Prices for March 11th, 2010
| HEATING OIL cents per gallon | | MONTH | HIGH | LOW | SETTLE | CHANGE | | APR | 212.60 | 210.19 | 211.50 | dn 00.12 | | MAY | 213.57 | 211.20 | 212.58 | dn 00.19 | | JUN | 214.65 | 212.30 | 213.73 | dn 00.28 | | JUL | 216.16 | 213.85 | 215.41 | dn 00.30 | | AUG | 217.82 | 215.64 | 217.13 | dn 00.33 | | SEP | 219.45 | 217.99 | 218.96 | dn 00.38 | | OCT | 221.58 | 220.40 | 221.14 | dn 00.45 | | NOV | 223.47 | 222.43 | 223.44 | dn 00.53 | | DEC | 226.51 | 224.28 | 225.80 | dn 00.60 | | JAN | 228.40 | 226.61 | 227.98 | dn 00.65 | | FEB | 229.23 | 227.75 | 229.10 | dn 00.75 | | MAR | ---.-- | ---.-- | ---.-- | -- --.-- | | Estimated Volume (day before) total all prev day 120,497 | | NYMEX CRUDE OIL dollars per barrel | | MONTH | HIGH | LOW | SETTLE | CHANGE | | APR | 82.38 | 81.33 | 82.11 | up 00.02 | | MAY | 82.69 | 81.67 | 82.43 | up 00.00 | | JUN | 83.00 | 82.03 | 82.78 | dn 00.01 | | JUL | 83.35 | 82.56 | 83.18 | dn 00.01 | | AUG | 83.71 | 83.15 | 83.55 | up 00.00 | | SEP | 83.96 | 83.13 | 83.89 | up 00.03 | | | | | | | | | Estimated Volume… 811,362 Opec Basket…$77.80 up $0.42
Prompt #2 Oil NYH 88..-1.25 to -1.00, 74 Lo S…+3.00 to +3.50
US Gulf 88 grade…-4.50 to -4.25, 74 grade Lo S…-2.00 to -1.50 Group .........+3.75 to +4.00 Lo S.....+3.75 to +4.00
Chicago ......-2.75 to -2.25 cash quotes by Dow Jones | | | |
| NYMEX RBOB GASOLINE cents per gallon | | MONTH | HIGH | LOW | SETTLE | CHANGE | | APR | 228.57 | 225.90 | 227.20 | dn 01.31 | | MAY | 228.75 | 226.34 | 227.69 | dn 00.99 | | JUN | 227.85 | 225.78 | 227.20 | dn 00.78 | | JUL | 226.57 | 225.01 | 226.31 | dn 00.72 | | AUG | 225.20 | 223.90 | 225.28 | dn 00.69 | | SEP | 224.18 | 222.82 | 224.06 | dn 00.67 | | OCT | 213.19 | 212.00 | 213.28 | dn 00.65 | | NOV | 211.30 | 210.85 | 211.89 | dn 00.61 | | Estimated RB Volume day before 128,119 | | NYMEX NATURAL GAS dollars per mmBtu | | MONTH | HIGH | LOW | SETTLE | CHANGE | | APR | 4.593 | 4.415 | 4.440 | dn 0.119 | | MAY | 4.655 | 4.487 | 4.506 | dn 0.118 | | JUN | 4.725 | 4.562 | 4.579 | dn 0.117 | | JUL | 4.789 | 4.656 | 4.672 | dn 0.117 | | | Estimated Volume…day before (260,549)
Nymex statistics are based on composite Access & Day Sessions
Prompt Gasoline NYH M5 -11.25 to -11.00 RBOB -1.00 /+0.00
US Gulf M4: -12.00 to -11.00 RBOB -2.00 to -1.50
L.A. Conv Reg 221.00-222.00, N-grade Group 217.20-217.70 Chi 209.20-210.20 | |
Market Review for Thursday
IL prices were unchanged to lower yesterday in a session during which traders struggled to find direction. This market’s most recent “default mode” has been higher, but traders were spooked by the release of consumer prices in China that showed more inflation that might be ideal. In recent weeks, this kind of figure, suggesting that the Chinese economy might be ‘overheating,’ has resulted in credit tightening by that nation’s central bank. Investors were cautious buying their usual slate of stocks (equities) and commodities on the fear that there will be another round of credit-tightening in China. By doing nothing, China’s central bank may be able to accomplish more than it would by just tightening. As long as it does nothing, the fear that it may tighten at some point becomes a lingering factor that hangs like Damocles’ Sword over the market. As soon as it actually raises requirements, the lingering fear will be gone and investors will return to buy their normal raftload of assets. China’s consumer price index rose 2.7% in February, after a 1.5% rise in January.
