Morning Petrospective – November 24, 2010
il prices started out moving lower on Tuesday, but they turned back up and scratched their way back towards unchanged by the afternoon. This rally seems to have come exclusively on short-covering, because the two major influences on oil prices – the dollar and equities – both moved in ways that would have suggested a steep move lower in oil.
Just before 2 PM, the euro was down a startling 240 points against the US dollar, while the DJIA was down more than 150 points. On most days, moves of those sizes would have given us a large decline in oil quotes. The fact that oil prices were down only 35 cents at that time tells us that oil prices are still resilient.
Traders were also trying to fit a North Korean attack on South Korean troops into their market views and, with Thanksgiving in two days, we saw investors dumping risk and parking funds in dollars, Swiss Francs and gold. The dollar, at left, was higher overnight, but it really started to advance dramatically after 7 AM Tuesday morning. This should have hurt oil prices, but did not really have that big of an impact on them.
This attack by North Korea also scared investors away from the stock market. Many had already been worried about euro-zone debt problems, which remained a consideration on Tuesday. And fears of Chinese financial tightening were also back-burner issues leading to a retreat from riskier assets. The DJIA dropped 142.21 to 11,036.37, setting up another potential test of the psychologically important 11,000 level on Wednesday or Friday. Volume will be light over the remainder of this week – in everything – and that could make it easier for the bears to paint in some bearish figures on the charts.
US weekly gasoline demand was down 0.9% to 9.119 million bpd in the most recent week, according to MasterCard’s SpendingPulse. It was a decrease of 83,000 bpd from the previous week’s demand figure. Compared to a year earlier, demand was up 43,000 bpd, or 0.5%. This week’s demand figure was the biggest yearly gain since September 3rd, and was the first yearly increase since October 8th.
Four-week average demand came in at 9.083 million bpd, which was down 94,000 bpd or 1.0% from year earlier levels. It was the ninth consecutive decline in the four-week average against year-earlier aggregate averages.
Year-to-date, demand is up 0.4% against a year ago. Three weeks ago, that figure was 0.5% and it had been at 0.7% just five weeks ago, after having been at 0.9% for most of the year through August.
This week’s API report showed a large crude build of 5.189 million barrels, where a drawdown had been expected. This was because of a huge jump in crude imports – 2.158 million bpd – and that helped fuel a 2.1% jump in refinery utilization. That, in turn, stoked processing rates and it gave us smaller draws in refined products than had been expected. Distillate stocks were down 0.311 million barrels, while gasoline stocks were down 0.499 million barrels. This was a bearish report because it showed such a big burst of refined products output.
FMX Newswire
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Bentek Energy
- Texas Observer - Cooler Weather Set to Come in For Thanksgiving.
- Power Burn Analytic Report - U.S. Burn Levels Decline 1.1 Bcf/d Today.
- Industrial End Users Analytic Report - New Industrial End User Report Coming with 720.
- Gulf Coast Production Analytic Report - Gulf Production Remains Well Below 2009 Levels.
PlattsOil
- The Czech Republic has secured a deal with the TAP pipeline to receive oil if supplies via the Druzhba pipeline from Russia are disrupted.
- Renewed violence in the Niger Delta region has forced the government to cut its oil output forecast for 2011 slightly to 2.3 million b/d.
Bloomberg
- Oil Fluctuates as Dollar Strengthens Amid Bets on Rising U.S. Consumption.
- Contango on Mideast Oil Disappears on China Diesel Squeeze: Energy Markets.
- Cold Snap Opens `Season to Watch' for Electricite de France Nuclear Plants.
- Spain Freezes Start of $18 Billion Electricity-Bond Program as Yield Soars.
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