Thursday September 24, 2009

The Energy Coaster by Zach Winter. Crude futures settled at $65.89 today, the lowest settlement since July 29th when sellers managed to push the value as low as $63.35. Crude lost just over three dollars on the day right at four percent additional loss on top of the Wednesday settle. Sellers were active from the get go and gained momentum following the latest report detailing home sales continue a weak sales cycle and reawakened worry over economic recovery. The dollar added support to the downward plunge as it gained against the euro. Heating oil or Distillate as we have talked in the past has hit an eight week low of $1.6814 and gasoline/ RBOB hit four month lows of $1.636. The short term outlook still remains bearish unless today’s market activity is over analyzed. This weeks DOE report provided the beginning of the downward direction with builds on all product. It was expected that we would once again have a draw on crude with low imports being reported, but as it turned out demand was weak enough to post builds across the board. As it stands crude stocks are at 335.6 million bbl, an annual increase of 32.2 million over last year. Similarly product reflects the same story, with builds in Distillate at 40.8 million bbl and Gasoline at 20.6 bbl. Watch the trend of the dollar to find tomorrows direction, but keep in mind the sideways trend of $65 to $75 crude. We are still in the range to maintain what we have seen over the past couple of months. This could be a great buying opportunity on the product side; multi month lows are just that.
Thanks for reading.
Zach Winter