Prices for February 17th, 2010
| HEATING OIL cents per gallon | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 201.25 | 198.70 | 200.67 | up 01.04 | | APR | 202.20 | 199.69 | 201.68 | up 01.09 | | MAY | 203.10 | 200.83 | 202.65 | up 01.04 | | JUN | 204.27 | 201.98 | 203.84 | up 01.04 | | JUL | 206.39 | 204.08 | 205.91 | up 01.00 | | AUG | 208.04 | 206.47 | 208.01 | up 00.95 | | SEP | 210.29 | 208.54 | 210.16 | up 00.87 | | OCT | 212.35 | 211.19 | 212.56 | up 00.79 | | NOV | 213.76 | 213.61 | 214.86 | up 00.71 | | DEC | 217.69 | 215.58 | 217.16 | up 00.65 | | JAN | 219.00 | 218.50 | 219.49 | up 00.58 | | FEB | ---.-- | ---.-- | ---.-- | -- --.-- | | Estimated Volume (day before) total all prev day 87,703 | | NYMEX CRUDE OIL dollars per barrel | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 77.82 | 76.53 | 77.33 | up 00.32 | | APR | 78.22 | 76.93 | 77.73 | up 00.31 | | MAY | 78.69 | 77.41 | 78.22 | up 00.30 | | JUN | 79.13 | 77.93 | 78.71 | up 00.29 | | JUL | 79.64 | 78.51 | 79.17 | up 00.26 | | AUG | 79.97 | 79.17 | 79.57 | up 00.24 | | | | | | | | | Estimated Volume… 657,904 Opec Basket…$73.06 up $1.34
Prompt #2 Oil NYH 88..-1.25 to -1.00, 74 Lo S…+0.75 to +1.25
US Gulf 88 grade…-4.50 to -4.25, 74 grade Lo S…-1.50 to -1.00 Group .........-5.25 to -4.75 Lo S.....-5.25 to -4.75
Chicago ......-5.00 to -4.00 cash quotes by Dow Jones | | | |
| NYMEX RBOB GASOLINE cents per gallon | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 201.03 | 198.51 | 200.71 | up 01.89 | | APR | 213.24 | 210.80 | 212.79 | up 01.45 | | MAY | 214.26 | 211.95 | 213.95 | up 01.36 | | JUN | 214.55 | 212.12 | 214.18 | up 01.28 | | JUL | 214.10 | 212.15 | 213.77 | up 01.22 | | AUG | 213.09 | 211.59 | 213.02 | up 01.17 | | SEP | 211.91 | 210.18 | 212.06 | up 01.13 | | OCT | 202.24 | 200.78 | 202.09 | up 01.06 | | Estimated RB Volume day before 77,620 | | NYMEX NATURAL GAS dollars per mmBtu | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 5.414 | 5.274 | 5.386 | up 0.076 | | APR | 5.388 | 5.261 | 5.363 | up 0.061 | | MAY | 5.436 | 5.320 | 5.416 | up 0.056 | | JUN | 5.501 | 5.400 | 5.482 | up 0.048 | | | Estimated Volume…day before (291,923)
Nymex statistics are based on composite Access & Day Sessions
Prompt Gasoline NYH M5 -0.75 /-0.25 RBOB +4.00 /+4.50
US Gulf M4: -3.25 to -3.00 RBOB +0.50 to +1.00
L.A. Conv Reg 201.00-202.00, N-grade Group 195.95-196.70 Chi 194.20-195.70 | |
Market Review for Wednesday
HE US dollar came back strongly yesterday, and the euro gave back most of its gains from Tuesday. Traders cited the most recent minutes of the Federal Open Market Committee (FOMC), which were released yesterday. In these, the Fed discussed reasons that lead it to believe the US economy is strengthening – an end-result that should ultimately lead to higher and more normal interest rates. That helped the US dollar. And the euro was beset by fresh or renewed concerns that current troubles in Greece could spread to Portugal, Spain or even Italy, potentially. Investors seem to have rethought Tuesday’s overly aggressive buying in the common currency, which had been triggered by nothing more than assurances that the IMF would “watch closely” as Greece tries to find solutions and that other European nations might then insist on added stringencies. It did not strike us as the tough and toothy approach that seemed to be reflected by markets on Tuesday. The reappraisal started early yesterday and continued through the session.