| Fuel for Thought In one of a few highly-watched outlooks for the 2010 Atlantic hurricane season, AccuWeather predicted 16-18 named storms, with five becoming hurricanes and two or three of those making landfall as Category 3 storms or worse this year. The historical average has been 11 named storms with six hurricanes and two of those becoming major Category 3 systems or higher. Last year, which had the fewest named storms in 12 years, there were only nine named storms and three hurricanes. None of those made landfall on the US mainland, the first time since 2006 that had happened. Curiously, both years without landfalls followed years (2005 and 2008) in which two major storms hit oil and gas facilities in the US Gulf. |
In other economic news, the US trade deficit narrowed by 6.6% to $37.29 billion, according to the Commerce Department. That was more than had been expected. And the Labor Department reported a decline of 6,000 people (to 462,000) filing for unemployment benefits. Estimates had been for a decline of 9,000, so the report was not as positive as had been expected. It was another factor working against higher oil (equities and commodities) prices yesterday.
As it turned out yesterday, it seems that traders were getting out of positions rather than laying down new ones. We say that because crude oil prices were just about unchanged while refined products prices were lower, with gasoline leading the selloff. For the last few weeks, gasoline has led refined products higher at the expense of crude oil, and open interest has increased substantially in all three contracts as outright buying outnumbered selling across the board.
In other oil-related news, the Houston Ship Channel was closed for a second day due to heavy fog. An estimated 39 vessels, 27 scheduled to enter and another 12 scheduled to leave, were becalmed by the fog. Another seven ships were idled coming or going to Galveston or Texas City, Texas.
Technicals
Oil prices were mixed yesterday, with crude oil prices unchanged to lower and refined products prices lower. It is difficult to tell if prices are about to have a serious correction or if this is the full extent of the correction just before another leap higher. Prices are not overbought enough here for us to say that it is clearly a top, and the seasonal makes us believe that another burst higher is jut a matter of time – but we are not sure, yet, from what levels.
Cents per gallon
Above: Gasoline prices were slightly lower yesterday after trading in an extremely tight trading range.
April crude oil now has buy-stops over $83.05, $83.95, $84.83, $85.13, $89.82, $90.99, $93.02, $96.03, and $100.37. Sell-stops are under $80.80, $80.00, $79.40, $78.00, $77.00, $76.30, $73.70, $72.60, $71.30, $70.75, $69.30, $68.55, $68.00, $65.80-$66.20, and $64.95. April heating oil has buy-stops over 213.50, 217.55, 222.72, 225.80, 227.05, 229.08, 238.95, 249.62, and 251.50. Sell stops are under 207.85, 206.60, 206.00, 205.40, 201.55, 200.55, 199.00, 196.40, 190.75, 189.95, 187.45, 186.50, 182.63, 177.00, 176.68, 173.75, 171.10, 170.35, and 168.60. April RBOB has buy-stops over 231.35, 240.10, 250.40, 252.00, 265.10, 267.85, and 270.85. Sell-stops are under 225.00, 223.80, 221.70, 219.00-219.10, 215.50, 213.70, 203.80, 202.25, 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 were held at the line of scrimmage on fourth and four to go, and that turns the ball back over to the bears.
Technical Support & Resistance
Apr crude oil Support: $80.80-$82.00, $80.15-$80.30, $79.40-$79.50, $78.00-$78.10, $77.00-$77.20.
Resistance: $82.90-$83.05, $83.85-$83.95, $84.75-$84.85, $85.00-$85.15, $89.70-$89.82.
Apr heating oil Support: 207.85-209.00, 206.60-206.75, 206.00-206.20, 205.40-205.55, 201.55-201.70.
Resistance: 213.35-213.47, 217.45-217.55, 222.65-222.75, 225.65-225.80, 226.90-227.05.
Apr Rbob Support: 225.00-225.10, 223.80-224.10, 221.70-221.90, 219.00-219.15, 215.50-215.65.
Resistance: 231.25-231.35, 239.95-240.10, 250.25-250.40, 251.80-252.00, 264.95-265.10.
Oil Inventory Reports
This week’s DOE report showed draws in refined products stocks and a build in crude oil inventories. The products draws were also larger than anticipated, while the crude oil stock build was less than expected. Directionally, the DOE report showed stocks moving in the same trends as the API had reported on Tuesday evening, but the DOE numbers were tempered versions of the API numbers. With crude stocks growing and products stocks declining, one would expect refineries to start processing more crude into gasoline and distillates; while we expect that to be the case ultimately, utilization dropped in this report.
