Morning Petrospective – September 14, 2011
ctober crude oil futures settled above $90 for the first time in a month on Tuesday, as oil traders looked ahead to this week’s DOE report. The consensus is for a crude oil stock draw of 3 million bbls or more, according to surveys by the major wire services. Last week, as much as 60% of the oil platforms were closed in the US Gulf which, in turn, accounts for 27% of US total production. The lost production will be reflected in inventories on Wednesday, and traders were buying ahead of the numbers.
Despite the advance of WTI on Tuesday, we still feel that technical factors will be working against oil prices over the intermediate term. Over the near term the upside is limited by overbought pressures and by the upper, blue Bollinger Band, both of which have turned back refined products recently. The products seem to be following Brent, which has been weakening as WTI has strengthened, but we have double tops in both refined products, and those suggest to us that the upside in Brent – and in WTI – is limited.
The heating oil chart on the next page shows us the double top we just mentioned. We think that will keep prices from rallying significantly. And we think that it caps Brent, if not WTI, as well. Prices were oversold and in the upper Bollinger Band resistance at both highs. We will need to see prices oversold and in the Bollinger Band support to like heating oil on the charts.
The “trump card” factors seem to limit oil advances intermediate term. Stock markets seem beleaguered by sovereign debt worries in Europe and the lack of a brisk recovery here. Corporate profits remain a bright spot … but the US dollar has just had a major technical breakout. That argues against higher oil prices and it augurs tougher times ahead for US exporters, potentially. The breakout last week was strong enough to suggest a dramatic move higher in the dollar near term.
This week’s API report showed a build in distillate stocks of 0.067 million barrels. Gasoline stocks rose 2.758 million barrels. Crude oil stocks dropped 5.052 million barrels and utilization fell 1.8% to 83.9% while crude oil imports dropped 261,000 bpd to 8.717 million bpd. Implied demand came in at 4.823 million bpd in distillate and at 9.351 million bpd in gasoline.
FMX Newswire
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Bentek Energy
- Power Burn Analytic Report – Luminant to Idle Coal Generation, Switch to PRB Coal in Order to Meet CSAPR.
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- Industrial End Users Analytic Report – Daily Demand Sample Down 1%: Most Regions Lower.
Platts
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- Nebraska increasingly at the heart of the dispute over Keystone XL.
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- Platts' oil team discusses long anticipated amendments to technical standards for Russia's gasoline.
Bloomberg
- Crude Oil Drops From Six-Week High on Concern Economic Recovery to Falter.
- Korea’s $8.4 Billion Offshore Wind Farm Helps Shipyards Challenge Siemens.
- Russia’s Lukoil Drops on Election Threat to Tax Cuts: Russia Overnight.
- Israel Surrounded as Arab Spring Turns Darker: Jeffrey Goldberg.
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