| Fuel for Thought A new “modular” nuclear technology has received the support of three large utilities, potentially paving the way for the installation of a number of these small nuclear reactors (125-140 megawatts) at existing nuclear facilities and at coal-fired utilities that are being phased out because of greenhouse gas emissions. The White House announced more than $8 billion in loan guarantees this week, and they are expected to lead to the first new nuclear plant in the US in nearly 30 years. President Obama has proposed increasing loan guarantees to $54 billion in an effort to spur nuclear technology, which is being seen as preferable to plants that produce carbon emissions; 20% of US power capacity is nuclear. |
The dollar’s recovery was further aided by news that January housing starts had reached their highest level since July, 2009. And January industrial production was up 0.9%, better than the 0.8% expected. December production was also revised up a tenth of a percentage point, to 0.7%. Manufacturing was reported up 1.0% in January. These figures bolstered the case for a strengthening economy.
Oil prices also benefited from the stronger economic data, although last night’s API report showed the lowest double implied demand combination in distillate and gasoline we have seen in years. Gasoline implied demand was 7.946 mln bpd while distillate implied demand was 3.337 mln bpd. That seems particularly low, given bitterly cold temperatures over the week. Neither number suggests economic recovery. At the same time, MasterCard’s SpendingPulse reported its lowest gasoline demand in 16 months, reporting average daily use of 8.84 mln bpd, down 2.5% on the week and off 6.1% over the last two weeks. Four-week demand is up 0.4% against a year ago, but this was seen as a disappointing figure combining snowstorms and recession.
Technicals
Oil prices were higher yesterday, but they did not continue in a vein that would confirm the same promise seen on Tuesday, when prices advanced strongly on little bullish information. There is resistance overhead, at $78.04 in crude, at 201.00-201.03 in gasoline, and at 205.74 in heating oil. In addition, we do have the seasonal tendency for stronger prices just about to begin, and that is going to be a growing factor, we would expect.
Cents per gallon
Above: Heating oil prices advanced yesterday, but they could not break back above resistance at their old trendline.
March crude oil now has buy-stops over $77.85, $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 $76.50, $73.70, $72.60, $71.30, $70.75, $69.30, $68.55, $68.00, $65.80-$66.20, and $64.95. March heating oil has buy-stops over 201.25, 202.65, 203.75, 204.45, 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 198.70, 190.80, 189.95, 187.45, 186.50, 182.63, 177.00, 176.68, 173.75, 171.10, 170.35, and 168.60. March RBOB has buy-stops over 201.05, 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, and 270.85. Sell-stops are under 198.50, 191.85, 187.00, 184.15, 182.40, 181.20, 179.20, 177.30, 175.14, 171.40, and 170.25.
Football: The bulls gained three yards yesterday on first down, making it second and seven to go, here.
Technical Support & Resistance
Mar crude oil Support: $76.50-$76.60, $73.35-$73.50, $72.60-$72.75, $71.15-$71.30, $70.55-$70.70.
Resistance: $77.80-$78.05, $78.25-$78.36, $79.31-$79.50, $80.60-$80.70, $82.20-$82.35.
Mar heating oil Support: 198.70-198.85, 190.75-190.90, 189.95-190.15, 187.45-187.60, 186.50-186.65.
Resistance: 201.15-201.25, 202.50-202.62, 203.50-203.72, 204.35-204.45, 205.60-205.75.
Mar Rbob Support: 198.50-198.60, 191.85-192.00, 188.90-189.00, 188.25-188.40, 187.00-187.15.
