Thursday, February 4th, 2010

Wow, what a difference a day makes. Energy started the week at support level and took off over Monday and Tuesday with no end in sight. On Tuesday inter day trade provided annual highs with heating oil up as much .15 cents mid-day. I thought we might have seen our contract window disappear, but after today's massive energy sell off all of this weeks gains were wiped away in one session. Crude saw it's largest dip in six months, losing $3.84 to settle at $73.14. Heating oil and gas both saw .08 cent plus losses. I am glad I only write the blog once a week, everything leading up to today looked like it was going to be a massive gains week in energy.
This weeks DOE report was rather neutral with large builds in crude and medium draws in product, little market stimulation was had. The early week gains were pinned on economic recovery data coming out of the Institute for Supply Management with its index hitting 2004 highs, indicating the worlds top economies are recovering. China also released data stating its needs for foreign oil will continue towards record levels, as their economy is recovering. Of course other data has come out as the week as progressed disagreeing with early week data, such as jobless claims and a strong dollar, which has pushed the commodities market the other way. Some feel as though their is a bubble specifically in energy that needs to burst to move the market more in line with current usage. Four week demand on diesel is down 9% from last year this time and gas is down about .5%.
It has been a wild week in energy, normally after a large sell off we will see a bit of a bounce the next day as the market repositions. But, looking forward crude and product are both at the bottom of their support levels, if they close the week lower after tomorrows trade look to see crude possibly touch its December low of $68.50 in the coming weeks and some are reporting diesel could fall to its September low of $1.66. Stay tuned.... it might get interesting.
Zach Winter