Energy Market Updates
Posts by:
Mark Pszeniczny
Positive Sales and Demand Data boosts RBOB
Early morning trading pushed all pits higher as news spread of Chinese Crude imports jumping 6%. With a Market desperately looking for direction, the slightest potential shift in sentiment can have large scale implications. As the morning moved on, and gasoline demand numbers were reported as an increase of 1.1% over last week, the buyers took early control and never looked back. Very similar to what happens when you score 4 goals and 6 minutes, a la Bruin nation, it makes for an early day. The empty netter was a retail sales figure that showed the losses were better than expected only showing a .2% decrease while a .3% decrease was anticipated. Remember, it is all about expectations. So it will be interesting to see how Wednesday plays out as most expect for builds across the board with the DOE numbers. While we are still some 22 cents off the high seen back in early April, we are only 27 cents off the low in early May. Again this range of 2.85 to 3.35 on Heat while vast appears to be the new normal. A very hard close pushed values higher with about 10 minutes left in the session. HEAT was teetering on even ground only to end up .02 to $3.1258, RBOB soared .0678 to $3.0646 and Crude added $2.07 to $99.37, still under the mythical line in the sand of $100 a barrel.
Futures Continue to Rebound on Two Week Rally
If you were to ask me two weeks ago if I thought the HEAT pit would rebound 30 cents after falling 45, I would say its about as likely as a tornado in Massachusetts.... And so here we are! With what has been an almost two week rally, todays moves looked to be a reaction to the indecisiveness of OPEC. For that last few years, OPEC has lost much of their mojo and most discounted their pumping policies and mandates as rhetoric. As with any slow news day, people needed something to jump onto and the report that OPEC was doing nothing had bulls run the table. That coupled with the DOE report of Crude having a 4.8mbl draw simple let the gates open for a decisively higher session. Jobless claims increase slightly last week still signaling a troubled economy. Even the Natgas report that showed an unexpected injection of 80bcf could not derail the upside. While many see the last several sessions as technical buy backs, it is difficult to maintain the notion that better days are to come as we pop 3 or 4 cents higher everyday. At the close, Crude maintained above $100 and settled up $1.19 to $101.93, HEAT rose .0441 to $3.1378 and RBOB jumped .0611 to $3.0398.
Dennis K Burke at NEFI Boston June 7th & 8th
Dennis K Burke is excited to be an exhibitor at this years NEFI Expo and Energy Summit June 7th and 8th at Boston’s Hynes Convention Center.
Markets Jump Higher After Long Weekend
What a difference a week makes! less than a week ago were were talking about HEAT testing some key support levels, but after today, those might be to far to see in the rear view mirror. The pits have jumped some 20 cents in the last five sessions. While yesterdays electronic trading seemed to bear some positive tones as most of the session was down almost 2 cents, waking up this morning saw the market up over 4 and Crude up over a dollar. The second round of bailout money for Greece appears to be in the works as Germany is conceding. Over the weekend, a NATO commander stated his forces were making significant strides against the Gaddafi regime and guaranteed his removal in the next few months. On the homefront, a pipeline leak in the Kansas City area that originates in Canada forced that line down for the second time in a week. The key detail in that report is that the pipeline ends up in Cushing, Oklahoma, a key yardstick for National Inventory numbers. The fear pushed values higher and stayed there the remainder of the day with Crude now healthily over $100 to close up $2.11 to $102.70, front month RBOB added .0584 to $3.1504, while JUL RBOB was up only .0190. HEAT finished higher by .0658 to $3.0563, JUL HEAT added .0516 to $3.0530. HEAT is currently at the top end of the recent range of 2.80 to 3.05, one would expect to see some profit taking over the next couple of days.
