Prices for February 5th, 2010
| HEATING OIL cents per gallon | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 194.50 | 182.72 | 187.48 | dn 06.04 | | APR | 195.00 | 183.50 | 188.28 | dn 05.98 | | MAY | 195.61 | 184.50 | 189.16 | dn 05.89 | | JUN | 196.85 | 185.42 | 190.41 | dn 05.86 | | JUL | 198.01 | 187.50 | 192.46 | dn 05.69 | | AUG | 200.17 | 191.00 | 194.53 | dn 05.57 | | SEP | 202.10 | 193.07 | 196.83 | dn 05.56 | | OCT | 204.09 | 195.90 | 199.32 | dn 05.55 | | NOV | 205.59 | 198.00 | 201.73 | dn 05.53 | | DEC | 208.74 | 199.69 | 204.13 | dn 05.50 | | JAN | 211.05 | 203.60 | 206.58 | dn 05.48 | | FEB | 212.30 | 204.19 | 207.98 | dn 05.46 | | Estimated Volume (day before) total all prev day 109,637 | | NYMEX CRUDE OIL dollars per barrel | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 73.94 | 69.50 | 71.19 | dn 01.95 | | APR | 74.27 | 69.80 | 71.52 | dn 02.02 | | MAY | 74.72 | 70.28 | 71.95 | dn 02.19 | | JUN | 75.15 | 70.75 | 72.45 | dn 02.29 | | JUL | 75.47 | 71.65 | 72.97 | dn 02.33 | | AUG | 76.01 | 72.04 | 73.46 | dn 02.37 | | | | | | | | | Estimated Volume… 907,924 Opec Basket…$72.73 dn $2.41
Prompt #2 Oil NYH 88..-1.25 to -0.75, 74 Lo S…+0.75 to +1.25
US Gulf 88 grade…-4.75 to -4.25, 74 grade Lo S…-3.50 to -3.00 Group .........-5.50 to -5.00 Lo S.....-5.50 to -5.00
Chicago ......-5.25 to -4.25 cash quotes by Dow Jones | | | |
| NYMEX RBOB GASOLINE cents per gallon | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 195.95 | 184.19 | 188.64 | dn 06.44 | | APR | 205.96 | 194.95 | 199.22 | dn 06.18 | | MAY | 206.85 | 196.10 | 200.30 | dn 06.06 | | JUN | 206.98 | 196.40 | 200.67 | dn 05.93 | | JUL | 205.42 | 197.30 | 200.30 | dn 05.89 | | AUG | 204.55 | 195.37 | 199.46 | dn 05.90 | | SEP | 201.89 | 194.30 | 198.54 | dn 05.82 | | OCT | 190.00 | 186.00 | 188.70 | dn 05.79 | | Estimated RB Volume day before 90,711 | | NYMEX NATURAL GAS dollars per mmBtu | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 5.598 | 5.383 | 5.515 | up 0.099 | | APR | 5.557 | 5.357 | 5.483 | up 0.099 | | MAY | 5.597 | 5.411 | 5.535 | up 0.107 | | JUN | 5.661 | 5.490 | 5.604 | up 0.105 | | | Estimated Volume…day before (241,308)
Nymex statistics are based on composite Access & Day Sessions
Prompt Gasoline NYH M5 -1.50 /-1.00 RBOB +2.75 /+4.25
US Gulf M4: -4.25 to -3.75 RBOB +5.25 to +5.75
L.A. Conv Reg 197.00-198.00, N-grade Group 180.40-180.90 Chi 186.35-186.85 | |
Market Review for Friday & Over the Weekend
IL prices dropped sharply on Friday, after trying initially to rally. The long-anticipated unemployment figures for January were released on Friday, and they showed a loss of 20,000 jobs in January and revised December’s losses from 85,000 to 150,000. Expectations for January had been for no change, so we suddenly had twice as many jobs lost in December and January as had been expected. At the same time, though, the percentage unemployed dropped to less than 10%. It did not make much sense, but we guess fewer people were actively looking for work.