Resistance: 200.85-201.05, 203.60-203.75, 206.25-206.35, 206.60-206.65, 207.20-207.35.
Oil Inventory Reports
For this coming week’s report, there have been eight straight years of distillate stock declines this week, averaging 3.062 million bbls. Utilization has been all over the place this week, with four years higher, three lower and one unchanged. Gasoline stocks have been higher in five years and crude has been higher in six years. It is clear, from last night’s API report and from MasterCard’s figures that gasoline demand is likely to take a major hit from last week’s snowstorms. That could give us a surprisingly large build today in gasoline inventories. The API figures suggest that distillate demand will remain weak, as well.
Last Week’s Inventory Comparison: Distillate stocks are now 12.4 million bbls, or 8.62%, higher than a year ago. Heating oil inventories are 6.0 mln bbls, or 16.00%, higher than they were a year ago. Gasoline stocks are 13.0 mln bbls (up 5.98%) higher against a year ago. Crude oil stocks are now 21.8 million bbls, or 6.17%, lower than a year ago. Residual stocks are 3.4 mln bbls (9.44%) higher than a year ago, jet fuel stocks are 1.6 mln bbls, (3.92%) higher than a year ago. Utilization is 2.50% lower than a year ago and 7.86% below the eight-year average. It is 9.98% lower than the four-year, pre-Katrina average and 5.75% 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, up 0.156 mln bbls on the week, and down 0.159 mln bpd and 0.83% against a year ago. Five weeks ago, it was 0.050 mln bpd and 0.26% higher than a year ago. Four-week gasoline demand is at 8.650 mln bpd, down 0.67%, compared to up 0.32% five weeks ago. It gained 6,000 bpd on the week. Four-week distillate demand is now at 3.726 mln bpd, down 8.05%, compared to down 0.98% five weeks ago. Four-week jet demand is now at 1.372 mln bpd, up 1.25% against a year ago, compared to up 8.17% five weeks ago. Four-week residual fuel demand is at 0.543 mln bpd, down 19.19%, compared to down 34.14% one week ago. Propane use is up 13.06%, to 1.601 mln bpd. Gasoline supply increased by 465,000 bpd in last week’s report.
This Week’s API Report: This week’s API report showed a draw of 0.063 mln bbls in crude oil stocks, a build of 1.283 mln bbls in distillate stocks and a build of 1.428 mln bbls in gasoline inventories. Utilization was up 2.9% to 79.9%. Implied demand came in at a pathetic 7.946 mln bpd in gasoline and at an anemic 3.337 mln bpd in distillate. Crude oil imports were down 0.336 mln bpd to 8.039 mln bpd. Both implied demand figures were so incredibly low we had trouble believing them. The gasoline demand was low because of the snow, but the cold weather should have helped distillate demand.
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 0.800 | dn 0.356 mln bbls | up 12.400 |
| Gasoline | up 1.00 to 1.50 | up 1.100 | up 2.324 | up 13.000 |
| Crude oil | up 1.25 to 2.25 | dn 0.200 | up 2.424 | dn 21.800 |
| Utilization | up 0.3% to 0.8% | up 0.7% at 82.3% | up 1.40% at 79.10% | |
| Crude Imports | dn 0.000 to 0.500 mmbd | dn 0.859 to 8.793 | dn 0.084 to 8.342 mln bpd | |
| DOE Distillate Demand | 3.696 mln bpd | up 037,000 | Gasoline Demand | 8.766 mln bpd | up 153,000 |
| DOE Distillate Production | 3.413 mln bpd | dn 071,000 | Gasoline Production | 8.807 mln bpd | up 223,000 |
| DOE Distillate Imports | 0.630 mln bpd | up 192,000 | Gasoline Imports | 1.168 mln bpd | up 242,000 |
Source: US Department of Energy’s Energy Information Administration
Open Interest Analysis
Crude oil open interest fell by 31,820 contracts on Tuesday, when prices were higher. That looks like heavy short-covering, which is surprising, because the buying came in reaction to higher equities and a lower dollar. It may have been expiry-related.
