Yesterday's DOE report was seen as being bullish, and it pushed oil prices to new recent highs, yet again. Traders were mostly impressed by the drawdown in crude oil stocks, but that came strictly as a matter of two trends intersecting. The first has been the trend towards very low imports. Despite what Ali Naimi said recently about industrial demand coming back, these low imports have to have hurt Opec. The second trend is the normal seasonal tendency for refinery runs to jump at the end of May and into June, as they move towards a high on Independence Day. This week’s report showed a big jump in processing rates, by 3.3%. That helped pull crude oil from storage. [More]

Prices just kept going higher yesterday, and this time they did so in the face of falling stock market (equities) prices. That is unusual because prices have followed equities higher on a number of occasions when the fundamentals suggested that they should instead be dropping. [More]

Crude oil prices started the day on a weak note, but they finished in positive territory yesterday. In the process, they printed their highest intraday high since November 5th, 2008. Heating oil prices followed the same script, and they printed their highest settlement since December 3rd, 2008. Gasoline prices had their strongest settlement price since October 14th, last year. The biggest jump in consumer confidence (to 54.9) since September was the hot-button item. [More]

The approach of Memorial Day Weekend kept shorts on the back foot, and buying kept coming in from a variety of sources, mostly in gasoline. Crude oil prices gained 62 cents a barrel and heating oil prices were up 86 points, muscled higher by strong gasoline quotes. There was more short-covering than long-liquidation/profit-taking going into the long weekend, which is unusual. [More]

The DOE showed declines in crude oil and gasoline stocks, again, this week, on the back of low refining rates and very low crude oil imports. Normally, we see the two with very different futures at this time of year, as refiners typically increase runs, which usually eat into crude oil stocks. But it also increases the production of gasoline, which has not happened to the same degree as usual this year. That fact has combined with the normal anticipation of heavier demand with the Memorial Day Weekend. Demand jumped 321,000 bpd in this week’s figures, as refiners moved product from primary to secondary storage ahead of the holiday weekend. [More]

Gasoline prices continued to run away on the upside, partially on very light imports over the last few weeks. We are also seeing some speculative buying in front of the official start of “Driving Season” this weekend. Gasoline has a swing objective to 185.52 and then potentially another all the way to 209.33, although we do not expect to make that objective on this run. Crude oil has swing objectives to $64.94 and $68.54 and it will be interesting to see which of those, if either, can be reached. June crude expired yesterday, and there was short-covering into the final session. [More]

Oil prices raced higher yesterday on short-covering ahead of today’s June crude oil contract expiration. The “smoking gun” for yesterday’s advance came from violence in Nigeria, which has been an ongoing factor in this market. Nigerian separatists fought the Nigerian army in the Niger Delta yesterday, and this actual fighting comes closely on the heels of last week’s war of words in which leaders of MEND (Movement for the Emancipation of the Niger Delta) threatened international oil companies with sabotage and violence if they did not pack up and leave. That was, of course, a difficult proposition for the oil companies to comply with, and the Nigerian government moved in to protect its largest single source of revenues. The result has been heavy but sporadic fighting. [More]

In a classic example of the “riptides” we have mentioned here recently, oil prices dropped rather sharply on Friday as longs took profits in a somewhat volatile session. Dow Jones quoted observers who attributed Friday’s weakness to “worries over weak demand and high inventories,” which has been a recurring theme on market weakness throughout 2009. The timing of that observer’s comments is strange, though, given last week’s DOE report, which showed large declines in both crude oil and gasoline stocks. [More]

Follow-through selling from Wednesday pushed oil quotes lower through most of yesterday’s session, but late short-covering, reportedly spurred by higher equities prices (Dow Jones), pushed crude oil and heating oil prices into mildly positive territory before the final bell. We think that we are seeing ‘riptides’ stirring prices as they try to build a mid-to-late May top. That means we should expect to see bearish news spur short-covering and bullish news would bring in long liquidation. It also tells us not to trust moves in either direction. [More]

Oil prices ended lower yesterday after initially moving higher, as traders took profits on long positions in the face of the most bullish DOE report in months. It was the first time in more than two months that crude oil stocks were lower on the week, and they fell fairly dramatically, dropping by 4.7 million barrels. Estimates had been for an increase of a million barrels or more, following nine or 10 consecutive builds in crude oil inventories. A sharp contraction in crude oil imports (down 1.212 million bpd) gave us a drawdown in crude oil inventories. [More]