Prices for March 30th, 2010

HEATING OIL    cents per gallon MONTH HIGH LOW SETTLE CHANGE APR 213.00 210.90 212.47 up 00.59 MAY 213.96 211.50 213.16 up 00.30 JUN 215.20 212.78 214.37 up 00.29 JUL 216.45 214.73 216.07           up 00.35 AUG 218.20 216.95 217.89 up 00.53 SEP 220.31 218.68 219.79 up 00.53 OCT 221.91 220.82 221.77 up 00.59 NOV 223.99 222.99 223.86 up 00.63 DEC 226.50 224.69 225.97 up 00.66 JAN 228.15 227.25 227.98 up 00.67 FEB 229.20 229.20 229.03 up 00.72 MAR 229.25 229.05 229.14 up 00.78 Estimated Volume (day before) total all prev day 111,733

NYMEX CRUDE OIL   dollars per barrel MONTH HIGH LOW SETTLE CHANGE MAY 82.74 81.77 82.37 up 00.20 JUN 83.14 82.18 82.77 up 00.18 JUL 83.53 82.61 83.17 up 00.15 AUG 83.80 82.90 83.46 up 00.14 SEP 83.87 83.25 83.67 up 00.14 OCT 84.09 83.54 83.84 up 00.14           Estimated Volume… 575,037   Opec Basket…$77.77  up $0.97 Prompt #2 Oil NYH 88..-0.50 to -0.25, 74 Lo S…+3.50 to +4.00 US Gulf 88 grade…-4.25 to -3.75, 74 grade Lo S…-1.25 to -0.75 Group .........+6.75 to +7.25  Lo S.....+6.75 to +7.25 Chicago ......+1.50 to +2.00                                                      cash quotes by Dow Jones

NYMEX RBOB GASOLINE       cents per gallon MONTH HIGH LOW SETTLE CHANGE APR 228.05 225.50 227.47 up 01.34 MAY 227.97 225.55 227.21 up 00.94 JUN 227.24 225.11 226.71 up 00.84 JUL 226.19 224.51 225.86        up 00.70 AUG 225.34 224.19 224.80 up 00.58 SEP 224.10 222.50 223.45 up 00.51 OCT 213.00 211.91 212.59 up 00.54 NOV 211.05 210.20 210.89 up 00.48 Estimated RB Volume day before 80,814

NYMEX NATURAL GAS   dollars per mmBtu MONTH HIGH LOW SETTLE CHANGE APR 4.015 3.847 3.973 up 0.057 MAY 4.105 3.934 4.062 up 0.061 JUN 4.208 4.035 4.166 up 0.065 JUL 4.275 4.119 4.242 up 0.068 Estimated Volume…day before   (193,635) Nymex statistics are based on composite Access & Day Sessions Prompt Gasoline NYH M5 -13.00 to -12.00 RBOB  +6.50 /+6.75 US Gulf M4:  -12.25 to -12.00  RBOB -1.50 to -1.25 L.A. Conv Reg 225.00-226.00, N-grade Group  217.70-218.20 Chi  220.20-220.45

Market Review for Tuesday                  

O

IL prices ended Tuesday’s session with slight gains as investors continued to buy on general “good vibrations,” those vague feelings - that things are getting better in the economy – which have been the mortar holding the edifice of higher oil prices together for 13 months now.  Equities were subdued, although they were lightly higher, and investors chose to ignore the rallying US dollar.  Instead, they were looking at yesterday’s Case-Shiller report, which showed an unexpected increase (of 0.3%) in home prices in January (from December).  It was 0.7% beneath January a year ago, but that was the lowest year-on-year decline in two years, according to Bloomberg.  Investors were also cheered by an increase in US Consumer Confidence in March, rising from 46.4 in February to 52.5 in March.  Market observers said that consumers are feeling better about the employment picture, as layoffs slow and some companies start talking about renewed hiring plans.  There is an undercurrent of belief, so far this week, that this next employment report could turn an important corner

Fuel for Thought   Before the week is over, Opec, the IEA and the International Energy Forum will announce a “joint action plan” designed to fight oil market volatility.  The agreement revolves around sharing expertise and information in an effort to improve transparency.  Details are scheduled for release on Wednesday.    Some of the world’s best known oil executives will be involved in this ‘accord,’ which seeks to avoid the volatility seen in 2008.  The IEA feels that $80 is better than $147, while Saudi Arabia wants to enshrine prices essentially where they are. Of course, neither the big funds nor consumers are involved, which could doom these good intentions.  Existing prices are still high for consumers, and funds embrace volatility.

