Thursday October 15th, 2009

Good Evening Coop blog reads. How about that Energy Market? If you dabble in spec trade you are probably jumping for joy this week. It has been a week of large gains across the board in products and crude. Energy futures hit a new high for 2009 with the release of this weeks DOE report showing draws in product and slight builds in crude. The story really began earlier this week, with large gains on Monday after the Saudi's released public statements about intentions to shut down all exports in the month of November and expect others to follow suite. Later in the day Valero and Sunoco shut down their New Jersey and Aruba refineries for an undisclosed amount of time to cut production rates. Apparently others have follow suite, with refinery runs plunging this week by 4.1% to 80.9% capacity; Expectations were a mere -.4%. We have seen gains everyday this week due to a weak dollar and positive financial reports on economic recovery. The technical picture is bullish with crude establishing new 2009 highs. Crude closed at $77.58 and heating oil came in .075 cents higher at $2.018. Gas closed .087 cents higher putting its weekly gain to about .16 cents.
The short term energy market outlook is bullish across the board. The DOE reported draws on diesel at 1.1 million bbls per day, with four week demand down 10.8% from last year. Why bullish with demand down you ask? Well, currently fewer diesel product will be made as refineries cut production, combine that with a late harvest and heating oil tanks filling with an early season chill and you get a bullish atmosphere. All of these factors will drive weekly demand over the coming months, continuing inventory reports to read bullish with draws. Gasoline showed draws of 5.2 million bbls per day, crushing early expectations of a build, opening the door for numbers to sore. Look for gas to test summer highs of 2.11. Gas will cost more tomorrow so if you reading this and can still make it to the station, fill up. Crude is forecasted to continue its climb with some calling for the $88 dollar mark. We are still long way from $88, but with $3.00 a day gains it will not take long to get there. My prediction is for some profit taking tomorrow, so expect a little give back tomorrow. On the other hand, we are out of our trend of 65-75 and its time for a new trend to be established.
Thanks for reading.
Zach Winter