The US dollar dropped in the early response, but as the day wore on, it rallied, and oil prices, which had been initially higher after the numbers, started to drop. We also discovered that Thursday’s steep declines had come on volume of more than 900,000 contracts, further confirming the significance of that decline. Open interest declined (for crude oil) on Thursday, so it seems to have been long liquidation. That can be supportive, but it did not feel that way at the end of last week.
| Fuel for Thought In a show of strength as Iran celebrates the 31st anniversary of its revolution, Iranian President Mahmoud Ahmadinejad ordered the country’s atomic energy chief to start enriching uranium to the 20% level – just days after it looked like Iran had accepted a UN-brokered deal to have its uranium enriched to that higher level in Russia and France. Mr Ahmadinejad blamed Western powers for the change, telling state television that he had offered to give the West “two to three months and if they don’t agree, we would start ourselves.” US Defense Secretary Gates said, that Iran has had “multiple opportunities to provide reassure of its intentions. The results have been very disappointing.” |
For the week, as a whole, prices were down $1.70 in crude, 3.82 cents in heating oil and 2.70 cents in gasoline. It felt like it was much weaker, but Monday and Tuesday were both strong days. Thursday and Friday saw huge losses, and they pushed prices into the loss column for the week. The week started with a fresh air of optimism over the economic recovery but, by Friday, that had given way to a sense that it will take much more time to turn things around. Friday’s unemployment report raised fresh issues over the recovery.
Oil prices touched off a number of important sell-stops on Friday, under $72.40 and then under $70.00 in crude, 189.00 and 187.00 in heating oil and 188.99 in gasoline. These breaks brought in technical selling and we expect that they brought in heavy long liquidation.
For the week, dollar strength was a consistently bearish factor for oil prices, as traders returned to buy the greenback over concerns that a number of European countries (Greece, Spain and Portugal) are having troubles with sovereign debt. The US economy started the week with optimistic figures, but by the end of the week, there were lingering questions about the recovery.
Technicals
Prices sold off steeply again on Friday, and the decline on Thursday came on volume of 900,000 contracts, which was extraordinarily heavy volume and the highest amount seen in months. That reinforces the significance of the selloff, which seems to have been powered by long liquidation. Sell-stops were triggered as support levels were broken, under $72.40 and $70.00 in crude, under 189.00 and 187.00 in heating oil and under 188.99 in gasoline.
Cents per gallon
Above: Heating oil prices returned to the broken trendline and then broke down beneath support at 189.00 and 187.00.
March crude oil now has buy-stops over $73.94-$74.00, $77.20, $78.05, $78.36, $79.31-$79.47, $80.67, $82.35, $83.95, $84.83, $85.13, $89.82, $90.99, $93.02, $96.03, and $100.37. Sell-stops are under $69.30, $68.55, $68.00, $65.80-$66.20, and $64.95. March heating oil has buy-stops over 194.50, 202.65, 205.75, 208.10, 210.91, 211.90, 217.55, 222.72, 225.80, 227.05, 229.08, 238.95, 249.62, and 251.50. Sell stops are under 182.63, 177.00, 176.68, 173.75, 171.10, 170.35, and 168.60. March RBOB has buy-stops over 195.95-196.00, 203.75, 206.65, 206.88-207.35, 208.30, 214.60, 219.27, 222.70, 228.86, 240.10, 250.40, 252.00, 265.10, 267.85, 270.85, 272.00, and 280.25. Sell-stops are under 184.15, 182.40, 181.20, 179.20, 177.30, 175.14, 171.40, and 170.25.
Football: It does look like the bulls fumbled and lost the ball on Thursday and the bears picked up the first down and another.
Technical Support & Resistance
Mar crude oil Support: $71.15-$71.30, $70.55-$70.70, $69.30-$69.45, $68.50-$68.60, $68.00-$68.20.
Resistance: $73.90-$74.00, $77.05-$77.20, $77.95-$78.05, $78.25-$78.36, $79.30-$79.50.
Mar heating oil Support: 182.60-182.75, 177.00-177.20, 176.65-176.75, 173.75-173.90, 171.10-171.25.
Resistance: 194.40-194.50, 202.50-202.62, 203.50-203.72, 204.35-204.45, 205.50-205.75.
Mar Rbob Support: 184.15-184.30, 182.40-182.55, 181.20-181.35, 179.20-179.35, 177.30-177.45.
Resistance: 195.80-195.95, 203.60-203.75, 206.25-206.35, 206.60-206.65, 206.90-207.35.
Oil Inventory Reports
This week’s DOE report does not have as strong a history as many of the recent reports we have reviewed. The best proportion of years in one direction was six years out of eight for lower distillate stocks. Utilization was also higher in six of the last eight years (for an average increase of 0.563%). Both crude oil and gasoline stocks were higher in five of the last eight years, and there have been some big builds (4.9 million bbls in gasoline stocks in 2005, and 4.9 mln bbls in crude in 2006). Crude oil imports have trended lower this week, although the eight-year average bears no relation to what we will see this week.