Oil traders, that distinct group of stubbornly old-fashioned market participants who actually still follow supply and demand for crude and refined products, rather than the investors who see everything that moves as a convenient ancillary source of liquidity in their quest to distill every move into a reflection of equities or currencies, were quiet on Tuesday as they awaited the release of this week’s API report.  After accurately predicting last week’s moves changes in crude oil and distillate stocks, some traders are willing to place greater store in this evening’s early figures.

As they turned out, this week’s API report was milder – from both perspectives.  A much larger build had been anticipated in crude, while significantly larger draws had been expected in refined products.  The biggest surprise was the larger-than-expected increase in refinery utilization.  

More than anything else, this week seems to have marked the return of investors to the long side in the oil markets.  We have noted that they have been tough dogs to keep under the porch this year and, after liquidating longs from St Patrick’s Day through late last week, they are resupplied and ready to buy.

Technicals

Crude Oil:

Oil prices were lightly higher yesterday in relatively subdued trading ahead of this week’s inventory reports.  Prices have major resistance at $83.18; a breakout and settle above that level would be bullish.

Dollars per barrel

Crude oil is in a range between $78.57 and $83.18.

May crude oil now has buy-stops over $82.80, $83.18, $83.95, $84.83, $85.13, $89.82, $90.99, $93.02, $96.03, and $100.37.  Sell-stops are under $80.00-$80.15, $79.40, $78.85, $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. 

 

Football: The bears lost two more yards yesterday on third and 27 to go, which makes it fourth and 29 to go, today.

 

May crude oil                       Support:             $81.75-$81.85, $79.85-$80.00, $79.40-$79.55, $78.85-$79.00, $78.00-$78.10.

                                           Resistance:        $82.35-$82.50, $82.75-$82.80, $83.00-$83.18, $83.85-$83.95, $84.75-$84.85.

 

Heating Oil:

Heating oil prices were higher again yesterday, although they are still in a range between 202.50 and 214.42.  They are not in any imminent danger of breaking the lower end of their range, and seem more likely to assault the upper end at 214.42.

 

May heating oil has buy-stops over 214.42, 217.55, 222.72, 225.80, 227.05, 229.08, 238.95, 249.62, and 251.50. Sell stops are under 210.90, 207.65, 204.95, 202.50, 201.55, 200.55, 199.00, 196.40, 190.75, 189.95, 187.45, 186.50, 182.63, 177.00, 176.68, and 173.75.

 

May heating oil    Support:             211.50-211.60, 207.65-207.80, 204.95-205.10, 205.00-205.15, 204.50-204.65.

                             Resistance:        214.30-214.42, 217.45-217.55, 222.65-222.72, 225.65-225.80, 226.90-227.05.

 

Heating oil prices were higher yesterday, and quite suddenly they are back threatening the upper end of their trading range between 202.50 and 214.42.  At the end of last week, we were looking at the possibility of breaking to the downside.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

 

Gasoline:

Gasoline prices rallied yesterday, and they gained more than heating oil or crude oil prices did.  Gasoline is still in a range between 218.95 and 231.50.  Prices seem more likely to attack the upper end of their current range, right now.   

 

May RBOB has buy-stops over 228.05, 230.40, 231.50, 240.10, 250.40, 252.00, 265.10, 267.85, and 270.85.  Sell-stops are under 225.50, 221.40, 218.95, 215.50, 213.70, 203.80, 202.25, 198.40, 191.85, 187.00, 184.15, 182.40, 181.20, 179.20, 177.30, and 175.14. 

 

Gasoline prices were higher again yesterday, and they now seem poised to launch an assault on the upper end of their trading range at 231.50.  A breakout and settle above that level would be bullish.  Should prices fail to break that resistance, they could turn back down to test the recently expanded lower end of their trading range at 218.95.  

 

May Rbob                    Support:             225.50-225.60, 221.40-221.55, 220.00-220.15, 218.95-219.15, 215.50-215.65.

                                           Resistance:        227.90-228.05, 230.25-230.40, 231.35-231.50, 239.85-240.10, 250.25-250.40.

 

Oil Inventory Reports

    Over the last eight years, gasoline stocks have been both higher and lower, four years for both.  The average is a draw of slightly less than 900,000 bbls.  Another factor that could have a bearing on this week’s statistics is the history of crude oil import increases.  Four of the last six years have had an increase in imports, with the average increase over those four years coming in at 572,000 bpd.  We had a large increase last week, which might mean it won’t occur this week.  The average crude oil build for this time of year is more than 5 million barrels.