This Week’s Inventory Comparison: Distillate stocks are now 3.8 million bbls, or 2.61%, higher than a year ago. Heating oil inventories are 5.3 mln bbls, or 14.52%, higher than they were a year ago. Gasoline stocks are 13.2 mln bbls (up 6.12%) higher against a year ago. Crude oil stocks are now 13.3 million bbls, or 3.73%, lower than a year ago. Residual stocks are 0.4 mln bbls (1.02%) lower than a year ago, jet fuel stocks are 0.4 mln bbls, (0.94%) higher than a year ago. Utilization is 1.97% lower than a year ago and 6.09% below the eight-year average. It is 8.17% lower than the four-year, pre-Katrina average and 4.02% below the average of the four years since the big hurricanes (Katrina & Rita) in 2005.
This Week’s Demand: Four-week, total refined products demand came in at 19.412 million bpd, up 0.098 mln bbls on the week, and up 0.711 mln bpd and 3.80% against a year ago, reportedly. Four weeks ago, it was 0.159 mln bpd and 0.83% lower than a year ago. Four-week gasoline demand is at 8.865 mln bpd, up 0.48%, compared to down 1.26% three weeks ago. It was up 57,000 bpd on the week. Four-week distillate demand is now at 3.731 mln bpd, down 4.06%, compared to down 9.08% five weeks ago. Four-week jet demand is now at 1.269 mln bpd, down 6.35% against a year ago, compared to up 8.17% nine weeks ago. Four-week residual fuel demand is at 0.655 mln bpd, up 25.96%, compared to down 34.14% five weeks ago. Propane use is up 11.82%, to 1.419 mln bpd. Our biggest concern is that the numbers we wrote down a year ago seem to bear little relation to the numbers that the DOE report says existed a year ago. They seem to represent major unreported revisions.
This Week’s API Report: This week’s API report showed a build of 6.500 mln bbls in crude oil stocks, a draw of 2.796 mln bbls in distillate stocks and a draw of 3.181 mln bbls in gasoline inventories. Utilization was down 0.7% to 80.9%. Implied demand came in at a very healthy 9.891 mln bpd in gasoline and at a decent 4.266 mln bpd in distillate. Crude oil imports were down 0.659 mln bpd to 9.142 mln bpd. This report was bearish for crude and bullish for refined products.
DOE Weekly Inventory Statistics
| Category | Final DOE Estimate
This Week’s Estimate | History
Last Year’s Report | Most Recent Changes
This Week’s DOE Report | Versus A Year Ago
Millions of Barrels |
| Distillate | dn 1.25 to 1.75 mln bbls | up 1.662 | dn 2.200 mln bbls | up 3.800 |
| Gasoline | dn 0.75 to 1.25 | up 0.168 | dn 2.900 | up 13.200 |
| Crude oil | up 2.00 to 3.00 | dn 0.757 | up 1.400 | dn 13.300 |
| Utilization | up 0.0% to 0.5% | up 1.7% at 83.1% | dn 1.14% at 80.73% | |
| Crude Imports | up 0.000 to 0.250 mmbd | up 0.259 to 9.028 | dn 0.744 to 8.492 mln bpd | |
| DOE Distillate Demand | 3.645 mln bpd | dn 184,000 | Gasoline Demand | 8.992 mln bpd | up 011,000 |
| DOE Distillate Production | 3.655 mln bpd | dn 1571000 | Gasoline Production | 8.758 mln bpd | dn 073,000 |
| DOE Distillate Imports | 0.130 mln bpd | dn 224,000 | Gasoline Imports | 0.826 mln bpd | up 031,000 |
Source: US Department of Energy’s Energy Information Administration
Open Interest Analysis
Crude oil open interest grew by 5,521 contracts on Wednesday, when prices advanced. That looks like new buying, which would be supportive. Open interest has increased by 79,755 contracts since March 1st.
Heating oil open interest fell by 859 contracts on Wednesday, when prices were higher. That looks like short-covering, which would be bearish. Open interest has increased by 20,919 contracts since the start of March.
RBOB open interest grew by 1,706 contracts on Wednesday, when prices were higher, which looks like fresh buying. Open interest is up 32,859 contracts added since March 1st.
