Morning Petrospective – August 30, 2011
urricane Irene blew through the Northeast in a destructive gust of wind that will leave a number of homeowners and businesses in the dark for most of the rest of this week, if one believes the dire projections of local and regional government and power company officials. A couple of regional refineries shut down briefly, but they are already ramping back up to full production or to levels seen before the storm. The CME declared force majeure on September heating oil, giving shorts an extra five days to deliver oil.
Investors returned to the markets on Monday, grateful that the markets were open, that there had been no catastrophic damage and they started counting their blessings in the insurance sector. It has been a difficult year for insurers, with an earthquake in New Zealand, an earthquake and tsunami in Japan, and just last week an earthquake in Virginia and a hurricane along the US Atlantic Coast. The fact that Irene may have done somewhat less in damage put investors in a good mood to start the day.
In Greece, the second and third largest banks announced their combination, and that was followed by news that Bank of America (BoA) had sold its interest in a Chinese bank, further raising capital after Warren Buffett’s injection of $5 billion on Friday morning. Those moves took two whipping dogs off their hot seats. Equities were strong throughout the day, as a result.
Oil prices followed – to a degree. Gasoline prices had been higher on Thursday, because traders had been buying ahead of Hurricane Irene and the presumed closure of refineries and the delay of cargoes to the USAC. As it turned out, though, the supply disruptions turned out to be less than expected. It was demand that seems to have been disrupted, through curfews and admonitions not to drive. Gasoline prices were lower on Monday while crude oil and heating oil prices were higher.
Traders revisited the comments by Fed Chairman Ben Bernanke on Friday, on Monday. He essentially said that the Fed has tools it can use if it needs to, but he also said that the economy’s problems were best solved by Congress or the White House, from here. We feel that Texas Governor Rick Parry’s comments about printing money brought home to Mr Bernanke how political a quagmire he could be in. If the nation’s leaders agree that they need Fed action, he can give it to them, but without their blessing, he is going to try to calm down panicking investors by promising everything will get better.
By the final bell, the DJIA rallied 254.71 to 11,539.25, and that seems to have been the biggest factor in the oil market on Monday.
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
- South Korea awards offshore crude oil and natural gas exploration rights to Daewoo and STX.
- National Iranian Oil Co has dropped Gazprom Neft from a project to develop the Azar oil field and is in talks with a domestic consortium.
- Japan's August 1-10 CIF crude oil imports jump 15.9% on year at 4.07 mil b/d.
- EU could adopt sanctions on Syrian oil supplies "sometime on Friday morning, if all goes well," a European Commission spokesman says.
Bloomberg
- Crude Oil Falls From Two-Week High in New York on U.S. Supply Forecasts
- Utilities Work to Restore Electricity After Brush With Hurricane Irene
- Sinopec to Bet on Shale for Growth to Offset Refining Losses
- Hurricane Irene Damage: Deaths, Flooding, Losses of Power State-by-State
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