 

DOE History:  Distillate stocks have fallen in six of the last eight years, by an average of 1.738 mln bbls.  The eight-year average is a draw of 1.276 mln bbls (last week’s average draw was 1.266 mln bbls).  Gasoline stocks fell in four of the last eight years, for a four-year average draw of 4.200 mln bbls.   The eight-year average was a draw of 0.897 mln bbls.  Crude oil stocks have been higher in all of the last eight years for an eight-year average build of 5.080 mln bbls.  Utilization has been higher in four of the last eight years and has an eight-year average increase of 0.024%, with an eight-year average utilization figure of 87.28%.  The four-year, pre-hurricane utilization average was 90.30%.  Since Katrina, refineries have run at an average utilization rate of 84.25%.  Crude oil imports have been higher in four of the last six years, and the average crude oil import figure over the last six years has increased 381,000 bpd.  The average crude oil import figure over the last six years has been 10.113 million bpd.  Imports were 0.716 mln bpd below that figure in last week’s report.   

 

Last Week’s Inventory Comparison:  Distillate stocks are now 1.0 million bbls, or 0.69%, higher than a year ago.  Heating oil inventories are 4.0 mln bbls, or 10.90%, higher than they were a year ago.  Gasoline stocks are 8.4 mln bbls (up 3.89%) higher against a year ago.  Crude oil stocks are now 10.0 million bbls, or 2.77%, lower than a year ago.  Residual stocks are 0.9 mln bbls (2.30%) lower than a year ago, jet fuel stocks are 1.1 mln bbls, (2.61%) higher than a year ago.  Utilization is 0.90% lower than a year ago and 6.14% below the eight-year average.  It is 8.83% lower than the four-year, pre-Katrina average and 3.45% 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 19.360 million bpd, up 0.013 mln bbls on the week, and up 0.676 mln bpd and 3.61% against a year ago, reportedly.  Six weeks ago, it was 0.159 mln bpd and 0.83% lower than a year ago.  Four-week gasoline demand is at 8.953 mln bpd, up 1.19%, compared to down 1.26% five weeks ago.  It was up 6,000 bpd on the week.  Four-week distillate demand is now at 3.761 mln bpd, down 0.95%, compared to down 9.08% seven weeks ago.  Four-week jet demand is now at 1.289 mln bpd, down 6.59% against a year ago, compared to up 8.17% 11 weeks ago.  Four-week residual fuel demand is at 0.643 mln bpd, up 6.41%, compared to up 25.96% two weeks ago.   Propane use is up 6.40%, to 1.405 mln bpd, compared to 1.330 mln bpd (up 7.34%) a week ago.  The major figures were similar to slightly stronger than they were a week ago. 

 

This Week’s API Report:  This week’s API report showed a mild build of 0.421 mln bbls in crude oil stocks, a lighter-than-forecast draw of 1.007 mln bbls in distillate stocks and a smaller-than-expected draw of 0.946 mln bbls in gasoline inventories.  Utilization was up 1.3% to 82.1%.  Implied demand came in at a respectable 9.569 mln bpd in gasoline (after two strong weeks) and at 4.061 mln bpd in distillate.  Crude oil imports dropped 279,000 bpd to 9.203 mln bpd.  This week’s figures fell short of expectations everywhere, except for utilization.

 

                                                                    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 1.00 to 1.50 mln bbls	up 0.221	dn 2.422 mln bbls	up   1.000
Gasoline	dn 2.75 to 3.25	up 2.225	dn 2.715	up   8.400
Crude oil	up 4.00 to 5.00	up 2.844	up 7.245	dn 10.000
Utilization	up 0.0% to 0.3%	dn 0.3% at 81.7%	up 0.50% at 81.10%
Crude Imports	up 0.000 to 0.500 mmbd	up 0.170 to 9.554	up 0.969 to 9.397 mln bpd

 

DOE Distillate Demand	3.809 mln bpd	up 047,000	Gasoline Demand	9.087 mln bpd	up 238,000
DOE Distillate Production	3.700 mln bpd	dn 091,000	Gasoline Production	9.024 mln bpd	up 063,000
DOE Distillate Imports	0.168 mln bpd	up 005,000	Gasoline Imports	0.623 mln bpd	up 015,000

Source: US Department of Energy’s Energy Information Administration

Open Interest Analysis

      Crude oil open interest grew by 8,090 contracts on Monday, when prices were up.  That looks like fresh buying, which would be bullish.  The funds are back buying.  Since March 1, open interest is up 20,846.

