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May crude oil has come into this morning on the defensive again, extending its sell off from late in yesterday’s session. This week’s storage numbers seem to have removed some of the market’s recent strength, as they indicate fairly high ongoing levels for crude oil stocks, as well as for crude oil imports. A stronger Dollar off of fresh EU debt problems, along lingering weakness in the US stock market have added to the pressure on prices energy prices this morning. Even so, the market still remains within $2.20 of 18-month highs. While prices look to soften off overdone technical considerations and a minor let down in global macro economic optimism, one should not forget the story from yesterday that 12 of the largest Chinese refineries would be running at a record rate of over 2.9 million barrels per day during the month of April, as that clearly points to the prospect of strong demand from that nation. Given the slacken economic views, seeing EIA crude stocks rise by 1.976 million barrels yesterday was seen as a reason to bank profits. However, with crude oil stocks sitting 9.835 million barrels below year ago levels, that would seem to provide some form of eventual underpin for prices. On the other hand, crude stocks do stand 20.725 million barrels above the five year average and that probably serves to embolden the bear camp. Crude oil imports for the week stood at 9.561 million barrels per day compared to 9.060 million barrels the previous week and that is another minor negative for the market to digest. Furthermore the US refinery operating rate was 84.49% up 1.89% from last week compared to 81.84% last year and the five year average of 85.97%. While the market might see increased refinery activity as supportive to crude oil prices, that could lessen the odds of a big tightening of product stocks ahead. In short, the bear camp has control today from a fundamental and technical perspective, as well as from an outside market perspective. Near term corrective targeting in June Crude oil is now seen at $85.00.
GASOLINE: In spite of some large gasoline draws indicated on this week’s storage reports, May RBOB has been caught up in the general oil market weakness and has drifted lower again this morning. While this year’s “driving” season is coming up and there have been fresh expectations of a sharp rise in gasoline prices this summer, this rally may have gotten ahead of itself, and recent market action may be more indicative of needed profit-taking than any sustained change in sentiment. EIA gasoline stocks did fall by 2.498 barrels but they are 5.874 million barrels above last year and 10.480 million above the five year average. Average total gasoline demand for the past four weeks was also down 0.36% compared to last year. Gasoline imports came in at 756,000 barrels per day compared to 710,000 barrels the previous week. In short, supply side news was negative and that was compounded by news that US refinery rates are starting to rise. Near term downside targeting is seen at $2.26.
HEATING OIL: May heating oil has moved lower again overnight as the trade is apparently being pressured by the builds shown in this week’s storage reports. With stocks at historically high levels earlier this year, the recent trend of weekly declines helped to underpin the recent rally but now that sentiment has lost its footing, especially since that trend appears to have ended around the same time as the conclusion of the heating season. Also distillate stocks at 145.68 million barrels are at a record high for this week. Previous record was in 2009. EIA distillate stocks rose 1.074 million barrels and stand at 1.88 million barrels above last year and 28.418 million above the five year average. Distillate imports came in at 153,000 barrels per day compared to 321,000 barrels the previous week. Average total distillate demand for the past four weeks was down 3.36% compared to last year. EIA heating oil stocks rose 576,000 barrels and are 5.311 million barrels above last year and 7.079 million above the five year average. Near term downside targeting is now seen at $2.20 basis June Heating oil.
TODAY’S ENERGY MARKET GUIDANCE: The bears have control and the losses might be somewhat aggressive in the wake of negative outside market factors.
Energy Market Commentary – 2010.04.08
by Dave Hightower on April 8, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
May crude oil has come into this morning on the defensive again, extending its sell off from late in yesterday’s session. This week’s storage numbers seem to have removed some of the market’s recent strength, as they indicate fairly high ongoing levels for crude oil stocks, as well as for crude oil imports. A stronger Dollar off of fresh EU debt problems, along lingering weakness in the US stock market have added to the pressure on prices energy prices this morning. Even so, the market still remains within $2.20 of 18-month highs. While prices look to soften off overdone technical considerations and a minor let down in global macro economic optimism, one should not forget the story from yesterday that 12 of the largest Chinese refineries would be running at a record rate of over 2.9 million barrels per day during the month of April, as that clearly points to the prospect of strong demand from that nation. Given the slacken economic views, seeing EIA crude stocks rise by 1.976 million barrels yesterday was seen as a reason to bank profits. However, with crude oil stocks sitting 9.835 million barrels below year ago levels, that would seem to provide some form of eventual underpin for prices. On the other hand, crude stocks do stand 20.725 million barrels above the five year average and that probably serves to embolden the bear camp. Crude oil imports for the week stood at 9.561 million barrels per day compared to 9.060 million barrels the previous week and that is another minor negative for the market to digest. Furthermore the US refinery operating rate was 84.49% up 1.89% from last week compared to 81.84% last year and the five year average of 85.97%. While the market might see increased refinery activity as supportive to crude oil prices, that could lessen the odds of a big tightening of product stocks ahead. In short, the bear camp has control today from a fundamental and technical perspective, as well as from an outside market perspective. Near term corrective targeting in June Crude oil is now seen at $85.00.
GASOLINE: In spite of some large gasoline draws indicated on this week’s storage reports, May RBOB has been caught up in the general oil market weakness and has drifted lower again this morning. While this year’s “driving” season is coming up and there have been fresh expectations of a sharp rise in gasoline prices this summer, this rally may have gotten ahead of itself, and recent market action may be more indicative of needed profit-taking than any sustained change in sentiment. EIA gasoline stocks did fall by 2.498 barrels but they are 5.874 million barrels above last year and 10.480 million above the five year average. Average total gasoline demand for the past four weeks was also down 0.36% compared to last year. Gasoline imports came in at 756,000 barrels per day compared to 710,000 barrels the previous week. In short, supply side news was negative and that was compounded by news that US refinery rates are starting to rise. Near term downside targeting is seen at $2.26.
HEATING OIL: May heating oil has moved lower again overnight as the trade is apparently being pressured by the builds shown in this week’s storage reports. With stocks at historically high levels earlier this year, the recent trend of weekly declines helped to underpin the recent rally but now that sentiment has lost its footing, especially since that trend appears to have ended around the same time as the conclusion of the heating season. Also distillate stocks at 145.68 million barrels are at a record high for this week. Previous record was in 2009. EIA distillate stocks rose 1.074 million barrels and stand at 1.88 million barrels above last year and 28.418 million above the five year average. Distillate imports came in at 153,000 barrels per day compared to 321,000 barrels the previous week. Average total distillate demand for the past four weeks was down 3.36% compared to last year. EIA heating oil stocks rose 576,000 barrels and are 5.311 million barrels above last year and 7.079 million above the five year average. Near term downside targeting is now seen at $2.20 basis June Heating oil.
TODAY’S ENERGY MARKET GUIDANCE: The bears have control and the losses might be somewhat aggressive in the wake of negative outside market factors.
Tags: Crude Oil, Energy, Heating Oil, Natural Gas, RBOB
About Dave Hightower