Heating oil open interest fell by 3,254 contracts on Tuesday, when prices were higher. That looks like short-covering and is bearish. We also find this somewhat surprising.
RBOB open interest fell by 2,375 contracts on Tuesday, when prices were higher. That looks like net short-covering, which would be bearish.
Natural gas open interest fell by 1,311 on Tuesday, when prices were lower. That looks like long liquidation, which would be supportive. A number of open interest moves in the energy complex have been unusual or surprising recently.
Tuesday’s Open Interest Changes:
Crude 1,301,624 dn 31,820 Heat 300,777 dn 3,254 RBOB 255,823 dn 2,375 Nat gas 780,477 dn 1,311
CFTC Commitments of Traders for Nymex (for the period ended Tuesday, Feb 2nd)
Crude oil prices dropped $3.53/bbl over the latest reporting period, and the best selling came from the “other reportables” category, which liquidated 2,360 longs, but which also added 517 new shorts. Producers added 1,290 shorts and added 2,221 shorts. Managed Money added 1,220 longs and covered 2,931 shorts while Swap Dealers added 3,517 longs and covered 1,555 shorts. Producers actively sold short in this market, but they bought about half of what they sold. The “other” selling did it.
In heating oil futures, prices dropped 9.77 cents a gallon, and the best net selling came from Managed Money liquidation. That category liquidated 6,267 long contracts and sold 161 new shorts. Swap Dealers were the best buyers, adding 4,753 new longs against 189 new shorts. Producers bought 3,379 new longs and covered 1,147 shorts. Other Reportables liquidated 1,418 longs and covered 320 shorts.
Gasoline prices dropped 9.26 cents a gallon during the period under review. Managed Money accounts liquidated 8,639 longs and added 17 shorts, making it the best net seller. Swap Dealers liquidated 687 longs and covered 62 shorts. Producers bought into the weakness, adding 9,798 new longs, while adding 1,827 new shorts. The Other Reportable category bought 810 new longs and covered 1,357 shorts as prices dropped.
In natural gas, prices fell 17.2 cents during the period under review. Producers liquidated 78 longs and covered 1,364 shorts. Swap dealers liquidated 9,167 longs and covered 1,496 shorts. Other Reportables liquidated 286 longs and covered 3,136 shorts. Managed Money accounts added 682 longs and covered 4,999 shorts. Swap Dealer liquidation pushed quotes lower.
Natural Gas & Utility Generation
Natural gas prices were back up again yesterday, as traders started looking ahead to today’s EIA report. Traders are looking for a larger-than-normal withdrawal from storage in this week’s figures, with Dow Jones calling for a pull of 190 bcf. Bloomberg is looking for a drawdown of 187-188 bcf. As we have noted here recently, last year’s report showed an unusually small withdrawal of just 24-44 bcf. The five year average draw is variously stated between 126 and 129 bcf (similar Friday’s or dates).and the five-year average is a draw of about 126 bcf-130 bcf. If today’s withdrawal is on target, we should see a major reduction in the surpluses.
Despite those fairly clear-cut numbers, and the easy subtraction one can do as a result, traders are feeling the normal mid-February “end-of-winter” fears that withdrawals will soon end. They probably won’t, but this is something we see every year as regularly as “jacket-day,” that first crisp day in autumn, or “shirt & skirt-day,” the first warm day in spring. All of these come early, as figurative shots-across-the-bow, harbingers of what’s to come, but nevertheless early signs rather than lasting and enduring streaks. It always warms up again after jacket day and always gets cold enough to force back on the long coats of winter before the long, consecutive days of a new season have permanently arrived. We are trading futures, and therein lies the allure of these forward-looking departures from what came before – and so often comes after, for a spell. March is statistically colder than November, but one precedes spring, while other comes before winter. The thought process is impossible to break. The funniest part of all this is that March often gives us the start of some major advances, while November often gives us the start of declines that seemingly run counter to the seasons they precede.
