October 29th, 2009

Good evening blog readers. Thursday is already here, which means, Energy. I bring news of Energy gains. Crude oil settled 3% higher at close today, just under the $80 mark at $79.87. The large bounce in today's market was driven by news that the economy is growing. GDP rose 3.5 percent in the third quarter. Of course today's energy gains are a wash after yesterdays losses, but the positive economic news has created a shift in short term direction. Yesterdays DOE report was interpreted as bearish with builds in crude oil of 800,000 bpd, builds in gas at 1.7 million bpd and draws in diesel of 2.1 million bpd. Just in itself the report is kind of neutral, but in context of early week reporting by the API of large draws across the board, the market reacted bearish with a mild sell off. Losses of .08 cents on gas, .05 cents on diesel, and $2.09 on crude seemed to provide the start of profit taking before months end. But just as we thought a downward push was coming, more money entered the energy market, giving it a firm bounce. Tomorrow could set the tone for next weeks trade as the bulls aim for the $80s on crude. Unfortunately, it seems yesterdays losses will not reach the public end users with gains today, the short term outlook is still bullish on Energy.
Market News:
- Key energy complex catalysts- the dollar's weak showing and stock market gains will continue to push the complex higher.
- Iraq's Oil Ministry said a final deal would be signed on November 3rd with BP and China's CNPC to develop Iraq's largest oilfield.
- Jobs data- is due November 6Th. Currently we are at annual highs, look for the data to provide energy direction. Most likely a gain will only confirm what we think and loss will cause the market to move higher.
- Home buying- It is suspected the Senate will extend the first time home buyer credit to help spur home sales, no time frame has been established.
- Iran- Obama has signed legislation that will penalize oil companies that export gasoline to Iran. This marks the first economic sanctions that Congress has passed regarding Iran.
- US Diesel and Gas Demand- Diesel demand overall is down 13.1% over a 4 week average from last year; While gas is only down 1.9%.

Good luck out there.
Zach