Morning Petrospective – August 17, 2011
he US dollar started to appreciate in trading last night and this morning. That’s because only the most optimistic traders ever really expected anything major from the meeting between French and German leaders Nikolas Sarkozy and Angela Merkel. The two leaders seemed genuinely glad to see each other and their meeting was described as constructive, but the problems remain. These two leaders were just never going to pledge to backstop every Greek or Spanish bond auction.
Oil prices were lower because of the strength in the US dollar and weakness in the euro. The euro rallied sharply a little after noon, but it could not hold onto its gains. Minutes later, it sold off again. Oil prices could not keep up with it all, but they decided to go with the latest move in the euro, which was lower again.
The oil markets finished in negative territory, as did equities. Crude oil prices finished down a little more than a dollar and the DJIA was down 90 points a little after 3 PM. By its final bell at 4 PM, the DJIA was down 76.97 to 11,405.93.
The summit between Merkel and Sarkozy yielded some unexpected results. They proposed a tax on all financial transactions, which would kill high-frequency trading wherever it would be imposed – and it would almost certainly move. They did not increase the bailout fund nor did they float the idea of common euro bonds. Germany and France made their pre-eminence in Europe clear with this meeting, but they did not solve the underlying problems that have shaken global confidence.
Back in the US, industrial production bounced back robustly in July as auto-makers finally got completely past the ripple-effects of the Japanese tsunami in the spring. July output was up 0.9% and June production was revised up 0.4%. Analysts had predicted an increase of 0.5%, so the numbers were surprisingly supportive. But, at the same time, as has so often been the case this year, another set of figures was bearish. Housing starts dropped 1.5% in July to 604,000 and June’s starts were reduced to 614,000, showing that housing remains the lost pillar of recovery – along with employment – in this economy.
This week’s API report showed a draw of 5.374 million bbls in gasoline stocks, after a startling implied demand figure of 10.273 mln bpd in gasoline. Implied demand in distillate came in at 5.026 million bpd. Crude stocks were up 1.745 mln bbls and distillate dropped 1.293 mln bbls.
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
- Power Burn Analytic Report – Texas Power Burn Expectred to Return to Normal.
- Supply Demand Balance Analytic Report – Production in Gulf Down, Demand Flat, Tropical Wave Developing in the Gulf.
- Texas Observer – Fpur Mothballed Gas Units Returning to Service, on Standby.
- Industrial End Users Analytic Report – Industrial Demand Flattening with 2010.
Platts
- What factors have led to Urals #crude #oil and Med light sweet grades hitting a 12-mth high?
- Korea Gas to import 5.64 mil mt/year of #LNG from Shell and Total.
- Sinopec chief says open to competition from private refineries, says report. .
- ICE and CME are a long way apart on their view toward position limits.
Bloomberg
- China’s July Coal Imports Rise 36% on Summer Power Shortages, Sxcoal Says.
- Oil Climbs in New York as U.S. Fuel Supply Drop Signals Increased Demand.
- Indiana Sewer Bond Leads Utility Debt Sales as Yields Plummet: Muni Credit.
- Rising Spending Holds Off U.S. Double-Dip.
Technical Recap
Crude Options Report / Straddle Runs
NG Options Report
Market Prices
Premium Subscriber (click here to register):
Volumes & Open Interest
End Of Day Straddles
Settlements
To view our energy news and articles on your PDA or mobile device, click here.