Prices are at an important point here. On the charts, there is clear support above $5.00, up to $5.06. A decisive break below that would be bearish. After what we expect to see happen to the surpluses (against a year ago and against the five-year average) in today’s report, it is difficult for us to believe that natural gas prices could be worth less than $5.00 per million Btu. Still, we have several weeks before the heating season is done.
In cash trading yesterday, Henry Hub prices were at $5.43-$5.51, down 0.18-$0.20 on the day (DJN). SoCal prices were at $5.37-$5.43, down $0.21-$0.23 on the day. El Paso Permian prices were down $0.18-$0.22 to $5.19-$5.26. Katy prices were down $0.22-$0.22 to $5.36-$5.43. Waha prices were down $0.17-$0.18 at $5.28-$5.39. Transco 6 was down $0.24-$0.26 to $6.05-$6.26/mmBtu, according to Dow Jones News (DJN).
Palo Verde prices were last quoted at $45.00-$46.00/mwh. Northeastern prices last traded at $35.95-$52.75. Entergy was last at $44.75-$45.25. Ercot was last at $42.50-$46.00/mwh.
Support is at $5.27-$5.29, $5.20-$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 $5.46-$5.47, $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: $5.27-$5.29, $5.20-$5.25, $5.12-$5.14, $5.06-$5.08, $4.96-$4.99, $4.83-$4.85.
Resistance: $5.46-$5.47, $5.55-$5.60, $5.71-$5.73, $5.87-$5.90, $5.99-$6.03, $6.09-$6.11.
Natural gas prices rallied lightly yesterday and have critical support at $5.00-$5.06.
Dollars per million Btu
This shows a slightly longer version of the same picture above.
Dollars per million Btu
EIA Weekly Storage Figures
Last week’s EIA report showed a draw of 191 bcf on expectations for a draw of 180-183 bcf. Stocks are now 172 bcf higher than a year ago, against a surplus of 199 bcf a week ago, a surplus of 120 bcf two weeks ago and a surplus of 22 bcf three weeks ago. Stocks are now 8.42% higher than a year ago. They are 114 bcf and 5.43% above the five-year average.
For this week, the eight-year average (of similar Friday reports) was a draw of 139.63 bcf. The five-year average was a draw of 126.0 bcf. Last year’s draw was only 24 bcf. Bloomberg is looking for a draw of 187-188 bcf.
EIA Report
| Region | 02-05-10 | 01-29-10 | Change | Last Year | 5 Yr Avg |
| Cons East | 1135 | 1251 | dn 116 | 988 | 1134 |
| Cons West | 344 | 359 | dn 15 | 328 | 284 |
| Producing | 736 | 796 | dn 60 | 726 | 682 |
| Total US | 2215 | 2406 | dn 191 | 2043 | 2101 |
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 down $0.51 at $76.82/barrel at 12.30 AM EST, this morning. March heating oil prices were down 1.22 cents to 1.9945/gallon. March RBOB prices were down 1.10 cents to 1.9961. March natural gas prices were down $0.001 to $5.385/mmBtu. Asian equities markets were skittish very early this morning, and there was profit-taking on long positions. Last night’s API figures also brought in selling. DOE Expectations The table below lists the final survey results for Dow Jones, Bloomberg and Reuters. The DOE report will be released at 11.00 AM EDT on Thursday morning this week because of the Presidents’ Day holiday. Category Dow Jones Bloomberg Reuters Crude up 1.800 up 1.730 up 2.200 mln bbls Distillate dn 1.500 dn 1.500 dn 1.500 Gasoline up 1.500 up 1.500 up 1.500 Utilization up 0.20% up 0.19% up 0.20% 
Crude oil prices were slightly higher yesterday, and they fell short of reaching or removing the next major resistance at $78.04. Yesterday’s session did not negate Tuesday, but it did not bolster it. | 
