Morning Petrospective – April 20, 2011

rude oil prices were higher on Tuesday … which was enough, along with a weaker US dollar, to give gold the excuse to print $1,500 an ounce. It settled at $1,494.⁵⁰, which was a new, all-time high. The S&P negative outlook was enough to hurt most commodities on Monday, but gold was exempt, and crude oil prices were exempt on Tuesday. Refined products prices were lower on Tuesday, which might have been a function of traders looking ahead to this week’s DOE report, which is expected to show an increase in utilization of roughly a percentage point.

We typically see refineries start to increase utilization about now, anyway. But, they started earlier this year raising runs, largely because they have had the opportunity to stay on top of maintenance regularly over the last two years. Utilization has been returning earlier than normal, but it is still 4.19% lower than a year ago and 3.4% below the five-year average. And it is 11.62% below the 4-year pre-2005 average. Estimates are the largest they have been (so far this year) for increased refinery utilization this week. That seemed to be putting pressure on refined products prices today.

The US dollar was steeply lower on Monday, and that helped crude oil as well as gold. There was a report showing much stronger private sector growth in the euro-zone than had been expected, and that pushed dollar quotes down against the euro. The DJIA recovered on Tuesday, partially on a stronger-than-expected housing report. It showed housing starts up 7.2% to 549,000 units, which was better than the 520,000 units predicted by a Bloomberg survey of analysts. Nevertheless, housing starts are at extremely low levels and they are recovering from dire levels. Housing is still the weakest part of the US economy. Capital Economics wrote on Tuesday that “housing starts aren’t going to enjoy a more meaningful recovery for a few years yet.”

Fighting continued in the Middle East on Tuesday, in Libya, but traders have started to take the activity there on board as background noise. In Nigeria, after very little violence previously, President Goodluck Jonathan called for calm as riots against his election killed at least six. The elections were considered fair and representative.

Syria approved an end to the nation’s 50-year old state of emergency, but protestors saw it as a ruse to claim that President Assad has enacted reforms. Observers believe that the situation there could become more volatile, with opposition leaders unhappy at the limited steps taken by the government – which, in turn, feels it has delivered on requested reforms, meaning that demonstrations should now end.

Britain is sending up to 20 military advisors to help rebels in Libya. Pro-Khadafi forces continued to hammer Misrata on Tuesday, and Nato leaders admitted that Khadafi’s forces still have considerable weaponry, despite Nato attacks.

The bears were unable to build on Monday’s losses, but the bulls are not in command either. It looks like prices are going to take their time deciding which way to go next.

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Don’t miss our special Silver options expiration series: PART 1 AND PART 2, with a special focus on the much-discussed May 40 call.

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.

Bentek Energy

• Rockies Observer – Basis Tightens, Cash Prices Climb Higher.
• Industrial End Users Analytic Report – Demand From Refineries Remain Strong.
• Midcon Observer – Rockies Inbound Flows Fall on tighter Spread; Bison Gets Temporary Boost.
• Power Burn Analytic Report – Power Burn Down 0.9 Bcf/d as Temperatures Decline.

Platts Oil

• President Obama still holds BP, others ‘fully accountable’ for Macondo; aggressive reforms for offshore oil being implemented.
• Nigeria - the politics of oil: with the elections over, the real work begins.
• Key European nations over-contracted to buy expensive gas.
• Japan's Tepco forced to shut its No.6 1 GW oil-fired unit at its quake-hit Kashima thermal power plant after a brief restart earlier Wed.

Bloomberg

• Crude Oil Rises for Second Day on Improving Outlook for Global Fuel Demand.
• AES Agrees to Acquire Ohio Utility for $3.5 Billion in Cash.
• Czechs Wedded to Nuclear Boost Utility CEZ as Germany’s Atomic Age Wanes.
• Libyan Rebels Hail U.K. Military Help as NATO Air Campaign Meets Obstacles.

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