Morning Petrospective – August 25, 2011
t is only Wednesday and the East Coast has had an earthquake (normally a West Coast phenomenon) and is preparing for a hurricane (normally a Gulf Coast phenomenon). That is strange and unusual. Oil prices rallied on Wednesday morning, as traders took their cue from a strong equities market which, in turn, took its cue from a much stronger-than-expected durable goods figure. For July, the number was up 4.0%, a number that was so strong that some observers questioned its validity. It just did not fit with numbers seen elsewhere, earlier.
In any event, prices had another day of trading on both sides of unchanged, and they finished near unchanged on the day. Crude oil prices were slightly lower and refined products prices were slightly higher at the end of trading on Wednesday. This was also the opposite of what we had seen on Monday, when traders were selling Brent and refined products – notably gasoline, because Libyan crudes are high-yielding in gasoline – and buying WTI or at least selling it sparingly. It was also the opposite of what we had seen earlier in the session, after the DOE report.
This week’s DOE report showed an unexpected drawdown in crude oil stocks and an unexpected build in gasoline stocks, in addition to a larger-than-expected build in distillate stocks and a much larger-than-expected increase in refinery utilization.
In theory, this week’s DOE report should have been seen as being bearish for gasoline on two levels, because utilization increased by 1.3% and stocks were higher rather than lower, bearish for distillate, because stocks were higher, and bullish for crude oil, because of lower stock levels and increased demand for crude oil for refining. Lower crude oil imports would also have been supportive for crude oil prices in a perfect world. Instead, heating oil prices were strongest on Wednesday, followed by gasoline and then crude.
In the meantime, it looks like the consensus on Jackson Hole might be shifting. Those who would seem best positioned to know have been calling for little or no change and are saying that a new round of quantitative easing would seem unlikely. Part of the reason is that it would not be as “successful” as QE1 or QE2. There is a good deal of disagreement over how successful either round really was.
For our money, this week’s biggest change so far came from the DOE’s four-week demand figures. Four-week total demand came in at 19.648 million bpd, up 1.43% from levels seen a year ago. At the end of July, it had been at 18.858 million bpd and had been down 1.97%. This represents a major turnaround, and it started a few weeks ago with distillate demand turning positive. Four-week gasoline demand remains down 2.35%.
FMX Newswire
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Bentek Energy
- Texas Observer – Texas Storage Helps Fill Downstream Demand.
- Midcon Observer – Demand Falls Slightly on Lower Cooling Load.
- Power Burn Analytic Report – North Anna Impact on Gas Demand Less Than Expected.
- Industrial End Users Analytic Report – Demand Runs Higher Both Year-To-Date and Month-To-Date.
Platts
- Republicans on US House panel criticizes Obama oil shale policy.
- Hopes high for Libyan crude oil output resumption within 3-4 months.
- Australian coalseam gas player Dart plans Singapore IPO for global assets.
- Implications of Cushing to Houston Double E crude oil pipeline project discussed in Platts podcast.
Bloomberg
- Oil Trades Near One-Week High in London on Fed Speculation, U.S. Supplies.
- PetroChina’s Profit Misses Estimates.
- Glencore ‘Aggressively’ Chases Acquisitions After First-Half Profit Jump.
- Hurricane Irene Strikes Bahamas on Path to U.S.
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