Rapture dissapoints, Commodities Tumble
Not that one has to do anything with the other, but I wonder how the market would have reacted? Even with another volcanic eruption in Iceland (coincidentally at 6:03 EST on Saturday), the markets still opened down heavily as debt concerns loom as late Friday Greece was downgraded to junk status. Recall the last eruption sent the European airlines, and industry as a whole into a tizzy. But with the dollar strengthening today, oil was on the opposite side of the see saw and saw another round of healthy drops. Disappointing manufacturing numbers also weighed in pushing both pits down well over five cents. Somehow RBOB was able to make a move and ended up finishing positive on the day. Which is bizarre in and of itself as a report showed that Americans drove 1.4% less than the did a year ago in March. Some blame could be towards higher fuel prices. You have heard me say time and again that mixed days always bring a eye of suspicion. Although today appears to be some adjusting ahead of the long weekend as outer month RBOB was down much stronger. At the close, Crude fell $2.40 to $97.70, RBOB rose .0023 to $2.9381 and HO tumbled .0712 to $2.8471. The key support level for Heat appears to be firmly placed at the $2.80 market, a close below that should initiate additional downside in the coming weeks.
Markets tumble as Dollar rises and Rivers ease
Early news today had European markets standing on their head as the investors try to sort out the mess with IMF chair being arrested and how that would play into the restructuring of many foreign nations debt. The greenback was substantially stronger this morning thus pushing commodities down. With the pending rape charges against Dominique Strauss- Kahn, most believe this would delay or prevent the International Monetary Fund from helping countries like Greece in restructuring their massive debt. On our own soil, the Obama Administration announced that it would extend and "ramp up" domestic production in the Gulf of Mexico and Alaska which had some significant psychological effects on trading. As the day went on, and some disappointing manufacturing numbers were released, the dollar softened and we actually looked to be heading towards the positive side around lunchtime. Ahead of the bell, markets continued to falter as flood fears began to subside with the Army Corps of Engineers opening spillways to divert waters from reaching major refinery points in the Louisiana area. At the close, Crude lost $2.49 to $97.17, HEAT shed .0678 to $2.8744 and RBOB tumbled .1433 to $2.9311. Look for continued length to be shed with bounces in between as the current downward trend remains your friend.
Futures plunge on dollar, data and demand
LADIES AND GENTLEMAN, PLEAS KEEP YOUR HANDS AND FEET INSIDE THE ROLLER COASTER AT ALL TIMES! What else can you say about the last several sessions that has seen 25 cent drops, 30 cent rises and another 25 cent drop. Overnight saw big drops on gas as what appeared to be an overbought speculative position put on Monday and Tuesday get sawed off as fears resurfaced that the European Union might not be willing just yet to jump in and help Greece. The subsequent reaction was a large jump in the Dollar, pushing commodities to the floor. So much for those tight supplies due to flooding? Bearish inventory data pushed the NYMEX down even further as Crude gained 3.8mbl, distillates fell by 800k and gasolines rose 1.3mbl as most were expecting moderate draws. For the first time since Rita and Katrina days, the Trade was halted as RBOB losses pushed over 25 cents. At the close, Crude tumbled $5.67 to $98.21, HEAT lost .1029 to $2.8983 and RBOB lost and astounding .2569 to $3.1228. At the end of the day, most were looking at demand figures that showed drops across all products, furthering the notion that Americans are either unwilling or unable to support retail fuel over $4 per gallon.
NYMEX puts on rally hats to end day positive
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.
Futures Tumble as length is shed with Jobs Data
As the saying goes " we buy in fear and sell in greed", today appears to be the perfect example of that old one. Coming off the first three day sell off in over six months, the NYMEX was poised for a correction. A new term put to the days action in the pits, a "flash crash" . With all three major pits teetering on key support levels at the open, the technical sell off ensued as new unemployment figures were released that showed claims up by roughly 43k more than most estimates. That, coupled with yesterdays slightly bearish inventory numbers, many sought to exit positions put on several weeks ago. Again, it appears that we did find the event that would cause a correction, the key now is how much length is left and where will Bulls find a buying opportunity. The last point to be made for a continued sell off will be to determine how demand will stand up with retail gasoline breaking $4.00 a gallon across most of the country. From all indications, or today at least, demand destruction is weighing heavily on the minds of investors. At the Close, Crude tumbled $9.40 to settle below $100 for the first time in weeks at $99.80. RBOB lost a staggering .2271 to close at $3.0954 and HEAT led the charge with a whopping loss of .2561 to $2.8869.