      Heating oil open interest grew by 2,552 contracts on Monday, when prices were higher.  That looks like net, new buying and is supportive.  Open interest has increased by 26,128 contracts since March 1st.

      RBOB open interest fell by 37 contracts on Monday, when prices were higher, which looks like net short covering, which would be mildly bearish.  Since March 1st , open interest is up 54,361 contracts.

      Natural gas open interest grew by 2,678 on Monday, when prices were lower.  That looks like new selling, which would be bearish.  Open interest for March is now up 3,317 contracts.

 

Monday’s Open Interest Changes: 

Crude 1,297,327   up 8,090       Heat 322,775  up 2,552       RBOB 316,128  dn 37      Nat gas 814,092  up 2,678             

 

CFTC Commitments of Traders for Nymex  (Forensic analysis for the period ended Tuesday, March 23rd)   

   Crude oil prices dropped $0.06/bbl over the latest reporting period, and the best selling came from Managed Money long liquidation.  These accounts – funds – liquidated 11,042 longs and added 1,802 new shorts.  Producers also liquidated heavily, more than funds, but not on a net basis.  Producers kicked out 33,031 existing longs, but they also covered 31,640 existing shorts.  Swap Dealers were buying into the weakness, adding 11,410 new longs against just 199 new shorts.  Other Reportables, which include commission houses, liquidated 283 existing longs and covered 903 existing shorts.  Fund liquidation ‘allowed’ prices to decline (they were heavy buyers for weeks) and Producer liquidation was also a major factor pushing prices lower.

    In heating oil futures, prices lost 1.25 cents a gallon, and the best net selling came from Managed Money accounts, which liquidated 4,074 existing longs and covered 2,687 shorts.  Other Reportables added 36 new longs and added 1,398 new shorts.  Producers added 1,468 longs and covered 1,462 existing shorts.  And Swap Dealers added 566 new longs and 198 new shorts.  Here, as well, managed money or fund liquidation helped push quotes lower – after powering them higher for weeks.

    Gasoline prices fell 1.22 cents a gallon during the period under review.  Managed Money accounts liquidated 2,850 existing longs and added 1,384 new shorts.  The others, which had been sellers, were buying.  Producers added 11,054 longs and 8,782 shorts.  Swap Dealers added 755 longs and covered 215 shorts.  Other Reportables added 1,781 longs and covered 153 shorts.

    In natural gas, prices dropped 21.7 cents during the period under review.  Managed Money accounts added 4,025 new longs against the sale of 2,467 new shorts.  Other Reportables added 6,198 longs and 6,746 shorts.  Producers added 2,768 longs and 355 shorts.  Swap Dealers liquidated 2,643 longs and sold 356 new shorts.  Swap Dealers were the best net sellers, after weeks of fund selling against everyone else’s buying.  Commission houses were the best gross sellers, although they bought nearly as much.  Only Swap Dealers are net long here (24 longs per short) with funds holding three shorts for each long.  

 

 

Natural Gas & Utility Generation

Nymex

Natural gas prices rallied almost six cents yesterday, despite the lack of any dramatic change in temperature forecasts, natural gas specific news or storage figures.  It seems to have been bargain-hunting and end-of-month book-squaring rather than something more enduring. 

Nevertheless, this is somewhat instructive.  Prices are going to keep dropping, surrendering two cents, three cents, a nickel or a dime, for day after day.  We have seen exactly that recently.  But, nothing lasts forever.  There will come a day when all we have left will be long-term buyers, companies who want to produce it or use it or both.  Investors are already short, along with the majority of speculators.  It will almost certainly be a shoulder month, with moderate temperatures forecast out to the predictive horizon.  Storage will seem plentiful.  But, prices will have reached their low. 

Five days after this price has been touched, quotes will be $1.50 – or some suitable amount – above the low, and every bullish factor that had been ignored for months will be trotted out in a parade of posthumous rectitude possible only when accompanied by an air of self-congratulatory revelation.  Those fortunate enough not to have been stopped out of long positions will say, “Of course it had to rally.  How could anyone expect prices to remain below $4.00 after erasing the huge overhang seen in storage at the end of October?”  And – of course – they will be right.  In our opinion, anything bought from here will be profitable just as soon as this reversal occurs.  But, then one has to hold on through the next few/many/several/interminable days of slight losses.  It is possible that we are early, as well, although we do not think we are, here.  We did not think we were early six weeks ago, either, though.  And we still expect that even those prices may look good after the inevitable turn back up.  The bottom line is simple: prices will keep going lower, but the turn will suddenly submerge any sellers from here under water.