Natural gas open interest grew by 2,399 on Wednesday, when prices were higher. That looks like new buying, which would be bullish. Open interest is up 39,527 contracts since March 1st. Fund selling has been the largest fresh input here.
Wednesday’s Open Interest Changes:
Crude 1,353,762 up 5,521 Heat 317,566 dn 859 RBOB 294,622 up 1,706 Nat gas 855,658 up 2,399
CFTC Commitments of Traders for Nymex (Forensic analysis for the period ended Tuesday, March 2nd)
Crude oil prices rallied $0.82/bbl over the latest reporting period, and the best buying came from Managed Money accounts. They bought 8,937 new longs and covered 2,617 shorts. Producers added 14,048 new shorts, which is normal, but they also added 15,738 new longs, which suggest refiner buying in anticipation of better margins. Swap Dealers liquidated 5,908 existing longs, with Other Reportables liquidating 1,001 longs, and Swap Dealers added 5,674 new shorts while Other Reportables added 4,488 new shorts. Funds were the motivating force behind higher prices, but refinery buying helped.
In heating oil futures, prices rallied 1.35 cents a gallon, and the best net buying came from Producer short-covering. Producers added 463 new longs and covered 2,169 existing shorts, presumably at least in part in front of the March contract expiration, which occurred during the period. All three other categories liquidated longs and added fresh shorts into the rise, with Other Reportables liquidating 843 longs and selling 2,295 new shorts. Commercial short-covering led the rally.
Gasoline prices gained 2.83 cents a gallon during the period under review. Swap Dealers and Producers were buying, although Producers sold more than double what they bought. Producers added 2,860 longs and 5,270 shorts. Swap Dealers added 3,971 longs and covered 159 shorts. Funds added 422 longs and 3,715 shorts. Others liquidated 1,034 longs and covered 151 shorts. Swap Dealers were far and away the most aggressive category buying. Producers did buy, though.
In natural gas, prices dropped 10.1 cents during the period under review. Everyone (other than funds) was buying new longs and covering shorts, except Producers, who added 1,259 new shorts, in addition to 3,452 longs. Swap Dealers added 6,433 new longs and covered 167 shorts. Other Reportables added 6,911 new longs and covered 5,141 shorts. Managed Money accounts added 3,542 new longs, but those were dwarfed by the addition of 19.970 new shorts, which was the motive force lower. Funds were pressing quotes lower with a will, while everyone else was buying and covering short holdings.
Natural Gas & Utility Generation
Natural gas prices dropped again yesterday, giving up nearly 12 cents per million Btu. This week’s EIA underground storage showed a drawdown of 111 bcf, which was very near the estimates of wire-house surveys, which predicted a draw of 112-113 bcf. The picture relative a year ago has not changed much; the deficit against a year ago stayed at 71 bcf and went from 3.93% to 4.18% while the surplus against the five-year average went from 21 bcf to 19 bcf and from 1.22% to 1.18%. These figures still represent huge improvements from where we were at the start of the heating season.
This makes the weather outlook the tie-breaker and, in this case, it is not supportive. Almost every forecasting group is currently calling for warmer than normal temperature readings out to March 20th or even as far as March 25th. If we actually experience much warmer than usual readings, there is a good chance that storage figures and comparisons will slip towards more bearish numbers. Last March was cold, so warm readings this year will give us bearish reports in comparison.
Almost all drilling techniques have seen increased work recently, but horizontal drilling, which is used with hydraulic fracturing to release large amounts of shale-trapped gas (and to a degree, oil), has been increasing dramatically. This has been responsible for large production and drilling gains in Saskatchewan and British Columbia, which have large shale gas formations. Yesterday, Alberta announced reduced royalty rates, charging just 5% in the first year, and lowering rates on conventional and shale output to 36% from 50% thereafter, as a lure to increase investment in its oil and gas production. Oil royalties will be reduced from 50% to 40%. This certainly will not hurt output or drilling efforts. Oil sands rates are exempted.
The market is telling us that there is too much supply available for the existing demand. While the consensus belief is that the economy has seen its worst and that we are in a recovery phase, we have not yet seen any blossoming industrial demand for natural gas, yet. We do still feel prices are undervalued, but less than we did.
In cash trading yesterday, Henry Hub prices were at $4.43-$4.53, up $0.03-$0.06 on the day (DJN). SoCal prices were at $4.65-$4.70, up $0.01-$0.02 on the day. El Paso Permian prices were up $0.00-$0.01 at $4.39-$4.44. Katy prices were up $0.00-$0.01 to $4.40-$4.47. Waha prices were down $0.04 and up $0.03 at $4.38-$4.42. Transco 6 was down $0.05 and up $0.06 to $4.70-$4.80/mmBtu, according to Dow Jones News (DJN).
