize the European Central bank.  Based on the jump in the Dow and in Commodities, the plan is being greeted with open arms.  Coupled with the forecast of draws in inventories again this week, values started up strong and did not look back all day. Technically speaking, we have commented frequently of the 2.80 support level of HEAT. For the fourth time in a year, we have hit the 2.80 level and yet again appear to be poised to bounce off it.  At the close, Crude added $4.21 to $84.45, RBOB screamed higher by .1261 to $2.6955 and HEAT jumped .0851 to $2.8766.  Assuming we ave confirmed another short term bottom, may not be a bad time to look at layering in some sort term fixed pricing.
RBOB CLOSE
                 CLOSE       CHANGE 
  
OCT    26955       +.1261
NOV    26360      +.1076
DEC    26011      +.1003
JAN   25849        +.0936
FEB    25841        +.0888
MAR    25898      +.0860
HEAT CLOSE
          CLOSE    CHANGE
OCT    28766    +.0851
NOV   28857    +.0827
DEC   28898      +.0796
JAN   28936     +.0767
FEB   28838      +.0733
MAR   28662      +.0705
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Crude Rises as Products Fade in Late Sell Off

Crude once again danced above the $100 a barrel mark today as many speculated that the economy is showing signs of improving.  Furthermore a marathon meeting session on Greece of European Leaders ended with a consensus that they will throw more money into the debt strapped country.  The Euro rose on the news as the dollar fell, thus pushing money into Crude.  The products failed to follow the rally.  RBOB slipped .0475 to $3.0995 while HEAT lost .0192 to $3.0992.  All while Crude managed to gain .73 to close at $99.13, more than a full buck off its high of $100.16.  Holding down products appear to be the fact that demand is still soft, and retail gas stations are still in the high $3 range.  Additionally, our friends at the IEA stated that they are willing to release more product to the market to stave off any spike in futures.  HEAT remains in a congested selling pattern and looking back over the last few months, you have seen healthy corrections after these periods.  In laymen terms, nobody is willing to make a move either way until an event pushes us too.  This event will likely be in the form of how the US debt ceiling issue is resolved, meaning we probably have another week of sloppy back and forth days

heat chart

RBOB CLOSE
                 CLOSE       CHANGE 
  
AUG    30995       -.0475
SEP    30567      -.0379
OCT    29285     -.0277
NOV   28959       -.0235
DEC    28801       -.0215
JAN    28832      -.0200
HEAT CLOSE
          CLOSE    CHANGE
AUG  30992     -.0192
SEP   31129       -.0191
OCT    31273      -.0188
NOV   31437       -.0191
DEC   31600       -.0191
JAN   31753       -.0190
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NYMEX jumps as Greece Debt vote Looms

Investors went on the attack today after several sessions of healthy losses and viewed current values as buying opportunities.  As a vote looms on the Greece debt crisis, most are now expecting the Nation will accept the austerity package as stave off pending doom.  As the dollar felt the brunt of this news, NYMEX values skyrocketed in early morning trading.  Yet, citizens of Greece still found the time and energy to riot in the streets.  Interesting news in the US  as Home prices were up slightly for the first time in over 8 months, signally to some a momentum shift in the economy.  Of course, those same speculators disregarded a report that shows consumer confidence dipping yet again.  With Crude inventories expected to fall slightly on Wednesday and the products expected to build, along with the official start of the summer driving season hitting this week, we are lining up for an exciting Wednesday in the Industry.  I would like to believe that cooler heads prevail and we continue our march down.  Remember, one day does not make a trend and the trend is your friend.  At the close, Crude added $2.28 to end at $92.89, HEAT jumped .0608 to 2.8257 and RBOB led the charge gaining .0821 to $2.8896.
 
heat chart
RBOB CLOSE
                 CLOSE       CHANGE 
  
JUL     28896       +.0821
AUG    28156      +.0712
SEP    27886         +.0683
OCT    26787       +.0662
NOV     26583      + .0642
DEC    26505      +.0622
HEAT CLOSE
          CLOSE    CHANGE
JUL    28257       +.0608
AUG    28415      +.0601
SEP    28609     +.0599
OCT   28814      +.0602
NOV   29018       +.0602
DEC   29214       +.0602
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Greece Debt Crisis pushes Nymex Lower

For the fourth straight day values across the most of the complex have fallen.  This mornings early action was surrounded by ongoing debt concerns in Greece, who announced they needed an immediate $17 billion....yes, billion... dollar infusion in order to meet creditors.  As a result the Euro plummeted and the dollar soared, which pulled money out of commodities.  Many feel that downside may be limited as ongoing concerns of supply disruptions continue and we are knocking on hurricane season.  What is interesting to note about todays session was that Crude actually finished higher by.25 to close at $93.26.  Still Crude values seem low for products being so high.  HEAT fell .0573 to 2.9329 and RBOB lost .0345 to 2.9115.  Or, the products are overpriced for Crude values.  I tend to think the latter scenario is more fitting.  As you may recall it wasn't to long ago that HO was at the 2.80 level.  With todays finish, we continue to be on the back nine of the recent range and would not put it out of the realm of possibility to touch 2.80 in the near future.
Daily Heat Chart
heat chart
RBOB CLOSE
                 CLOSE       CHANGE 
  
JUL     29115       -.0345
AUG    28526      -.0368
SEP    28324     -.0375
OCT    27165       -.0357
NOV     26953       -.0351
DEC    26848      -.0341
HEAT CLOSE
          CLOSE    CHANGE
JUL    29320       -.0513
AUG    29469      -.0509
SEP    29655     -.0502
OCT   29843      -.0495
NOV   30031       -.0490
DEC   30202       -.0481
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