Conclusions

It really is not about storage or weather or charts anymore.  Prices have to find their level, and once they have, prices will rally dramatically and without warning.  Commercials with deep pockets are buying on a scaled-down basis here.  One needs patience and financial staying power.  Because so few have both, the final phase of the decline will include the exit of those who just can’t hold on. 

Cash

In cash trading yesterday, Henry Hub prices were at $3.77-$3.85, down $0.00-$0.03 on the day (DJN).  SoCal prices were at $3.74-$3.85, down $0.06-$0.09 on the day.  El Paso Permian prices were up $0.01 and down $0.06/mmBtu to $3.58-$3.75.  Katy prices were down $0.05-$0.06 to $3.70-$3.77.  Waha prices were up $0.04 and down $0.10 at $3.60-$3.78.  Transco 6 was up $0.27-$0.36 to $4.10-$4.25/mmBtu, according to Dow Jones News (DJN). 

Electricity

Palo Verde prices were last quoted at $37.00-$38.25/mwh.  Northeastern prices last traded at $32.00-$38.75.  Cinergy was last at $31.75-$32.75.  Ercot was last at $35.75-$36.60/mwh.

Support is at $3.82-$3.86, $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 $4.01-$4.02, $4.14-$4.18, $4.29-$4.30, $4.36-$4.37, $4.44-$4.47, $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. 

May Natural Gas:               Support              :     $3.82-$3.86, $3.73-$3.75, $3.66-$3.68, $3.50-$3.53, $3.44-$3.46, $3.28-$3.32.

                                                    Resistance:     $4.01-$4.02, $4.14-$4.18, $4.36-$4.37, $4.44-$4.47, $4.59-$4.63, $4.76-$4.79.

 

Natural gas prices are into oversold territory here.

Dollars per million Btu

The crude to gas ratio ended at 20.73-to-one yesterday.  It was a day off its highest ratio since 9-11-10, when it reached 23.41-to-one.

 

Ratio

EIA Weekly Storage Figures

Last week’s EIA report showed a build of 11 bcf on expectations for a build of 9-11 bcf.  Stocks are now 28 bcf lower than a year ago, against a deficit of 40 bcf a week ago, a deficit of 71 bcf two weeks ago and a deficit of 71 bcf three weeks ago.  Stocks are now 1.69% lower than a year ago.  They are 121 bcf and 8.04% above the five-year average.

For this week, the eight-year average (of similar Friday reports) was a draw of 10.00 bcf.  The five-year average was a draw of 6.4 bcf.  Last year’s storage number was unchanged.  Over the last eight years, five years showed draws, two years showed builds, and last year showed no change. 

 

EIA Report

Region	03-19-10	03-12-10	Change	Last Year	5 Yr Avg
Cons East	760	770	dn 10	666	696
Cons West	285	283	up 02	280	228
Producing	581	562	up 19	707	581
Total US	1626	1615	up 11	1654	1505

Bcf, or Billions of cubic feet.  Source:  Energy Information Administration, US Department of Energy

 

News & Views

In trading on Globex last night, May crude oil prices were down $0.08 to $82.29, at 12:30 AM EDT.  April heating oil prices were down 0.47 cents to 2.1200/gallon.  Gasoline prices were up 0.03 cents to 2.2750/gallon.  May natural gas, was up 0.033 to $4.006/mmBtu. Prices were reacting cautiously to last night’s API report.  The US dollar was advancing just after midnight to its after-hours high. 

SThe White House is expected to announce today its findings on the suitability of opening up coastal waters to drilling and exploration.  There has been a 20-year moratorium, during which time we had a rig floating in the mouth of the Mississippi (after Hurricane Katrina) without a single drop of oil spilled.  The state of the art has come a way in two decades.  There are early indications at this time that the administration might just be willing to compromise and open up a significant portion of the outer continental shelf (OCS). 

At stake are an estimated 4 billion barrels of Atlantic crude and 37 trillion cubic feet of gas, and 10.5 billion barrels of Pacific oil supplies and 18 trillion cubic feet of natural gas.  The US imports roughly 2 billion barrels of Opec oil each year and will bring in 2.7 trillion cubic feet of gas from abroad in 2010. 

