Prices for February 19th, 2010
| HEATING OIL cents per gallon | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 207.80 | 201.87 | 206.99 | up 01.83 | | APR | 208.71 | 202.79 | 207.94 | up 01.72 | | MAY | 209.30 | 203.76 | 208.72 | up 01.59 | | JUN | 210.51 | 204.80 | 209.82 | up 01.50 | | JUL | 211.65 | 206.97 | 211.63 | up 01.38 | | AUG | 213.56 | 209.50 | 213.51 | up 01.26 | | SEP | 215.55 | 212.05 | 215.41 | up 01.08 | | OCT | 217.06 | 215.83 | 217.64 | up 00.98 | | NOV | 219.36 | 219.21 | 219.80 | up 00.88 | | DEC | 222.02 | 218.30 | 221.97 | up 00.79 | | JAN | 223.74 | 223.49 | 224.16 | up 00.73 | | FEB | 225.36 | 221.95 | 225.36 | up 00.69 | | Estimated Volume (day before) total all prev day 113,834 | | NYMEX CRUDE OIL dollars per barrel | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 80.10 | 77.76 | 79.81 | up 00.75 | | APR | 80.34 | 78.10 | 80.06 | up 00.64 | | MAY | 80.63 | 78.55 | 80.45 | up 00.60 | | JUN | 81.04 | 78.98 | 80.85 | up 00.58 | | JUL | 81.40 | 79.44 | 81.22 | up 00.54 | | AUG | 81.59 | 80.06 | 81.53 | up 00.49 | | | | | | | | | Estimated Volume… 715,379 Opec Basket…$74.33 up $1.27
Prompt #2 Oil NYH 88..-1.75 to -1.25, 74 Lo S…+1.00 to +1.25
US Gulf 88 grade…-4.50 to -4.00, 74 grade Lo S…-1.50 to -1.00 Group .........-3.00 to -2.00 Lo S.....-3.00 to -2.00
Chicago ......-0.50 to -0.00 cash quotes by Dow Jones | | | |
| NYMEX RBOB GASOLINE cents per gallon | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 209.40 | 203.50 | 208.57 | up 01.65 | | APR | 220.75 | 214.62 | 220.04 | up 01.94 | | MAY | 221.38 | 216.00 | 220.69 | up 01.73 | | JUN | 220.90 | 215.76 | 220.67 | up 01.66 | | JUL | 220.34 | 216.37 | 220.05 | up 01.64 | | AUG | 219.14 | 215.26 | 219.09 | up 01.64 | | SEP | 218.06 | 214.28 | 217.94 | up 01.60 | | OCT | 205.95 | 205.95 | 206.32 | up 01.20 | | Estimated RB Volume day before 115,475 | | NYMEX NATURAL GAS dollars per mmBtu | | MONTH | HIGH | LOW | SETTLE | CHANGE | | MAR | 5.167 | 5.008 | 5.044 | dn 0.128 | | APR | 5.157 | 5.014 | 5.057 | dn 0.107 | | MAY | 5.222 | 5.078 | 5.121 | dn 0.105 | | JUN | 5.292 | 5.151 | 5.190 | dn 0.108 | | | Estimated Volume…day before (267,682)
Nymex statistics are based on composite Access & Day Sessions
Prompt Gasoline NYH M5 -1.25 /-1.00 RBOB +3.25 /+3.50
US Gulf M4: -2.50 to -2.00 RBOB +1.50 to +2.00
L.A. Conv Reg 210.00-211.00, N-grade Group 205.30-205.55 Chi 203.05-204.05 | |
Market Review for Friday & over the Weekend
HURSDAY afternoon’s Fed decision to raise the discount rate by 25 basis points helped the US dollar and hurt equities and commodities in trading Thursday evening and late night. But, after following that line into Friday morning, the “appetite for risk” sharpened and what started as mild peckishness developed by Friday afternoon into ravenous hunger. Commodities and equities that had been in the red turned into the green and finished strong. The US dollar, which had been so strong on Thursday afternoon and night, finished at the low end of its daily range by Friday afternoon.