Last Week’s Inventory Comparison: Distillate stocks are now 12.8 million bbls, or 8.91%, higher than a year ago. Heating oil inventories are 3.9 mln bbls, or 10.24%, higher than they were a year ago. Gasoline stocks are 10.8 mln bbls (up 4.97%) higher against a year ago. Crude oil stocks are now 21.3 million bbls, or 6.08%, lower than a year ago. Residual stocks are 4.2 mln bbls (11.83%) higher than a year ago, jet fuel stocks are 2.9 mln bbls, (7.20%) higher than a year ago. Utilization is 5.80% lower than a year ago and 8.70% below the eight-year average. It is 9.88% lower than the four-year, pre-Katrina average and 7.52% below the average of the four years since the big hurricanes (Katrina & Rita) in 2005.
Last Week’s Demand: Four-week, total refined products demand came in at 18.750 million bpd, down 0.003 mln bbls on the week, and down 0.375 mln bpd and 1.96% against a year ago. Four weeks ago, it was 0.050 mln bpd and 0.26% higher than a year ago. Four-week gasoline demand is at 8.644 mln bpd, down 0.53%, compared to up 0.32% four weeks ago. It fell 32,000 bpd on the week. Four-week distillate demand is now at 3.705 mln bpd, down 9.08%, compared to down 0.98% four weeks ago. Four-week jet demand is now at 1.360 mln bpd, up 0.22% against a year ago, compared to up 8.17% four weeks ago. Four-week residual fuel demand is at 0.461 mln bpd, down 34.14%, compared to down 1.19% 11 weeks ago. Propane use is up 13.63%, at 1.634 mln bpd.
Last Week’s API Report: This week’s API report showed a build of 4.723 mln bbls in crude oil stocks, a draw of 1.022 mln bbls in distillate stocks and a draw of 1.159 mln bbls in gasoline inventories. Utilization was up 0.4% to 78.0%. Implied demand came in at 9.196 mln bpd in gasoline and at 4.019 mln bpd in distillate. Crude oil imports were up 0.322 mln bpd to 8.471 mln bpd. Demand was pretty average, and we had a build in crude and draws in products in this report.
DOE Weekly Inventory Statistics
| Category | Final DOE Estimate
This Week’s Estimate | History
Last Year’s Report | Most Recent Changes
Last Week’s DOE Report | Versus A Year Ago
Millions of Barrels |
| Distillate | dn 2.00 to 2.50 mln bbls | dn 1.066 | dn 0.948 mln bbls | up 12.800 |
| Gasoline | up 1.00 to 1.50 | dn 2.662 | dn 1.306 | up 10.800 |
| Crude oil | up 1.25 to 2.25 | up 4.717 | up 2.317 | dn 21.300 |
| Utilization | up 0.3% to 0.8% | dn 1.9% at 81.6% | dn 0.75% at 77.70% | |
| Crude Imports | dn 0.000 to 0.500 mmbd | dn 0.385 to 9.652 | up 0.559 to 8.426 mln bpd | |
| DOE Distillate Demand | 3.659 mln bpd | dn 066,000 | Gasoline Demand | 8.613 mln bpd | dn 006,000 |
| DOE Distillate Production | 3.484 mln bpd | dn 032,000 | Gasoline Production | 8.584 mln bpd | dn 052,000 |
| DOE Distillate Imports | 0.438 mln bpd | dn 220,000 | Gasoline Imports | 0.926 mln bpd | up 103,000 |
Source: US Department of Energy’s Energy Information Administration
Open Interest Analysis
Crude oil open interest fell by 18,848 contracts on Thursday, after falling by 24,202 contracts on Wednesday. That looks like long liquidation and it seems that many of the week’s early buyers were sellers after Wednesday.
Heating oil open interest fell by 2,182 contracts on Thursday, when prices were lower. That looks like long liquidation and is theoretically supportive.
RBOB open interest fell by 3,489 contracts on Thursday when prices were lower. That looks like long liquidation, which would be supportive, at least in theory.
Natural gas open interest grew by 3,822 on Thursday, when prices were lightly lower. That looks like fresh selling, but it did not get much of a move lower going.
