Morning Petrospective – October 4, 2011

he oil complex was lower on Monday, as investors liquidated long positions across the board. Oil prices finished the day near their lowest prices in almost a year, and equities prices slumped and were on the precipice of falling to new lows for 2011. The US dollar is already at its highest levels for 2011. The DJIA dropped 258.08 to 10,655.30, and Monday’s finish was its lowest in almost a year, as well. The most alarming part of all this is that prices are oversold and in support – which has been a combination that has generated strong rallies in the past; now, that combination has not spurred buying, yet.

The US dollar was higher on Monday, finding an intraday bottom around 6:30 AM. Oil prices started dropping with Monday’s opening bell and they remained under pressure through most of the trading session. Market observers noted that oil prices seem to have been following stock market ups and downs through the day, and investors have seen in equities prices the reflected anticipation of economic activity, moving forward. If equities are weak, oil use can be extrapolated as being weak in the future, as well.

Late last week, our daily reports included pictures of Germany, not because it can beautiful there in October, but because one of last week’s compelling stories was the German parliament finally ratifying the second Greek bailout of $109 billion from July 21^st. Details needed to be hammered out and there were always going to be additional discussions, but we were not supposed to have the German vote on Friday just to return on Monday to fresh concerns on Monday – which is what has happened.

Greece said over the weekend that it might fail to reach its deficit-reduction targets this year, and that, in turn, raised the issue of whether Greece could raise the requisite bailout funds it needs to avoid default. For reasons that have escaped us for two months, we are having great trouble understanding how this problem seems to be solved every week – from Wednesday through Friday – invariably to return as a major issue for investors when they return to markets on Monday morning. We are starting to mutter under our breath, to no one in particular, “So, default already.” We have to expect that many Europeans are starting to feel this way, although maybe not so much those with fingers in the fire.

We are starting to feel that this afternoon’s API report might not be as eagerly received as a source of data as previous reports have been recently. And that would go for tomorrow’s DOE report, as well. Traders seem much less interested in oil supply and demand right now – even when compared to lower levels of interest over the last four years.

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

• Power Burn Analytic Report – Power Burn Shows Little Gain Over Yesterday.
• Supply/Demand Balance Analytic Report – Power Burn, ResComm Demand Moderate with Temperatures.
• Industrial End Users Analytic Report – ISM’s Purchasing Index Up in September; New Orders Flat for Month.
• Nuclear Plant Status Analytic Report – Turkey Point Down After Unplanned Maintenance Event.

Platts

• Mediterranean & Black Sea Aframax rates jump on Bosporus weather delays, say sources.
• Israeli energy industry sources say unaware of talks with Egypt on gas price hike.
• Saudis may import gas due to rocketing Mideast demand, says Gazprom official.
• NWE ultra low sulfur diesel premiums rise to 2008 levels on severe shortage, say traders.

Bloomberg

• Crude Falls to One-Year Low on Libya Supply; Goldman Cuts Brent Forecast.
• RWE, EON Keep Spending on U.K. Reactors as Germany Scraps Nuclear Plants.
• Billionaire Mordashov Adds Steel Mills as Mittal Retrenches: Commodities.
• Tiny Qatar’s Big Plans May Change U.S. Mideast Policy: Meghan O’Sullivan.

Technical Recap

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