Heating oil prices were higher yesterday, but not by enough to confirm what had seemed like a blossoming bull market. There is major resistance now at 205.74. DOE History: Distillate stocks have fallen in all of the last eight years, by an average of 3.062 mln bbls. The eight-year average is a draw of 3.062 mln bbls. Gasoline stocks rose in five of the last eight years, for a five-year build of 0.940 mln bbls and an eight-year average draw of 0.037 mln bbls. Crude oil stocks have been higher in six of the last eight years for a six-year average build of 3.017 mln bbls and it has an eight-year average build of 1.850 mln bbls. Utilization has been higher in four of the last eight years (up 0.93%) and has an eight-year average decline of 0.1%, with an eight-year average utilization figure of 86.86%. The four-year, pre-hurricane utilization average was 89.32%. Since Katrina, refineries have run at an average utilization rate of 84.40%. Crude oil imports have been higher in three of the last six years, and the average crude oil import figure over the last six years has been up 47,000 bpd. The average crude oil import figure over the last six years has been 9.731 million bpd. Imports were 1.389 million bpd below that average in last week’s report. That’s 14.27% lower, which indicates how much lower runs are now. |
| Crude prices have resistance at $78.04. | |
Prices were higher yesterday, despite a resurgent US dollar, as traders bought on positive economic news. Today’s DOE report has a number of reasons to expect bearish figures, especially in demand, which could give us stock builds.
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 took back all of Tuesday’s losses yesterday, and prices moved higher after yesterday’s normal session. A decisive break to the upside here could give us a fresh leg 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 ended the day up 40.43 points yesterday. Equities were higher on stronger economic signals and seemed to ignore any suggestion that a better economy will lead to higher interest rates.
Source: http://money.cnn.com/quote/chart/chart.html?symb=djia&sid=1643&time=6mo&Submit1=Refresh
Gasoline Seasonal Trade
In regular gasoline, the tendency for prices to advance from early March is even greater than it is in heating oil. Following the loose guideline of buying in the first two weeks of March and selling sometime before May 15th, the seasonal tendency has worked in 24 out of 25 years - or 96.00% of the time. That is the strongest seasonal tendency in any commodity over the last quarter of a century.
We have to admit that specification changes seem to have helped, partially because they have always been at their most acute in early spring. In fact, the only year that this seasonal has not worked since gasoline started trading on the Nymex was 2003, when prices rallied through March - in the leadup to the invasion of Iraq on March 19th of that year - and they then dropped into May. We advised against following this seasonal that year, as we saw prices advancing in January and February as it became clear that war with Iraq was coming.
Buying June gasoline futures in March has yielded profits consistently. The buying part is a great deal easier than the selling part, which can seem almost subjective, but there have been steady profits over the years in this trade. The following table shows whether one could have bought gasoline on March 1st and then have been able to sell it at a profit at some point in the first two weeks of May.