Thursday’s Open Interest Changes:
Crude 1,317,647 dn 18,848 Heat 313,591 dn 2,182 RBOB 256,143 dn 3,489 Nat gas 779,267 up 3,822
CFTC Commitments of Traders for Nymex (for the period ended Tuesday, Feb 2nd)
Crude oil prices gained $2.57bbl over the latest reporting period, and the best buying came from the “other reportables” category, which added 1,623 longs, but which also added 1,123 new shorts. Producers covered 6,749 shorts and liquidated 8,284 longs. Managed Money liquidated 2,386 longs and added 160 shorts while Swap Dealers liquidated 802 longs and covered 515 shorts. Based on these figures, we must deduce that day-trading helped push quotes higher – none of this did.
In heating oil futures, prices were up 7.34 cents a gallon, and the best net buying came from Swap Dealers, who bought 3,861 new longs and covered 72 shorts. Producers bought 832 longs and covered 4,783 shorts. Managed Money was on the short side, liquidating 1,388 longs and adding 2,498 new shorts. Other Reportables liquidated 698 longs and added 99 shorts. The motive buying, though, seems to have come from Swap Dealers on this round.
Gasoline prices gained 4.49 cents a gallon during the period under review. Producer short-covering seems to have given us the best buying; Producers liquidated 5,079 longs and covered 9,475 shorts. Swap dealers liquidated 1,444 longs and covered 720 shorts. Other reportables liquidated 212 longs and covered 769 shorts. Managed Money liquidated 2,406 and added 908.
In natural gas, prices gained 3.2 cents during the period under review. Producers added 130 longs and added 2,442 shorts. Swap dealers added 6,926 longs and added 5,048 shorts. Other Reportables added 280 longs and added 3,861 shorts. Net short-covering by Managed Money, which liquidated 11,763 longs and covered 18,540 shorts, was the motive force.
Natural Gas & Utility Generation
Natural gas prices got over the negative report last week by focusing on cold weather forecasts and on the likelihood of there being a strong drawdown in this week’s EIA report. There was early talk, at the end of last week, about there possibly being a drawdown of 200 bcf or more in this week’s figures. It was genuinely cold across large parts of the country last week, and forecasts suggest that the bitterly cold readings will continue to be a factor into the end of this month. The National Weather Service (NWS) is calling for colder-than-normal temperatures pretty much all the way to February 18th from here.
Last week’s report was a major setback for the bulls, and it increased the surpluses against both last year and against the five-year average. Last week’s reported pull of 115 bcf was 7-9 bcf less than expected, 79-80 bcf less than a year ago (going right onto the year-on-year surplus) and 52-63 bcf less than the five-year averages. Those increases were added right onto the surpluses against a year ago and against the five-year average. This week’s report will be compared to last year’s draw and the draw over the previous five years. Last year, for the report corresponding to the one coming out this Thursday, there was a drawdown of 159 bcf. The five-year average, using similar Friday reports in our records, was a draw of 147.6. So, anything larger (on the draw side) of 159 bcf will eat into the surpluses against both a year ago and against the five year average. The eight-year average of similar reports was a drawdown of 158.5 bcf.
Given the time of year, and the fact that a number of forward-looking traders and observers tend to discount the end of winter once we get into the second half of February, this week’s set of numbers could set the stage for the rest of the month. March is almost always a bullish month, as traders get into it thinking spring, but almost always feeling winter; March is statistically colder in degree days than November is. It’s just that we have the full winter ahead of us in November and not so much left in March. Winter lasted well into April last year, so we need to be careful not to endorse the second-half February winter-is-ending mindset, but we do often see it.
In cash trading on Friday, Henry Hub prices were at $5.55-$5.68, up 0.17-$0.19 on the day (DJN). SoCal prices were at $5.60-$5.70, up $0.10-$0.11 on the day. El Paso Permian prices were up $0.11-$0.11 to $5.40-$5.50. Katy prices were up $0.11-$0.17 to $5.50-$5.57. Waha prices were up $0.11-$0.12 at $5.46-$5.54. Transco 6 was up $2.55-$6.40 at $9.20-$14.00/mmBtu, according to Dow Jones News (DJN). That jump was predicated on forecasts for vicious cold.
Palo Verde prices were last quoted at $49.75-$53.00/mwh. Northeastern prices last traded at $51.75-$78.50. Entergy was last at $38.50-$39.75. Ercot was last at $44.35-$49.00/mwh.
