Morning Petrospective – May 11, 2011
he oil complex was higher on Tuesday, and gasoline prices took back another dime in what has to be one of the most humbling rallies-after-a-collapse in commodities trading history. Prices advanced on reports that a surging Mississippi River – shown at left on Monday, where it meets the Missouri River – has already closed down refining units and disrupted transportation of refined products. This is yet another rare, once in a century or millennium, event that seems to be defining 2011. Apparently, having one rare event does nothing to immunize one against a second or third rare event.
Of course, it would be another thing altogether if the two events were related, like the earthquake was to the tsunami. There, we got both rare events because one caused the other. Here, one would have an extraordinarily difficult time drawing straight or parallel lines between the earthquake in Japan and the flooding going on in the US Midwest right now, but we are finding that rare, disconnected once-in-a-lifetime natural events are not mutually exclusive in the same year.
It has been a rare and strange year since the first ripple of discontent in Tunisia. And, events that have happened since have only magnified the volatility of a natural nervous and jittery market. The timing, coming as it does after a large and brutal corrective move lower, makes this flooding doubly unwelcome across the middle of the US; as homes and businesses are mauled, the one really likely spot of good news at the pump this year seems likely to be swept away by the Mississippi.
Motiva reportedly is preparing for problems at its Norco, Louisiana refinery (237,000 bpd), Dow Jones noted. At the same time, Valero told the newswire that it expects to be unaffected by the rising waters. Enterprise Products Partners reported that it has at least two barges stuck in Kentucky for as long as a week because of the floodwaters.
This week's API report showed a build of 2.948 million bbls in crude oil stocks, and a build of 0.582 million bbls in distillate stocks. Gasoline stocks dropped by 1.835 million barrels. Utilization was unchanged at 82.2%. Crude oil imports were up 471,000 bpd to 9.407 million bpd. Implied demand came in at 4.363 million bpd for distillate and at 9.726 million bpd for gasoline.
The US dollar was lower in trading on Tuesday, selling off from highs reached around 2 AM very early on Tuesday. They met support at nearly 3 PM Tuesday afternoon, and prices worked sideways into the afternoon and early evening.
After Wednesday’s weekly DOE statistics are released, we believe that the interplay between the US dollar, the Fed and the economy are going to start coming into sharper relief. Ultimately, we feel that the story will be written in those terms and then translated into oil.
Gasoline inventories have fallen for 11 consecutive weeks, and they were down in this evening’s API report. Traders are likely to look at gasoline stocks, first, and they could well give us the market direction through the end of the week. Longer-term, though, we still feel that interest rate forecasts, the dollar and the Fed will decide the direction of oil and commodities prices.
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
- Texas Observer – Texas Outflows Remain Strong To Midcon.
- Supply Demand Balance Analytic Report – Production Slides With Limited Outflows From Rockies While Demand Increases.
- Industrial End Users Analytic Report – Industrial Demand Rises Across the South.
- Power Burn Analytic Report – Power Burn Declines 0.3 Bcf/d as Temperatures Remain Flat.
Platts
- EU gas and power utilities face 1.5%/yr energy savings obligation from 2013, according to draft directive.
- Malaysia's Petronas to build 400,000 b/d refinery as part of an integrated downstream oil and gas complex: sources.
- East African regional body plans Uganda-Rwanda oil and natgas pipeline.
- Low Rhine water levels tightens the spot availability of LPG barges in ARA region .
Bloomberg
- Crude Oil Futures Halt Two-Day Advance on Chinese Inflation, European Debt.
- China’s Commodity Takeovers Dropping 30% This Year as Oil, Copper Advance.
- OMV’s First-Quarter Net Income Declines 9%, Missing Analysts’ Estimates.
- Japan to Monitor Tepco on Financial Aid to Ensure Compensation for Victims.
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