Palo Verde prices were last quoted at $42.00-$43.00/mwh. Northeastern prices last traded at $31.00-$42.25. Cinergy was last at $29.00-$30.50. Ercot was last at $35.75-$36.25/mwh.
Support is at $4.39-$4.42, $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 $4.59-$4.63, $4.76-$4.79, $4.86-$4.89, $4.97-$5.00, $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.
Apr Natural Gas: Support : $4.39-$4.42, $4.15-$4.17, $4.05-$4.08, $3.73-$3.75, $3.66-$3.68, $3.50-$3.53.
Resistance: $4.59-$4.63, $4.76-$4.79, $4.86-$4.89, $4.97-$5.00, $5.16-$5.17, $5.46-$5.47.
Natural gas prices were back down, again, yesterday.
Dollars per million Btu
The crude-to-natural gas ratio finished yesterday at 18.49-to-one, its highest level since September 22nd, when it was 19.83-to-one.
Ratio
EIA Weekly Storage Figures
This week’s EIA report showed a draw of 111 bcf on expectations for a draw of 112-113 bcf. Stocks are now 71 bcf lower than a year ago, against a deficit of 71 bcf a week ago, a deficit of 56 bcf two weeks ago and a surplus of 26 bcf three weeks ago. Stocks are now 4.18% lower than a year ago. They are 19 bcf and 1.18% above the five-year average.
For this week, the eight-year average (of similar Friday reports) was a draw of 95.0 bcf. The five-year average was also a draw of 95.0 bcf. Last year’s draw was 112 bcf. Estimates suggested a drawdown of 108-109 bcf in this week’s report.
EIA Report
| Region | 03-05-10 | 02-26-10 | Change | Last Year | 5 Yr Avg |
| Cons East | 789 | 861 | dn 72 | 716 | 786 |
| Cons West | 289 | 296 | dn 07 | 289 | 234 |
| Producing | 548 | 580 | dn 32 | 693 | 587 |
| Total US | 1626 | 1737 | dn 111 | 1697 | 1607 |
Bcf, or Billions of cubic feet. Source: Energy Information Administration, US Department of Energy
News & Views
| In trading on Nymex, April crude oil prices were up $0.74 at $82.85/barrel at 8.30 AM EST, this morning. April heating oil prices were up 1.96 cents to 2.1346/gallon. April RBOB prices were down 1.51 cents to 2.2871. April natural gas prices were down $0.001 to $4.439/mmBtu. Dollar weakness and general economic optimism seem to have been factors for higher prices. Very early this morning, equities were fairly quiet as investors remained on the sidelines. Equities, commodities, and currencies have all been relatively quiet this week, as investors await the next major development. Economic indicators have been mixed all year, and investors seem to have lost some of the blind faith (that the recovery will go from strength to strength) that was the hallmark of the advance that started a little more than a year ago. Up until this week, though, the ‘default mode’ in all three categories had been unflinchingly higher, and the departure from that this week may turn out to be telling later on. 
Crude oil prices were unchanged essentially yesterday, although prices did rally from lower levels established earlier in the session. There is resistance at $83.03 and at $83.95. | 
Heating oil prices were slightly lower, after once again trading on both sides of unchanged. Yesterday’s trading range was much tighter than Wednesday’s and it was an inside day, which tend not to tell us as much about where prices may be headed. This is especially true in oil. Since early February, prices have been advancing steadily, and very little (if any) of the rise in prices seems to have come from oil market fundamentals. Open interest has risen steadily since March 1st, and that is bullish – unless we have reached a point where there is just not any real fresh buying potential left. We don’t think that’s the case. The strong seasonal tendency for prices to advance from March to May makes us feel that this week’s pause was nothing more than just that – a pause on the way to higher prices. We have become so used to having oil prices rise on dollar weakness (even short-term or intraday), equities strength or on the latest mildly supportive piece of economic data that we no longer believe it is necessary for fundamental support in this market. But, it is possible that investors have loaded up on as much risk as they can stomach now, without there being something decisive or conclusive, either in terms of economic growth or in the supply and demand of oil. We may have broken the impasse this morning, but a failure to post gains today would be a yellow caution light in our view. |
| Crude prices were essentially unchanged yesterday. | |
Yesterday’s activity seems to have been profit-taking, especially by those holding crack spreads, but we are trying to find meaning in this week’s pause. It may be just that – just a pause, but it could turn out to be the start of a correction that pushes quotes back down for a while – until some genuine economic or fundamental support actually develops.