Support is at $5.36-$5.39, $5.22-$5.25, $5.12-$5.14, $5.06-$5.08, $4.96-$4.99, $4.83-$4.85, $4.64-$4.66, $4.40-$4.43, $4.15-$4.17, $4.05-$4.08, $3.73-$3.75, $3.66-$3.68, $3.50-$3.53, $3.44-$3.46, $3.28-$3.32, $2.91-$2.93, $2.80-$2.82, $2.74-$2.75, and $2.69-$2.70. Resistance is at $5.55-$5.60, $5.87-$5.90, $5.99-$6.03, $6.09-$6.11, $6.15-$6.17, $6.34-$6.37, $6.65-$6.69, $6.90-$6.94, $7.01-$7.04, $7.28-$7.31, and $7.34-$7.36.
Mar Natural Gas: Support: $5.36-$5.39, $5.23-$5.25, $5.12-$5.14, $5.06-$5.08, $4.96-$4.99, $4.83-$4.85.
Resistance: $5.55-$5.60, $5.71-$5.73, $5.87-$5.90, $5.99-$6.03, $6.09-$6.11, $6.15-$6.17.
Natural gas prices remain below their trendline. Weather remains the critical factor.
Dollars per million Btu
Natural gas prices are coming back from overbought pressures.
Dollars per million Btu
EIA Weekly Storage Figures
Last week’s EIA report showed a draw of 115 bcf on expectations for a draw of 122-124 bcf. Stocks are now 199 bcf higher than a year ago, against a surplus of 120 bcf a week ago, a surplus of 22 bcf two weeks ago and a surplus of 103 bcf three weeks ago. Stocks are now 9.02% higher than a year ago. They are 150 bcf and 6.65% above the five-year average.
For this week, the eight-year average (of similar Friday reports) was a draw of 158.58 bcf. The five-year average was a draw of 147.6 bcf. Last year’s draw was 159 bcf. The range over eight years was for draws of 98 to 259 bcf.
EIA Report
| Region | 01-29-10 | 01-22-10 | Change | Last Year | 5 Yr Avg |
| Cons East | 1251 | 1334 | dn 83 | 1105 | 1236 |
| Cons West | 359 | 380 | dn 21 | 337 | 301 |
| Producing | 796 | 807 | dn 11 | 765 | 720 |
| Total US | 2406 | 2521 | dn 115 | 2207 | 2256 |
Bcf, or Billions of cubic feet. Source: Energy Information Administration, US Department of Energy
News & Views
| In trading on Nymex, March crude oil prices were up $0.50 at $71.69/barrel at 10.30 PM EST, last night. March heating oil prices were up 1.32 cents to 1.8880/gallon. March RBOB prices were up 0.31 cents to 1.8895. March natural gas prices were up $0.136 to $5.651/mmBtu. Oil prices were higher last night, but everyone was talking about ample supply, poor demand, European sovereign debt & the dollar, and a tenuous recovery. Iran has gone on the offensive with the fuel enrichment deal, throwing the UN onto its back foot. The Iranian position is that it has agreed to a simultaneous exchange on Iranian soil and if the UN members “come forward and say we will exchange uranium unconditionally and cooperate on your reactors and medicine … fine, then we will cooperate, too.” If the UN Security Council does not accept Iran’s proposal, then it will move on without them and enrich its uranium to the 20% level by itself. This is a significant change in Iran’s approach and leaves the West in the position, effectively, of needing to respond to Iran’s ultimatum. It is a deft ploy. 
Crude oil prices were sharply lower on Friday, and there is now support at $68.50-$68.60. Last week had an extraordinary range, and the biggest influence was the US dollar. | 
Heating oil prices dropped sharply on Friday, and they broke beneath support at 189.00 and then at 187.00, touching off sell-stops under both in the process. The next support is at 182.70, Friday’s low. DOE History: Distillate stocks have fallen in six of the last eight years, by an average of 2.838 mln bbls. The eight-year average is a draw of 1.991 mln bbls. Gasoline stocks rose in five of the last eight years, for a five-year build of 2.560 mln bbls and an eight-year average build of 0.867 mln bbls. Crude oil stocks have been higher in five of the last eight years for a five-year average build of 3.063 mln bbls and it has an eight-year average build of 0.940 mln bbls. Utilization has been higher in six of the last eight years (up 1.18%) and has an eight-year average increase of 0.56%, and it has an eight-year average utilization figure of 86.96%. The four-year, pre-hurricane utilization average was 89.08%. Since Katrina, refineries have run at an average utilization rate of 84.85%. Crude oil imports have been lower in three of the last six years, and the average crude oil import figure over the last six years has been down 374,000 bpd. The average crude oil import figure over the last six years has been 9.686 million bpd. Imports were 1.260 million bpd below that average in last week’s report. That’s 13.0% lower. |
| Crude prices have support above $68.50, but the trend is lower. | |
The sovereign debt situation in Europe is giving the dollar support, oil markets still suffer from poor demand, the economic recovery is on shaky ground and important support has been broken. In the meantime, Iran has seized the reins in nuclear negotiations, giving the West the equivalent of a fait accompli & ultimatum (sorry for mixing French & Latin).
