Morning Petrospective – September 29, 2010       

il prices started out moving lower on Tuesday as international equities were weaker starting out, and as the euro started the day only steady to slightly higher against the dollar. Both of those turned stronger as the day wore on, with the euro gaining dramatically against the greenback as the day progressed, and with equities posting decent gains, but they were not enough to overcome a bearish consumer confidence figure and some late fundamentals that were bearish.

Capital Economics said that “consumer confidence is being sapped by high unemployment, rising gasoline prices, low equity prices and now a renewed decline in house prices.”

CE called that almost toxic economic cocktail cause to believe the “outlook for consumption remains ominous.” The Conference Board reported a decline in consumer confidence from 53.2 in August to 48.5 in September. That is a seven-month low and, if it is still well above the low of 25 seen at the nadir of the recession, CE points out, it is also “well below the long-term average of 94.” Expectations are “now consistent with with annual consumption growth of a paltry 1%,” CE also noted. House prices are the latest element to assail consumer feelings, and the result is that “there are still very few signs that households are in any position to pick up the baton of growth,” it said in summary on Tuesday.

  These numbers were enough to keep investors from buying oil futures, and more traditional oil traders were selling on the latest fundamental information, which only seemed to get worse as the day wore on yesterday. Gasoline demand, which turned negative in its four-week average against a year ago, for the first time in weeks, last week, was dealt another blow by this week’s SpendingPulse’s point-of-purchase demand figures. These were later supported by the API’s implied disappearance from primary storage numbers.

This week’s American Petroleum Institute (API) report showed a draw of 2.415 million barrels in crude oil stocks, a build of 3.018 million barrels in gasoline stocks and a draw of 2.814 million barrels in distillate stocks. Crude oil imports were up 73,000 bpd to 9.293 million bpd, and refinery utilization was down 1.6% to 83.6%. Implied demand in gasoline came in this week at just 8.830 million bpd, a week after coming in at an equally disappointing 8.760 million bpd, and implied distillate demand registered a much stronger 4.749 million bpd. The draws in crude and distillate and the decline in utilization were better than anything predicted, and it is unusual to see a draw in distillate stocks in September. If this is repeated in the DOE figures, it would be the biggest distillate draw in at least six years. This week’s MasterCard SpendingPulse report reinforced the API implied gasoline demand figures. Gasoline demand for the latest week fell 28,000 bpd (0.3%) to 8.978 million bpd, the third week lower in a row and its lowest level in nearly four years. The figure was 194,000 bpd (2.1%) lower than the number seen a year ago, and it was the largest deficit year-on-year seen in the last three months. Four-week demand came in at an average of 8.99 million bpd, which was the lowest four-week aggregate average since the period ended November 14^th, 2008 – nearly 23 months ago. The four-week average was 60,000 bpd, or 0.7%, lower than a year ago, which was the largest four-week average deficit since July 9^th. Year-to-date consumption is now up 0.7%, while it was up 0.9% last week and for a number of weeks before that.

     FMX Newswire       

FMX Newswire is an overnight news summary designed to meet the needs of professional energy traders. The content is to-the point, professional grade and not widely reported in the mainstream media. All sources are professional respected firms and newspapers.

Platts oil

• TNK-BP is to appeal a decision by a Russian commission not to admit the company's bid for the major Trebs and Titov oil fields.
• BP's incoming CEO Bob Dudley has announced plans to create a new safety division with sweeping powers to oversee the company's operations.
• The Russian government will soon consider legislation to open offshore developments to private Russian and foreign companies.
• China plans to raise crude oil and fuel oil import quotas issued to non-state designated companies by 15% for 2011.
• Qatar Petroleum International is in "advanced" talks with "Japanese companies" for joint investments in overseas gas and power sectors.

Bentek Energy

• Supply/Demand Balance Analytic Report – U.S. Marketed Production Closing Out September Averaging 61.8 Bcf/d
• Northeast Observer - RCI Demand to Increase as Tropical Storm Makes it's Way North
• California SW Observer - California/SW Power Demand, Spreads Soften
• Gulf Coast Production Analytic Report - Tennessee Pipeline Reciepts Down 157 MMcf/d in the Past Two Days
• Power Burn Analytic Report - U.S. Power Burn Expected to Decline Over 6 Bcf/d by Monday

Bloomberg 

• Crude Oil Advances in New York on Signs of Growing Demand in China, U.S.
• Diesel's Europe-Asia Price Gap Rises to Most in 18 Months
• BP's Dudley Ousts Exploration Head in Post-Spill Reshuffle
• Tokyo Electric Power to Raise Up to $6.6 Billion in Public Share Sale
• Shell to Invest About $40 Billion in the Americas to Increase Production

Technical Recap

Crude Options Report / Straddle Runs

NG Options Report

Premium Subscriber  (click here to register):

Volumes & Open Interest

End Of Day Straddles

Settlements