SMasterCard’s SpendingPulse reported gasoline demand down 1.3% in the latest week, possibly in reaction to fresh, new 17-month high pump prices.  The report had consumption up 0.3% on the year, for a running total of 11 out of 12 weeks higher this quarter.  Year-to-date consumption is up 1.4% from the same number of days in 2009.  Four-week average demand came in at 9.58 million bpd, up 2.3% on the year and the highest aggregate average since Independence Day, 2009.

SPresident Obama said yesterday that he is looking to impose fresh international sanctions against Iran “within weeks,” adding that “we are going to get this done this spring,” according to Agence France-Presse (AFP).  French President Nicolas Sarkozy added that “the time has come to take decisions.”  He added, “Iran cannot continue its mad race.”  In agreement with German Chancellor Angela Merkel and British Prime Minister Gordon Brown, he noted, “We will make all necessary efforts to ensure that Europe as a whole engages in this sanctions regime.”  It seems that the West’s patience for a negotiated settlement has expired.  Foreign Ministers from the G-8 nations, meeting in Canada, expressed “serious doubts” over Iran’s nuclear intentions and urged “in the strongest possible terms” the Islamic Republic to cooperate with UN Security Council resolutions and with the IAEA.  US Secretary of State Hilary Clinton said that the next few weeks will be “ones of intense negotiations in the Security Council.” 

 

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 found support and rallied yesterday, although oil prices chose to focus on a general feeling that the recovery is gathering pace in the US.  There has been an undercurrent of hope all week that this next set of employment statistics could turn a corner – which could then set the stage for higher interest rates.  That would be bullish for the dollar and could hurt the stock markets. 

   http://www.x-rates.com/d/EUR/USD/graph120.html

 

A Look at the Dow Jones Industrial Average (djia)

 

Dow Jones Industrial Average: One-Year Chart

The DJIA ended with a gain of 11.56 points yesterday, as the stock market continues to sustain itself near its fresh highs.  Equities played a minor and passing role in oil markets yesterday.

Source:  http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=DJIA&sid=1643

 

Recommendations for Specific Market Segments

Heating Oil Distributors       Heating oil prices were higher again yesterday, and it looks like prices are ready to make a serious assault on the resistance up to 214.42.  If prices can break and settle over that important threshold, they should be able to launch a fresh leg higher.  A decisive breakout would give us an objective to 234.23.         Fundamentally, the year-on-year surplus is now just 1.0 million barrels.  But a year ago, it was 32.9 million barrels, or 29.63%.  The same is true of crude oil stocks, which are now 10 million bbls below year-ago levels.  Last year, they were 48 million barrels and 15.55% higher.         We are unlikely to get a sustained fundamental reaction in this market as long as investors are still following the carry trade.  In the meantime, if we can’t beat them, we should position ourselves accordingly.                                            Diesel Users We would hold our caps here., and would add to them.   NYH Ultra Low Sulfur Diesel.…218.65-219.15 plus 6.125 USG Ultra Low Sulfur Diesel.…216.15-216.40 plus 3.375   Jet/Kerosene Users & Airlines New York Harbor cash market differentials were 6.25 to 7.00 cents over January heating oil in NY Harbor and 1.50 to 2.00 over the screen in the US Gulf.    Diesel & Gasoline Marketers We would stay hedged here as we start the week.   Gasoline Blenders & End-Users Prices look bullish again, so we would hold and add to long bias holdings.  Prompt NYH Fuel Ethanol…..164.00-166.00 Prompt USG Fuel Ethanol….157.00-159.00 Quotes from 03-30-10   Heating Oil End-Users We want to hold what we have here, and we would add to them.   Speculators We bought calls through March 15th.  We would hold them and add to them here.   Refiners The 7:5+2 crack spread was $11.37 yesterday.  This time of year is when crack spreads typically strengthen.   Crude Oil Producers Crude oil prices are in a range between $78.57 and $83.18.  Prices are now – again – threatening to break to  the upside.

Prompt Jet Fuel Prices New York Harbor  219.90-220.40 US Gulf  214.65-214.90 Midwest (Group Three) 216.45-217.45 Midwest (Chicago)  218.15-219.15 Los Angeles  218.00-220.00 San Francisco  218.00-220.00 Portland, Oregon  218.00-220.00 Cents per gallon   Propane Prices Mont Belvieu……….…..non-TET………$1.101000   Cents per gallon  Spot Ethanol prices have support from 150.00 to 157.00.  It looks like it will take an extended period to turn this market back up, again.  Prices are following corn more than oil.