June Unleaded Regular Gasoline - Settlement on day nearest day listed
Year 3/1 4/1 4/15 5/1 5/15 Result
2009 127.62 138.67 146.33 151.74 168.06 ü
2008 269.15 263.27 287.30 287.82 316.58 ü
2007 190.56 203.08 209.42 224.47 230.16 ü
2006 171.04 188.79 213.87 214.66 205.40 ü
2005 146.00 174.61 150.47 151.45 140.52 ü
2004 110.95 106.74 117.20 123.54 141.01 ü
2003 103.39 85.22 84.56 79.02 86.73 û
2002 71.26 84.37 78.33 80.48 78.82 ü
2001 85.19 87.98 100.70 105.84 100.36 ü
2000 88.10 81.55 78.95 83.27 96.79 ü
1999 40.03 52.89 52.16 55.19 52.00 ü
1998 52.15 52.11 52.74 54.29 50.75 ü
1997 61.63 62.31 61.47 62.63 64.38 ü
1996 57.66 64.59 69.12 67.42 67.20 ü
1995 55.89 57.60 60.76 64.15 64.90 ü
1994 46.83 47.62 50.78 50.47 51.17 ü
1993 60.36 61.22 60.95 61.81 59.12 ü
1992 60.15 63.13 60.61 64.69 63.68 ü
1991 61.67 63.71 70.21 70.83 69.08 ü
1990 62.52 64.95 59.55 61.03 63.51 ü
1989 53.59 65.00 68.21 72.61 66.09 ü
1988 45.27 49.00 52.15 49.37 52.73 ü
1987 49.02 54.04 51.55 52.15 55.48 ü
1986 39.90 37.80 43.30 50.40 53.35 ü
1985 73.50 80.70 81.10 79.85 80.00 ü
This report is for information only and does not represent any offer to buy or sell futures, options, ETF’s, cash market or OTC forward or derivative instruments or stocks, bonds or shares in any specific company. Cameron Hanover and its principals DO NOT take positions in energy futures, options, equities or shares or in any financial instruments that might be influenced or touched upon by our comments, research or analysis. This information is believed to be reliable, but we cannot guarantee that everything written is true or accurate. Futures, options, stocks, bonds, and all financial derivatives are fraught with perils and carry significant financial risk. Nothing written here should be construed as a recommendation to buy, sell, or trade any financial instrument. Past results are no guarantee of future possibilities or results. Consult an experienced commodities broker or licensed professional before entering into any transaction involving futures, options, ETF’s, cash market or over-the-counter forward transactions. Trading in any of these instruments can generate huge and financially crippling losses, which can exceed initial investments, margins or deposits.
All Rights Reserved, Cameron Hanover, Copyright 2010. Reproduction or transmission of this report without permission is prohibited.
Tactical Variation
One of the best variations is to buy on March 1st, and sell 50% on May 1st and 50% on May 15th. One can use any system that buys in early March and sells later. One can start selling at any time after April 1st. The table below shows the profit and loss figures for the March 1st to May 15th period, taking half profits on May 1st and half on May 15th. The last four years have been spectacular, with the four largest gains coming in those four years.
June Unleaded Regular Gasoline - Settlement on day nearest day listed
Year 3/1 5/1 5/15 Average P/L Result
2009 127.62 151.74 168.06 159.90 +32.28 ü
2008 269.15 287.82 316.58 302.20 +33.05 ü
2007 190.56 224.47 230.16 227.31 +36.75 ü
2006 171.04 214.66 205.40 210.03 +38.99 ü
2005 146.00 151.45 140.52 145.98 -00.02 û
2004 110.95 123.54 141.01 132.27 +21.32 ü
2003 103.39 79.02 86.73 82.88 -20.51 û
2002 71.26 80.48 78.82 79.65 +8.39 ü
2001 85.19 105.84 100.36 103.10 +17.91 ü
2000 88.10 83.27 96.79 90.03 +1.93 ü
1999 40.03 55.19 52.00 53.60 +13.57 ü
1998 52.15 54.29 50.75 52.52 +0.37 ü
1997 61.63 62.63 64.38 63.51 +1.88 ü
1996 57.66 67.42 67.20 67.31 +9.65 ü
1995 55.89 64.15 64.90 64.52 +8.63 ü
1994 46.83 50.47 51.17 50.82 +3.99 ü
1993 60.36 61.81 59.12 60.46 +0.10 ü
1992 60.15 64.69 63.68 64.18 +4.13 ü
1991 61.67 70.83 69.08 69.95 +8.28 ü
1990 62.52 61.03 63.51 62.27 -0.25 û
1989 53.59 72.61 66.09 69.35 +15.76 ü
1988 45.27 49.37 52.73 51.05 +5.78 ü
1987 49.02 52.15 55.48 53.81 +4.79 ü
1986 39.90 50.40 53.35 51.87 +11.97 ü
1985 73.50 79.85 80.00 79.92 +6.42 ü
Using that system rigidly, there would have been profits in 22 out of 25 years for a net gain of $2.6516, or $111,367.20, per contract before commissions and fees, during the years we recommended it. One could have been hurt in 2003, although we specifically recommended against using this that year.