Oil prices followed the same pattern. Crude oil prices had been down roughly a dollar late Thursday night. They were lower early Friday morning. But, by the end of business, they were up 75 cents on the day and up a whopping $5.68/bbl on the abbreviated week. Heating oil prices gained 15.10 cents a gallon and gasoline prices beat that with their own gain of 15.62 cents a gallon. Clearly, the market does not want to wait for he March seasonal to start officially.
| Fuel for Thought As the Iranian nuclear crisis deepens, analysts are wondering what steps can actually still be taken to send a strong message to Teheran. The only two items left to sanction are finance and gasoline, 40% of which Iran needs to import. Mr Ahmadinejad’s recent threat to make the West “regret” any fresh sanctions seems to raise the stakes. Preventing gasoline supplies from reaching Iran could be enough to invite retaliation in Iraq, Afghanistan or the Petroleum Gulf. The fact that the US is as vulnerable as Iran also raises questions. Israel has also been noticeably quiet, but its stated policy is that it cannot allow Iran to have nuclear weapons. As we begin the seasonal for strength, we fear that something will happen … . |
On Friday, the Labor Department reported “core” inflation down 0.1% in January, its first decline since January, 1982. But, once food and energy were included, the CPI was estimated up 0.2%. The decline in the so-called “core” rate was reportedly what halted the dollar’s advance against the euro, as investors saw in the number a reason to expect a pause in upward pressures on interest rates. On Friday, the dollar ended the session on its lows for the day.
A few factors became clear on Friday. The first is that the economy is strong enough to interpret the Fed’s hike in the discount rate as a sign of strength rather than as a shock to the system. The second is that investors are back buying with a vengeance. Friday’s CFTC report showed Managed Money accounts buying oil – but once again selling natural gas. There is at least one large fund buying oil and selling gas, for reasons that escape us, given the use of natural gas in more manufacturing and power generation than oil.
This is the last week before the official start of the March seasonal tendency. How much of last week’s buying came in anticipation of this is hard to tell. It is clear, though, the race is on; we would buy into any dips this week.
Technicals
The oil complex was higher on Friday, and it was a very strong four-day week for the bulls, gaining $5.68 in crude and more than 15 cents a gallon each in gasoline and heating oil prices. All three major traded contracts broke and settled above key resistance last week. Prices may next try to test the major highs at $83.95 in crude oil, 222.72 in heating oil and at 219.27 in gasoline prices.
Cents per gallon
Above: Gasoline prices were higher again on Friday.
March crude oil now has buy-stops over $80.10, $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 $77.75, $76.30, $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 207.80-208.10, 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 201.85, 197.95, 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 209.40, 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 203.50, 198.40, 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 seven yards on Friday on first down, making it second and three to go today.
Technical Support & Resistance
Mar crude oil Support: $77.75-$77.90, $76.30-$76.60, $73.35-$73.50, $72.60-$72.75, $71.15-$71.30.
Resistance: $79.95-$80.10, $80.60-$80.70, $82.20-$82.35, $83.85-$83.95, $84.75-$84.85.
Mar heating oil Support: 201.85-202.00, 197.95-198.05, 190.75-190.90, 189.95-190.15, 187.45-187.60.
Resistance: 207.80-208.10, 210.80-210.91, 211.80-211.90, 217.45-217.55, 222.60-222.75.
Mar Rbob Support: 203.50-203.65, 198.40-198.60, 191.85-192.00, 188.90-189.00, 188.25-188.40.
Resistance: 209.25-209.40, 214.50-214.60, 219.15-219.30, 222.55-222.70, 228.75-228.90.
Oil Inventory Reports
This week’s DOE report has given us drawdowns in both distillate and gasoline stocks over the years, with seven out of eight years showing distillate draws and five out of eight years showing draws in gasoline stocks. Crude oil stocks have risen in five of eight years. Utilization has risen in four years and declined in four years, with the declines larger than the gains. Crude oil imports have declined five out of the past six years this week. Last week was cold and Monday was a holiday, so those factors may be reflected in this week’s statistics.