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 slightly lower yesterday, but it was a relatively tame session for the currency, at least by recent standards. The dollar seems to be in a trading range between roughly 72.30 and 74.15 euro cents (the red and green lines above).
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 with a gain of 44.51 points yesterday in the largest move so far this week. That is slightly misleading, though, because the key average had an inside” trading day that covered much of the same territory traversed during earlier sessions this week.
Source: http://money.cnn.com/quote/chart/chart.html?symb=djia&sid=1643&time=6mo&Submit1=Refresh
A Look at Gasoline Supply & Demand
Thirteen week gasoline demand came in at 8.817 million bpd, down 1.16% against a year ago. Thirteen-week average supply was down 2.46% to 9.628 million bpd and 13-week implied demand was 9.554 mln bpd, down 2.16%.
A Look at Distillate Supply & Demand
Thirteen week distillate demand came in at 3.725 million bpd, down 8.56% against a year ago. Thirteen-week average supply was down 12.20% to 4.018 million bpd and 13-week implied demand was 4.185 mln bpd, down 5.20%.
A Look at Refinery Utilization
Utilization is 1.97% lower than a year ago and 6.09% below the eight-year average. It is 8.17% lower than the four-year, pre-Katrina average and 4.02% below the average of the four years since the big hurricanes (Katrina & Rita) in 2005.
Recommendations for Specific Market Segments
Heating Oil Distributors Heating oil prices were lower yesterday, but not by enough to put too fine a point on it. Our bigger question is whether the market’s recent pause is stalling that will give us a major corrective decline or just a lull before the next leg of the advance has gathered enough strength to get under way. The increases in open interest support a continuing advance, as do the strong seasonal tendencies for this time of year. Petropolitically, we can never really expect bearish news from Nigeria or the Middle East in spring, and the consensus is that the economy is improving. Demand is still nothing special, and as long as nothing actually happens in the world’s hot spots, there are reasons to see prices as being overpriced here. There is plenty of oil out there. Despite those factors, we would continue to use any dips to buy caps or calls in this market. The seasonal is as strong a factor as we can identify. Nonetheless, we would be cautious and use stops. Diesel Users We would hold our caps and will be buying more on any dips. NYH Ultra Low Sulfur Diesel.…216.00-216.50 plus 4.750 USG Ultra Low Sulfur Diesel.…212.00-212.50 plus 0.750 Jet/Kerosene Users & Airlines New York Harbor cash market differentials were 5.50 to 5.75 cents over January heating oil in NY Harbor and 0.25 to 0.75 over the screen in the US Gulf. Diesel & Gasoline Marketers The sensible course is to stay hedged, but one can buy on a dip and wait to hedge it – carefully. Gasoline Blenders & End-Users Prices have broken to the upside, and we want to buy on any dips. Prompt NYH Fuel Ethanol…..163.00-166.00 Prompt USG Fuel Ethanol….156.00-159.00 Quotes from 03-11-10 Heating Oil End-Users We want to use dips to get in on the long side, using caps or calls. Speculators We bought calls last week, and we would continue to buy calls on any decent dips until March 15th. We will need to use intraday dips. Refiners The 7:5+2 crack spread was $11.43 yesterday. Crack spreads typically improve from March to May. Crude Oil Producers Crude oil prices were essentially unchanged yesterday, and it is hard to say in which direction this market’s next major move will occur. The bears have the initiative now, but the seasonal higher is strong. | Prompt Jet Fuel Prices New York Harbor 217.00-217.25 US Gulf 211.75-212.25 Midwest (Group Three) 214.50-216.50 Midwest (Chicago) 214.50-215.00 Los Angeles 215.00-216.00 San Francisco 215.00-216.00 Portland, Oregon 215.00-216.00 Cents per gallon Propane Prices Mont Belvieu……….…..non-TET………$1.162020 Cents per gallon  Ethanol prices have fallen dramatically over the last three and a half months. On December 1st, ethanol prices were trading at $2.34 and looked capable of advancing further. But, as corn crop expectations increased, ethanol followed its agricultural grain base lower. It s now 68 cents – or 28.20% - lower than on December 1st.
Ethanol now enjoys its largest discount to gasoline in 14 months as we get ready to start this year’s driving season. Refiners are getting ready to mix in more ethanol than ever before, as a result. The question is whether the added demand will revive prices. |