Energy Market Updates

We truly have moved to a market that is tick to tick.  We all recall the days when a .01 move in the market called for a meeting.  Today, right out of the gate RBOB was up .08 while HEAT limped along slower than Shaq last night and was negative most of the morning.  Early in the session for about 20 minutes, both pits tumbled with HEAT negative almost 4 cents.  Gasoline futures are spiking on concerns of Midwest flooding preventing shipments moving from key areas.  But with overall gasoline demand slipping last week and demand destruction appears to be settling in as retail pump prices hover around the $4 mark, todays jump seems somewhat nonsensical.  Imagine the gray hairs the station owners and gasoline end users have sprouted the last few sessions, from falling 20 cents one day to being up over 25 cents in the last two days!  With Wednesday comes another round of inventory numbers that are expected to show Crude levels build by 1mbls and products to show slight increases.  On another note, one which might have tempered todays gains, the NYMEX raised margin requirements making it more expensive for people to purchase futures, ultimately will have minimal effect on the course of business.  At the close, Crude added $1.33 to $103.88, HEAT found strength towards the close and gained .0394 to $3.0012 and RBOB led the charge jumping .1013 to $3.3797.

What is funny about Todays title is that it seems that I have used it several times over the last month!  Another Groundhog Day with the Market up strong on the overnight, falling into negative ground late in the day and ending as a mixed bag at the close.  Investors were eager to jump in overnight as many weighed the FED Chairman's comments and the reluctance to raise interest rates.  The decision to keep rates extremely low signals to investors that the US economy still has some hurdles to jump before we are all fat and happy again.  That policy is weighing heavy on the greenback, pushing it to a 33 month low.  We all know the corollary is the high Crude and product prices as inflationary hedges from investors.  The news the economy only grew 1.8% last quarter while most were expecting a 3.1% increase did little to ease rising NYMEX prices.  Yet around mid session a sell off materialized that had both products negative for some time.  HEAT was able finish in the red as it fell a mere 18pts to $3.2316, RBOB keeps pushing higher as it gained .0104 to $3.4298, while CRUDE gained .10 to $112.86.  With $28 crack spreads on gas, it is not hard to see how Exxon posted 69% Q1 profits.   While it is easy to point to middle eastern unrest as the cause of this surge, it is tough to defend as supplies in the US are still at very healthy levels.  End result is that this bubble has to burst.  Hopefully soon. 

Another mixed end to another volitile session that saw both RBOB and HEAT finish on opposite sides of par.  Solid early morning gains built on Wednesdays DOE report that had all products reporting substantial draws, much higher than expectations, eventually gave way to news of yet another dismal Job report.  The number of Jobless claims missed analysts expectations by about 10,000 claims that sent the pits down at the Opening Bell.   Heat and RBOB were down almost .04 each as Crude remained strong on a falling dollar.  The Dollar continues to  hover around a 2 1/2 year low.  While strife continues abroad, the threat of barrels off the market appears to be taking a back seat.  The Saudi cartel have stated that there is no need for excess production as buyers appear to be limited.  As we mentioned, the volitility from day to day has remained with a downward bias.  The hope amongst peers is that at somepoint it falls off the shelf.  As a reminder, the NYMEX is closed Friday in observance of Good Friday.  At the Close Crude added 81 cents to $112.29, RBOB jumped .0313 to $3.3086 and HEAT fell .0222 to $3.1992.

NYMEX futures struggled to put together consecutive down days, and similar to the Bruins last night, it was a little tense right up to the end.  Futures opened down over 3 cents in both Pits and fell to as much as over five cents down before clawing all the way back, and actually trading positive briefly with about 40 minutes left in the day.  The days fall can be attributed to yesterdays news of Standard & Poors issuing a negative long term credit rating for the United States.  Highlighting that report was concern over the future of Commodity pricing and its effect on consumers.  Yet many are pointing to signals within the economy that could lead one to believe that we are well into a recovery.  Lets face it, last weeks DOE numbers were an aboration of refinery turns.  And as the pits turned stronger today, it centered around reports that gasoline demand jumped over 3% last week.  But that report is by spendingpulse.  Spendingpulse is a yardstick for usage of credit card customers.  Americans generally charge gasoline as a last resort to cash or debit. Thus the sell off continued.  At the close, front month Crude rose $1.03 on the expiry to $108.15. RBOB fel .0197 to $3.2331 and HEAT fell .0243 to $3.1585.  Keep in mind, we have not seen three consecutive down days since early FEB, and previously in early DEC.