Last Week’s Inventory Comparison: Distillate stocks are now 8.8 million bbls, or 6.09%, higher than a year ago. Heating oil inventories are 4.9 mln bbls, or 13.17%, higher than they were a year ago. Gasoline stocks are 15.2 mln bbls (up 7.01%) higher against a year ago. Crude oil stocks are now 19.2 million bbls, or 5.43%, lower than a year ago. Residual stocks are 1.0 mln bbls (2.71%) higher than a year ago, jet fuel stocks are 1.3 mln bbls, (3.14%) higher than a year ago. Utilization is 2.55% lower than a year ago and 7.11% below the eight-year average. It is 9.57% lower than the four-year, pre-Katrina average and 4.65% 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 18.995 million bpd, up 0.089 mln bbls on the week, and up 0.034 mln bpd and 0.18% against a year ago. One week ago, it was 0.159 mln bpd and 0.83% lower than a year ago. Four-week gasoline demand is at 8.630 mln bpd, down 1.26%, compared to up 0.32% six weeks ago. It lost 20,000 bpd on the week. Four-week distillate demand is now at 3.717 mln bpd, down 7.35%, compared to down 0.98% six weeks ago. Four-week jet demand is now at 1.370 mln bpd, up 1.41% against a year ago, compared to up 8.17% six weeks ago. Four-week residual fuel demand is at 0.647 mln bpd, up 3.69%, compared to down 34.14% two weeks ago. Propane use is up 9.65%, to 1.511 mln bpd. Gasoline supply decreased by 838,000 bpd this week, after gaining 465,000 bpd in last week’s report.
Last 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 2.50 to 3.00 mln bbls | up 0.800 | dn 2.937 mln bbls | up 8.800 |
| Gasoline | dn 1.00 to 1.50 | dn 3.400 | up 1.620 | up 15.200 |
| Crude oil | up 1.00 to 2.00 | up 0.700 | up 3.085 | dn 19.200 |
| Utilization | dn 0.1% to 0.6% | dn 0.9% at 81.4% | up 0.64% at 79.75% | |
| Crude Imports | dn 0.000 to 0.500 mmbd | dn 0.024 to 8.769 | up 0.206 to 8.548 mln bpd | |
| DOE Distillate Demand | 3.787 mln bpd | up 091,000 | Gasoline Demand | 8.521 mln bpd | dn 245,000 |
| DOE Distillate Production | 3.433 mln bpd | up 020,000 | Gasoline Production | 8.428 mln bpd | dn 379,000 |
| DOE Distillate Imports | 0.391 mln bpd | dn 239,000 | Gasoline Imports | 0.709 mln bpd | dn 459,000 |
Source: US Department of Energy’s Energy Information Administration
Open Interest Analysis
Crude oil open interest fell by 13,949 contracts on Thursday, when prices were higher. That looks like fairly heavy short-covering, which would be bearish. The March contract expires this afternoon.
Heating oil open interest grew by 765 contracts on Thursday, when prices were higher. That looks like new buying and would be supportive.
RBOB open interest rose by 694 contracts on Thursday, when prices were higher. That looks like new buying and is supportive.
Natural gas open interest grew by 12,045 on Thursday, when prices were lower. That looks like heavy, new selling and is bearish. It looks like funds are buying oil and selling natural gas as a spread.
Thursday’s Open Interest Changes:
Crude 1,291,641 dn 13,949 Heat 299,565 up 765 RBOB 254,501 up 694 Nat gas 790,783 up 12,045
CFTC Commitments of Traders for Nymex (for the period ended Tuesday, Feb 2nd)
Crude oil prices rallied $3.26/bbl over the latest reporting period, and the best buying came from Managed Money accounts. They bought 12,583 new longs and covered 19,037 shorts. Producers added 3,094 new longs and also added 4,466 new shorts. Swap Dealers and Other Reportables sold into the higher prices, liquidating 8,557 and 1,648 longs and selling 9,001 and 3,596 new shorts, respectively. It seems that investment money was flowing into the market on the long side, in response to higher equities, a weaker dollar or stronger economic data, which are what get investment-bank led index funds and ETF’s buying.
In heating oil futures, prices rallied 5.90 cents a gallon, and the best net buying came from Managed Money accounts, which were buying 556 longs and covering 1,626 shorts. Producers also covered 10,227 shorts, which would have pushed quotes higher, although they kicked out 8,93 existing longs. Swap Dealers liquidated 3,499 longs and sold 180 shorts. Other Reportables liquidated 260 longs and sold 496 new contracts short.
