Energy Market Updates

The NYMEX continued strong gains as most early risers thought we would see a reversal of yesterdays spike. At 5 am, RBOB was down almost .03 and HO was down about a penny. It had me thinking that yesterdays reaction to the Hess announcement that it was closing their New Jersey refinery was somewhat overdone. But as the rest of the world woke up, and saw the Dollar struggling, Futures made an about face at the open. While consumer confidence was reported to be at the lowest levels since late 2011 (maybe an effect of Americans seeing less in their checks this month), Home values were reported to see roughly a 5.5% increase in values year on year. Back to the notion of a gasoline shortage, with there being only two major refineries to serve the Eastcoast, it is easy to see how some can predict a long term crunch. My hunch is higher prices will solve that problem eventually. Still, HO has risen above the top end of the range we have been stuck in since October, closing up .0476 to 3.1092, RBOB added.0386 to 2.9734 and Crude gained $1.13 to $97.57. All ahead of the relatively tropical forecast for the next two days. (shown below)

Early morning news of Hess shutting down its St. Croix facility from producing gas to strictly an oil storage facility sent RBOB futures higher some seven cents before the opening bell even rang.  Fear of tightening eastcoast gasoline supplies could not have hit at a worst time as ongoing tensions with Iran have again made headlines.  Iran appears to have got the eye, or wallet, the Saudis as they have gestured they are unwilling to pick up additional pumping left by removing Iranian barrels from the market place.  Realistically, this means that the Kingdom is comfortable with Crude above $100.  The trade seemed to cool off as the day moved on with large builds expected across all products in the delayed DOE report.  Additionally, looming concerns over the long term demand continue to be a bearish influence on any price breakouts beyond our current range.  At the Close, Crude fell 12 cents to finish at $100.59, RBOB surged .0541 to $2.8254 and Heat fell .0238 to $3.0134.