Five of the last six years have yielded profits of more than 20 cents a gallon. In 2005, it would have lost two-hundredths of a cent. Every year, we are afraid that this seasonal has too many adherents or that too many people are aware of it for it to work, again. And, yet it continues to work spectacularly – and its biggest successes have come in recent years. That does NOT mean it will work again this year … but we would take a close look at the factors leading to failure if it does not.
If one is going to use this, we recommend following it over the course of a number of years, rather than as a single, one-time trade. Given its historical success, we see this as a trading “campaign” to be undertaken each and every year. We would insist, though, on using normal money management principles. NEVER let one year or one trade hurt you.
Recommendations for Specific Market Segments
Heating Oil Distributors Heating oil prices were up dramatically yesterday as traders and investors reacted to higher equities and lower dollar values. There was nothing in Friday’s DOE report which suggested that we should expect cold weather to help demand in this market. We still will want to be buyers in the first two weeks of March, for seasonal reasons that we are going to include in the next few reports, starting with tonight’s (for tomorrow). The seasonal has worked at least 77% of the time, over 30 years, and the strongest percentage even reaches above 83%. It calls for the purchase of June heating oil in the first two weeks of March and the sale of those positions before May 15th. We will be covering it in detail in two special reports to be attached over the next few reports. It is possible that yesterday’s buying, or some of it, was early buying ahead of the seasonal influence. We are still holding capped-price programs as insurance against the kind of rally we saw yesterday. We do continue to see Iran as a potentially explosive wild card in this market. Diesel Users We would hold our caps and will be buying more, soon. NYH Ultra Low Sulfur Diesel.…204.90-205.15 plus 4.375 USG Ultra Low Sulfur Diesel.…201.15-201.40 plus 0.625 Jet/Kerosene Users & Airlines New York Harbor cash market differentials were 3.25 to 3.75 cents over January heating oil in NY Harbor and 0.50 under to 0.25 under the screen in the US Gulf. We still like locking in four cents or less, when we can. Diesel & Gasoline Marketers We would keep product hedged against lower prices. Gasoline Blenders & End-Users We are increasingly worried about the Iranian wild card, and we will be buying in two weeks, so we want to get a foot in the door now. Prompt NYH Fuel Ethanol…..180.00-183.00 Prompt USG Fuel Ethanol….170.00-173.00 Quotes from 02-12-10 Heating Oil End-Users We want to hold capped-price protection, here, and we will be looking to buy for April-May and part of next year in early March. If we see any sudden weakness before then, we would use it to buy. Speculators We will be looking to buy calls on any weakness between now and March 15th, increasing our positions the nearer we get to March. Refiners The 7:5+2 crack spread was $6.96 yesterday. Crude Oil Producers Crude oil prices posted small gains yesterday, and they have resistance up to $78.04. The bias may become increasingly bullish. | Prompt Jet Fuel Prices New York Harbor 203.90-204.40 US Gulf 200.15-200.40 Midwest (Group Three) 201.15-202.15 Midwest (Chicago) 201.40-201.90 Los Angeles 203.00-204.00 San Francisco 203.00-204.00 Portland, Oregon 203.00-204.00 Cents per gallon Propane Prices Mont Belvieu……….…..non-TET………$1.217500 Cents per gallon  Gasoline prices were higher yesterday, although they were unable to break decisively over 201.00, getting just as far as 201.03. Prices had reached 201.00 on Tuesday, but sold off into the close. Yesterday, they finished nearer the day’s high, but now have important resistance there.
We have included the gasoline seasonal tendency above. It is the single most reliable seasonal tendency in commodities over the last quarter of a century, failing to work just once during that period, because of the 2003 invasion of Iraq. It starts on page 8. |