Gasoline prices gained 5.92 cents a gallon during the period under review. Managed Money accounts added 1,740 new longs and covered 1,682 shorts, while Other Reportables added 1,091 new longs and covered 87 shorts. Producers liquidated 4,066 longs and added 739 new shorts into the rise, while Swap Dealers liquidated 228 longs and added 346 new shorts. Funds and commission houses were the best buyers and the motivating force behind higher prices.
In natural gas, prices gained 2.0 cents during the period under review. Swap Dealers added 3,204 new longs against 564 new shorts; Other Reportables added 452 new longs and covered 1,937 shorts, and Producers liquidated 2,766 longs, but covered 3,699 shorts. The net buying from Swaps and Others and short-covering by Producers and Others pushed quotes higher. Managed Money accounts sold 6,098 new shorts against the purchase of just 244 new longs as prices rose.
Natural Gas & Utility Generation
Natural gas prices were down almost 13 cents per million Btu on Friday on what looked like fairly heavy fund selling. The reason for the selling was that recent temperature forecasts had predicted moderating readings in early March. March natural gas prices touched off sell-stops and triggered technical selling on the break below $5.06. Support extends down to $5.00, which could be on the line today. Prices do not seem to deserve being under $5.00, but funds seem to want to push them there, and today’s up-to-date weather outlook will help determine where prices move next.
Looking ahead to this week’s EIA report, the five-year average drawdown was 132.4 bcf, according to our records, and we had a draw of 101 bcf last year on the similar Friday. The numbers for the precise dates will doubtless be slightly different, but the numbers above will serve as a guideline. As a result, it is easy to do the arithmetic. Any draw of more than 135 bcf will cut into the surpluses (against both a year ago and the five-year average). Last week’s EIA report left underground storage levels 26 bcf and 1.30% higher than a year ago. They are 53 bcf and 2.69% above the five-year average.
We expect to see a draw of 150 bcf or more this week. That would erase the year-on-year surplus and would cut into the surplus against the five-year average. We still feel that cutting into the surpluses now will leave the market in a fundamentally sounder place as we end the heating season.
Many are already discounting that end. It is an often yearly ritual, with traders discounting the end of the heating season in the middle and end of February. At this stage, the forecasts are not calling for warm readings, only normal ones in the key Northeast. We are reluctant to buy into them too fully, though, because of the long-standing colder-than-normal trend in place. We would not be surprised to see today’s forecast return to the existing pattern. If it does not, though, we should expect to see it restored soon. It takes three solid weeks to break a trend in temperatures.
In cash trading on Friday, Henry Hub prices were at $5.03-$5.15, down 0.29-$0.31 on the day (DJN). SoCal prices were at $5.05-$5.15, down $0.25-$0.28 on the day. El Paso Permian prices were down $0.26-$0.27 to $4.86-$4.93. Katy prices were down $0.22-$0.34 to $4.93-$5.05. Waha prices were down $0.23-$0.33 at $4.90-$5.05. Transco 6 was down $0.40-$0.40 to $5.45-$5.65/mmBtu, according to Dow Jones News (DJN).
Palo Verde prices were last quoted at $41.00-$44.00/mwh. Northeastern prices last traded at $42.00-$50.50. Cinergy was last at $37.00-$40.00. Ercot was last at $42.00-$42.75/mwh.
Support is at $5.00-$5.01, $4.96-$4.97, $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 $5.16-$5.17, $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 : $5.00-$5.01, $4.96-$4.99, $4.83-$4.85, $4.64-$4.66, $4.40-$4.43, $4.15-$4.17.
Resistance: $5.16-$5.17, $5.46-$5.47, $5.55-$5.60, $5.71-$5.73, $5.87-$5.90, $5.99-$6.03.
Natural gas prices dropped yesterday and are one good push away from breaking support at $5.00-$5.06.
Dollars per million Btu
The crude-to-gas ratio was 15.82-to-one, its highest level since January 4th.
Ratio
EIA Weekly Storage Figures
Last week’s EIA report showed a draw of 190 bcf on expectations for a draw of 187-190 bcf. Stocks are now 26 bcf higher than a year ago, against a surplus of 172 bcf a week ago, a surplus of 199 bcf two weeks ago and a surplus of 120 bcf three weeks ago. Stocks are now 1.30% higher than a year ago. They are 53 bcf and 2.69% above the five-year average.
