Thursday October 1, 2009

Good evening blog readers. Lets talk Energy. The week started slow after last weeks test of multi-month lows, but a large rebound was post yesterday after the DOE report read bullish. Well it read bullish to investors, I am still trying to figure out how builds of 2.8 million in crude for the second consecutive week is bullish. Never less, gains of $3 and some change were posted and more importantly they held today with an additional bounce of .21 cents to close above the $70 mark at $70.82. After yesterdays close the market talk was still a bit negative, thinking the gains were over done and today would be a profit taking day. The day looked to begin just as predicted, with a strong dollar, weak housing and manufacturing reports, but no losses were recorded by days end. We are still trading in the 65-75 dollar range so unless either are tested, we will most likely remain in this trend. The energy market weathered what looked like a perfect storm today, don't look for much change tomorrow.
Diesel
Diesel saw large gains this week, with nine plus cent gains yesterday. The DOE report showed builds of 300,000 bpd and over all four week demand down 9.2% from last year. While builds were not what we have seen the past few weeks it is wonder how builds can still provide a boost of almost a dime in a single day of trade. Not to mention refinery utilization is down 1% this week to 84.6% of total capacity. I really thought the market was over done yesterday, but we saw less than a half of one cent come back. You will most likely see consumer diesel prices jump about a dime at the pumps over the next couple of days.
Gasoline
Gasoline seems to be the catalyst for this weeks gains. The DOE reported a draw of 1.6 million bpd giving a boost to the entire energy market. Gas has a four week demand increase of about 5.4% from last year this time. Look for prices to increase at the pump over the weekend, with small gains of about half a cent today and ten cents of gain yesterday.