An Illustrated Look at Energy Market Factors
A Look at the US Dollar Versus the Euro
Dollar-Euro (dollar in euro cents): Three-Month Bar-Chart 
The US dollar added to its gains on Friday, confirming Thursday’s decisive breakout to the upside. We have effectively reached the objectives to the 72.80-73.00 area, and we could see a correction. Nonetheless, the trend is still higher.
http://www.advfn.com/p.php?pid=forexqkchart&curcode1=USD&curcode2=EUR
A Look at the Dow Jones Industrial Average (djia)
Dow Jones Industrial Average: Six-Month Chart
The DJIA was down for most of Friday’s session, but it finished higher, up a little more than 10 points at the final bell. Still, prices fell to the downside and look relatively weak, here.
Source: http://money.cnn.com/quote/chart/chart.html?symb=djia&sid=1643&time=6mo&Submit1=Refresh
A Look at Overbought/Oversold Oscillators
All three sets of oscillators show markets that are oversold, but not by enough to compel a rally anytime soon or immediately. Prices can fall significantly more before a rally will be needed.
Recommendations for Specific Market Segments
Heating Oil Distributors Heating oil prices started the week on such a strong note in an atmosphere of optimism over the state of the economy. By Tuesday, there had been three pieces of ostensibly supportive economic news, and the feeling was that the recovery was on solid ground. By Wednesday, that sentiment was under assault, although few had any idea that the floodgates would open on Thursday and Friday. As the week ended, the employment picture had injected fresh concerns and worries, and the decline in the percentage unemployed had dropped even as the (jobless) numbers had increased, underlining a fresh sense of hopelessness among those whose search for work has simply died on the vine. We are still holding capped-price programs as insurance against the upside, but we would not add to that protection now. Once we get towards the end of this month, though, that will change. We will have more on that a week from now. Diesel Users We would hold capped-price protection here, without adding more. NYH Ultra Low Sulfur Diesel.…191.25-191.75 plus 4.000 USG Ultra Low Sulfur Diesel.…187.00-188.00 minus 0.000 Jet/Kerosene Users & Airlines New York Harbor cash market differentials were 3.75 to 4.25 cents over January heating oil in NY Harbor and 0.75 under to 0.25 under the screen in the US Gulf. Anything under 4 cents is worth hedging. Diesel & Gasoline Marketers We would keep product hedged against lower prices. Gasoline Blenders & End-Users Prices are under intense selling pressure and we would hold off until late February or early March to buy into this weakness. Prompt NYH Fuel Ethanol…..191.00-194.00 Prompt USG Fuel Ethanol….182.00-184.00 Quotes from 02-04-10 Heating Oil End-Users We would hold capped-price protection, strictly as a precaution, but we are not going to want to buy until early March. Speculators We would buy short-time puts here, but are looking at the buying program that will start in March (more on that next week). Refiners The 7:5+2 crack spread was $7.90 on Friday. Crude Oil Producers Crude oil prices broke important support late last week, and we expect to see prices move lower from here. We will be looking to buy in early March. | Prompt Jet Fuel Prices New York Harbor 191.25-191.75 US Gulf 186.75-187.25 Midwest (Group Three) 188.75-189.75 Midwest (Chicago) 189.50-193.50 Los Angeles 191.00-192.00 San Francisco 191.00-192.00 Portland, Oregon 191.00-192.00 Cents per gallon Propane Prices Mont Belvieu……….…..non-TET………$1.331370 Cents per gallon  Gasoline prices also sold off steeply on Friday, touching off sell-stops under 188.99. They settled just below that figure, and there is major support now above 181.24. A break and settle beneath that would be extremely bearish.
We will take a look at the March seasonal next week, which has a very strong history of success in gasoline futures. |
So much seems bearish right this minute, but we continue to worry about the Iranian nuclear situation, which remains the big wild card for 2010. We are approaching the March seasonal, which we will cover in detail next week. We are bearish, near term, but we are as nervous as a long-tail cat at a rocking chair shop. And we are deeply concerned over the implications of everything seen last week for the economic recovery.