Morning Petrospective – August 4, 2010       

he oil complex continued advancing on Tuesday, partially on follow-through buying, a good deal on technical momentum, partially on a weaker US dollar and partially on the growing consensus that the recovery is still on – just at a crawl.

Equities did not follow oil’s rationale (or lack thereof). The DJIA was lower for most of the day and it finished down 38.00 points to 10,636.38. Copper prices, which had also accompanied oil and equities prices higher on Monday, also failed to see the economy as brightly as oil prices did. Housing data and manufacturing figures applied the brakes to equities and some industrial commodities … but not oil.

The number of contracts to purchase existing homes was unexpectedly reported lower in June on Tuesday. The index of pending home sales fell 2.6%. And home foreclosures reportedly increased 38% in the second quarter, RealtyTrac was quoted by Bloomberg as having said last week. Consumer spending and personal incomes were reportedly stagnant in June. Purchases were unchanged from May levels and incomes failed to increase for the first time since September. The ‘good news’ was that the savings rate hit its highest level in a year. Also, from the economic front, US factory orders fell 1.2% in June, against expectations for a decline of 0.5%. Any of these three statistics could have stopped oil prices dead in their tracks, but the oil complex simply isn’t interested in bearish news, technical failures, signs the recovery is going to be softer than tropical outdoor ice or increases in inventories. It didn’t care about copper or equities, and when the euro started to falter, oil prices decided to cling to this week’s new, improved chart picture.

MasterCard’s SpendingPulse reported gasoline use up 1.7% in the latest week to 9.507 million barrels per day (bpd). That represents an increase of 161,000 bpd and it places demand at its highest level since the week ended July 2^nd, just before the Independence Day holiday weekend. It was, however, still 200,000 bpd below the figure seen in the week leading up to Memorial Day Weekend. Demand in the latest week was up 420,000 bpd, or 4.6%, against year-ago figures. The four-week average is now 9.432 million bpd, up 197,000 bpd, or 2.1%, against the same four weeks in 2009. That is also 78,000 bpd below the same four-week period in 2008. Demand has risen, week-over-week, in each of the last four weeks, as vacation use and driving by teens out of school for the summer has kicked into gear. Year-to-year demand is up 0.9%. Those demand figures were slightly supportive, but they came out as the oil complex was about to close, and prices were higher all day long, through the worst of the economic indicators and declines in supposedly influential (upon oil) markets.

Tuesday evening’s API report showed a crude oil drawdown of 0.776 million barrels, but it also showed a build of 1.109 million barrels in distillate stocks and a build of 2.305 million barrels in gasoline stocks. Refinery utilization dropped 0.7% to 86.7%, which was in line with expectations. Crude oil imports declined 1.358 million bpd to 9.361 million bpd, which helped crude oil stocks to decline. Implied demand was 9.176 million bpd in gasoline and 4.392 million bpd in distillate.

     FMX Newswire       

FMX Newswire is an overnight news summary designed to meet the needs of professional energy traders. The content is to-the point, professional grade and not widely reported in the mainstream media. All sources are professional respected firms and newspapers.

Platts oil

• Beleagured BP hit by $10 bil lawsuit over a leak of toxic chemicals at Texas City refinery earlier this year.
• BP says Macondo well in US Gulf of Mexico appears to have reached static condition.
• Iran's President Mahmoud Ahmadinejad has survived an attack on his convoy in western Iran.
• Philippine refiner Petron wins court battle with government over tax.
• DME sets new record high for physical Oman crude delivery in July.

Bentek Energy

• Texas Observer - More Gas Leaves the State Despite Continued High Demand
• Storage Analytic Report - Lower Injections in the East and Producing Regions Push the Midpoint Down
• Supply/Demand Balance Analytic Report - Power Burn Posts Highest Level Since 2007 Yesterday
• Gulf Coast Production Analytic Report - Tropical Storm Colin Peters Out

Bloomberg

• Oil Falls From Three-Month High on Concerns Over U.S. Recovery
• BP Controls Gulf Well That Caused Record Oil Spill
• Putin's Global Gas Plan Falters as Gazprom Dithers on LNG
• Carbon Capture Closer to Profit as Oil Rallies Toward $100: Energy Markets
• EU Seeks Caspian Gas Accord to Cut Russian Dependence
• U.S. Moratorium on Deep-Water Oil Drilling May End Early, Bromwich Says

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