For this week, the eight-year average (of similar Friday reports) was a draw of 130.50 bcf. The five-year average was a draw of 132.4 bcf. Last year’s draw was 101 bcf.
EIA Report
| Region | 02-12-10 | 02-05-10 | Change | Last Year | 5 Yr Avg |
| Cons East | 1030 | 1135 | dn 105 | 951 | 1048 |
| Cons West | 322 | 344 | dn 22 | 314 | 270 |
| Producing | 673 | 736 | dn 63 | 735 | 655 |
| Total US | 2025 | 2215 | dn 190 | 1999 | 1972 |
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 $0.59 at $80.40/barrel at 11.30 PM EST, last night. March heating oil prices were up 1.96 cents to 2.0895/gallon. March RBOB prices were up 1.95 cents to 2.1052. March natural gas prices were down $0.079 to $4.965/mmBtu. There was buying in oil and selling in gas. Asian equities markets were higher early this morning as traders bought back what they sold Friday morning in reaction to the discount rate hike. Volume was broader as many Asian countries returned from a full week off for the lunar new year. Despite some bullish numbers out last week, jobless claims increased unexpectedly, by 31,000 to 473,000 for the week ended February 13th. Wholesale prices also increased more than expected in January, led by energy, light trucks and pharmaceuticals. They were up 1.4%, after a 0.4% increase in December. The core rate was up 0.3%. At the same time, only 72.6% of capacity is being utilized, as of the most recent report, for January. Capacity usage has averaged 80% over the last two decades. 
Crude oil prices advanced on Friday, as prices were higher for the fourth straight day. They have now been higher in eight out of nine sessions. Prices are trending higher. | 
Heating oil prices were higher on Friday, and they broke and settled above 205.74. Prices now seem poised for another test of the major resistance at 222.72. The trend is clearly higher, here. DOE History: Distillate stocks have fallen in seven of the last eight years, by an average of 2.600 mln bbls. The eight-year average is a draw of 2.175 mln bbls. Gasoline stocks fell in five of the last eight years, for a five-year draw of 2.140 mln bbls and an eight-year average draw of 0.888 mln bbls. Crude oil stocks have been higher in five of the last eight years for a five-year average build of `.860 mln bbls and it has an eight-year average build of 0.725 mln bbls. Utilization has been lower in four of the last eight years and has an eight-year average decline of 0.36%, with an eight-year average utilization figure of 86.50%. The four-year, pre-hurricane utilization average was 88.68%. Since Katrina, refineries have run at an average utilization rate of 84.33%. Crude oil imports have been lower in five of the last six years, and the average crude oil import figure over the last six years has been down 200,000 bpd. The average crude oil import figure over the last six years has been 9.533 million bpd. Imports were nearly a million bpd below that average in last week’s report. Usually, imports don’t start to increase until refiners know they are going to increase refinery output. That is unlikely until May this year. |
| Crude prices are back in a bullish trend here. | |
Risk appetite seemed to have had a major resurgence in Friday’s trading. We have the powerful March-to-May seasonal tendency just a week away, and a closing window of opportunity for Israeli or US action against Iran’s nuclear program.
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 was higher Thursday night on the higher discount rate, but it paused and then started to weaken through Friday’s session, finishing near the lows for the day. A renewed interest in risk gave the euro fresh appeal, it was reported.
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 9.45 points on Friday. On Friday, the DJIA overcame initial skittishness that the Fed had taken its first of many steps towards tighter credit and it finished higher as demand for risk emerged stronger than before.
Source: http://money.cnn.com/quote/chart/chart.html?symb=djia&sid=1643&time=6mo&Submit1=Refresh
HEATING OIL – March Seasonal Tendency, Part Two
2. Longer-Term Trade: Split Buying Late Selling Approach
This trade requires buying half the position on March 1st, the other half on April 1st, with the sale of everything on May 15th. It has worked in 23 out of 30 years, and has made a net profit of 136.33 cents per contract, or $57,258.60 profit before fees and commissions, per contract. It has gained an average of 4.54 cents per year. The biggest loss was 7.44 cents in 2005. The biggest winners were 12.80 cents in 1982, 14.52 cents last year, 17.06 cents in 2004, and the 30.92 cents gained in 2008. Over the last six years, even with the losses in 2003, the average gain has been 12.19 cents per gallon.
