Morning Petrospective – June 21, 2011

il prices rallied on Thursday, as traders were cheered by a better-than-expected weekly unemployment report and by upbeat housing figures. The US dollar was higher in trading overnight, but it started to weaken early Monday morning. It moved sideways after about 10 AM, but traders did not seem to notice until later in the day. The market was treading water until either a resolution is reached on the Greek debt situation or until the Greek Parliament passes a measure of confidence in the current government. That is now expected by Tuesday or Wednesday, at the latest.

The US dollar still seems to be making a bottom, but it has had a difficult time keeping its moves going for more than a few days at a time. The dollar was higher at first in reaction to the lack of any agreement on the Greek debt crisis. It now looks like the Greek government will face its confidence vote on Tuesday. Greek Prime Minister George Papandreou said on Monday that he was trying to achieve the “widest possible consensus” in Parliament to pass the budget cuts required by European authorities in order to get more aid. Greece is facing “very difficult and complicated” negotiations and the austerity measures are widely unpopular, even among Papandreou’s Socialist party.

The biggest fear is that the Greek Parliament might withhold its confidence from Papandeou’s government, which would be an implicit withdrawal of support for austerity. And, with austerity, Greece is going to find it next to impossible to attract aid or investment. Finance ministers have made it abundantly clear that acceptance of the austerity package is a “necessary condition” for additional aid.

The DJIA was 76.02 to 12,080.38 on Monday, as traders looked for bargains and waited for news from Greece. The first story we heard on CNBC on Monday casually stated that equities were higher because oil prices were lower. That has not been the way the two have been working lately, with both seemingly following the same factors or cues moving higher or lower. Both markets seem to have benefited from the same type of bargain-hunting and short-covering on Monday. Traders were relieved that the Greek crisis had not worsened ostensibly over the weekend.

It would be a mistake, though, to believe the problem has been resolved. It has not been. No one is taking this bull by the horns and that is potentially bearish in its own right.

Existing home sales will try to keep some positive momentum going from last week’s surprising housing starts. Capital Economics is not especially upbeat, reminding its readers that Tuesday’s numbers will reflect sales in May, when floods and tornadoes would have kept certain corridors from attracting fresh buyers.

We will also see this week’s API report, the SpendingPulse gasoline demand figures and will start to look to the DOE numbers.

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.

Bentek Energy

• California SW Observer – Basis Strengthens as Cooling Loads Reach Season-to-Date High.
• Texas Observer – Ship Channel Remains Above HH.  Texas Implied Storage Increases.
• Industrial End Users Analytic Report – Refinery Demand Stays over 2010 Levels.
• Power Burn Analytic Report – Northeast Power Bur Jumps 16%.

Platts

• The US NHC on Tuesday said it expects no tropical storm activity in the Atlantic in the next 48 hours.
• Canada's Encana ends year-long talks with PetroChina to form JV round its Cutbank Ridge gas shale assets, will seek new partners.
• Trinidad and Tobago is to launch a new 36-block deepwater exploration round in September, says energy minister Carolyn Seepersad-Bachan.
• Private forecaster WSI said July would be warmer than normal in the northeastern US and hotter than in its last forecast.  

Bloomberg

• Oil Gains a Second Day as Euro Crisis Eases, U.S. Crude Supplies Seen Down.
• Nuclear Power Generators May Be Tapped for Tougher Safety Costs, IAEA Says.
• Deepwater Horizon’s Top Manager Won’t Testify in Macondo Well Spill Cases.
• Qaddafi Tanks Deprived of Diesel as Ships Shunning Libya: Freight Markets.

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