Thursday May 13th, 2010

Well it's still ugly for those looking for an energy market up tic. Most of us will be happy with cheaper fuel, but many investors were looking to energy for an income opportunity and it doesn't look as though the bounce is coming anytime soon. Crude closed down another $1.25 at $74.40. The same story has once again lead to the same results, (funny how that works) dollar gains on continued worries over the state of the global economy, with commodities and equities lower. Overall crude is down $2.40 on the week, with diesel and gas both up about .02 cents; Mainly do to sizable jump Monday.
This weeks DOE report did little to increase the hopes of demand, with reports of 1.9 million bpd builds on crude and 1.4 million bpd builds on diesel. Supply levels are at all time highs, Cushing, OK reported its crude reserves are at all time highs since reporting began in 2004. The only glimmer of hope came in the way of 2.8 million bpd draw on gasoline.
I believe if the economy was showing stronger signs of global improvement, the 970,000 barrels of oil substance spuing into gulf would have an impact on the market, but no impact has been seen. BP reported today that the clean up efforts tabhas hit $450 million, with over 530 vessels participating in clean up efforts. An end may be in site, with hopes of a "top hat"oil containment system will be in place within a few days. The latest effort is focused on a slightly smaller tube being inserted into the existing pipe, funneling oil to the top of the surface, where it can be trapped and contained.
The short term outlook remains bearish with inventory high and demand low. Some news of increased air demand did surface today calling for a possible up tic in jet fuel demand. Air travel authorities are budgeting 20% fuel price jumps for the up coming travel season, that could be an indicator of future price ranges, but expect to pay about the same for fuel this weekend.
Good evening, stay dry.
Zach Winter