This trade worked in three of the years that the trade above (in Friday’s report) did not - but did not work in four years where the first trade did. It has been a big winner in nine of the last 11 years, gaining an average of 8.70 cents per gallon. It would have worked in 1998 if we had sold it out on May 1st rather than the 15th, but that’s getting away from rules that have been designed to inject some order into a disorderly process. The year by year breakdown for the trade is below.
June Heating Oil Futures - Settlement on day closest to day listed.
Year 3/1 4/1 Avg Buy 5/15 P/L Result
2009 117.87 136.84 127.36 141.88 +14.52 ü
2008 278.03 283.67 280.85 311.77 +30.92 ü
2007 177.98 187.10 182.54 189.02 +6.48 ü
2006 178.11 187.63 182.87 194.50 +11.63 ü
2005 138.63 146.32 142,47 135.03 - 7.44 û
2004 89.90 84.16 87.03 104.09 +17.06 ü
2003 86.28 72.45 79.37 75.04 -4.33 û
2002 59.10 68.69 63.90 67.79 +3.89 ü
2001 69.89 67.01 68.45 76.63 +8.18 ü
2000 71.57 65.85 68.71 77.25 +8.54 ü
1999 33.05 43.40 38.23 44.47 +6.24 ü
1998 42.92 43.83 43.38 41.64 -1.74 û
1997 52.99 53.95 53.47 56.48 +3.01 ü
1996 53.42 57.08 55.25 54.16 -1.09 û
1995 46.44 47.47 46.95 51.09 +4.14 ü
1994 45.55 45.80 45.68 47.57 +1.89 ü
1993 55.79 56.25 56.02 55.88 -0.14 û
1992 50.12 53.97 52.04 56.70 +4.66 ü
1991 50.49 52.18 51.33 54.27 +2.94 ü
1990 53.56 54.51 54.04 52.97 -1.07 û
1989 46.94 50.62 48.78 49.46 +0.68 ü
1988 41.33 44.84 43.08 45.95 +2.87 ü
1987 43.33 48.92 46.13 48.15 +2.02 ü
1986 38.33 35.33 36.83 40.56 +3.73 ü
1985 68.40 74.50 71.45 71.89 +0.44 ü
1984 77.20 77.31 77.26 78.63 +1.37 ü
1983 70.24 75.81 73.03 78.33 +8.30 ü
1982 75.34 77.69 76.52 89.32 +12.80 ü
1981 96.95 95.10 96.03 91.49 -4.54 û
1980 78.25 77.00 77.63 78.00 +0.37 ü
3. Simple, Longest Term Trade
This calls for buying everything on March 1st, and selling it all on May 15th. This trade worked in 24 out of the last 30 years, and it had net gains of 220.94 cents, or $92,794.80 per contract, before any fees or commissions. Before the war-impacted price decline of 2003, the biggest loss was 5.46 cents in 1981, and the biggest gain was 13.98 cents in 1982. Prior to 2008’s huge gain of 84.21 cents, the gain in 2006 was the largest, at 16.39 cents, with 2004 a close second, with a gain of 14.19 cents. Then, last year, there was a gain of 24.01 cents, which makes it the new second best. The purely imaginary traders who made this trade, year in and year out, made 7.36 cents per year on average.
June Heating Oil Futures - Settlement on day closest to day listed.
Year 3/1 5/15 P/L Result
2009 117.87 141.88 +24.01 ü
2008 278.03 362.24 +84.21 ü
2007 177.98 189.02 +11.04 ü
2006 178.11 194.50 +16.39 ü
2005 138.63 135.03 - 3.60 û
2004 89.90 104.09 +14.19 ü
2003 86.28 75.04 -11.24 û
2002 59.10 67.79 +8.69 ü
2001 69.89 76.63 +6.74 ü
2000 71.57 77.25 +5.68 ü
1999 33.05 42.95 +9.90 ü
1998 42.92 41.64 -1.28 û
1997 52.99 56.48 +3.49 ü
1996 53.42 54.16 +0.74 ü
1995 46.44 51.09 +4.65 ü
1994 45.55 47.57 +2.02 ü
1993 55.79 55.88 +0.09 ü
1992 50.12 56.70 +6.58 ü
1991 50.49 54.27 +3.78 ü
1990 53.56 52.97 -0.59 û
1989 46.94 49.46 +2.52 ü
1988 41.33 45.95 +4.62 ü
1987 43.33 48.15 +4.82 ü
1986 38.33 40.56 +2.23 ü
1985 68.40 71.89 +3.49 ü
1984 77.20 78.63 +1.43 ü
1983 70.24 78.33 +8.07 ü
1982 75.34 89.32 +13.98 ü
1981 96.95 91.49 -5.46 û
1980 78.25 78.00 -0.25 û
Needless to say, your fills will be different. They could be better, but they could be worse. More than anything else, this report is designed to give you an idea of a seasonal tendency that we have seen at work for a full three decades.
It is always difficult to tell where any given year is in terms of seasonality. Still, if one uses this tendency, one should make a commitment to use it every year, so that the averages can work to your advantage. Normal money management principles should be employed in case we hit a year that does not work. If it does not work this year, it would be a sign of uncommon weakness, given the strong history of success.
Recommendations for Specific Market Segments
Heating Oil Distributors Heating oil prices were up again on Friday, and they have broken their first major resistance level without much effort (205.74). Their major resistance is at 222.72, and prices may be on their way towards that level, ultimately. If we see any decent dips over the next three weeks, we should be using them to buy into this market. We are not the only ones aware of the strong seasonal tendency, and we should expect traders and investors to be buying on any weakness. On top of that, recently released economic figures have been more supportive, and Friday’s ability to overcome the initial selling pressure generated by the Fed’s raising of the discount rate was a clear sign that traders and investors are in a buying frame of mind, here. That could change, but we would tend to expect this market to overcome any weakness that occurs over the next three weeks. This week, we need to establish the extent to which we want to buy over the next three-week period. Diesel Users We would hold our caps and will be buying into dips from here. NYH Ultra Low Sulfur Diesel.…211.50-212.00 plus 4.750 USG Ultra Low Sulfur Diesel.…208.00-208.50 plus 1.250 Jet/Kerosene Users & Airlines New York Harbor cash market differentials were 3.25 to 3.50 cents over January heating oil in NY Harbor and 0.25 under to 0.25 over the screen in the US Gulf. Jet fuel demand last week, at 1.225 mln bpd, was its lowest since Feb 6, 2009. Diesel & Gasoline Marketers We would keep product hedged, but March may be time to risk it. Gasoline Blenders & End-Users We are coming into the most reliable seasonal tendency in commodities. The short side is off limits here. Prompt NYH Fuel Ethanol…..176.00-179.00 Prompt USG Fuel Ethanol….172.00-174.00 Quotes from 02-19-10 Heating Oil End-Users We will be looking to get in on the long side in heating oil on any dips between now and March 15th. Use this week to figure out how much you want to buy and what amount can be risked. 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 $7.60 on Friday. Crude Oil Producers Crude oil prices broke to the upside last week, and we have to expect prices to move higher. Crack spreads often improve after early March. | Prompt Jet Fuel Prices New York Harbor 210.25-210.50 US Gulf 206.75-207.25 Midwest (Group Three) 208.50-209.50 Midwest (Chicago) 207.50-208.50 Los Angeles 210.00-211.00 San Francisco 210.00-211.00 Portland, Oregon 210.00-211.00 Cents per gallon Propane Prices Mont Belvieu……….…..non-TET………$1.355650 Cents per gallon  Gasoline prices were higher yesterday, and they settled again above the resistance at 206.62, confirming Thursday’s breakout. Prices may be on their way to test the high at 219.27. We are one week away from the March seasonal, a tendency first noted in heating oil, but quick to manifest itself in gasoline, where it has held tenacious sway for a full quarter of a century, failing just once – when it arrived early because of preparations for the invasion of Iraq. Every year, there is a reason to doubt it will work, and every year, so far, it has worked nevertheless.
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