by Brad Zigler
Handicappers in the oil derby have been losing their shirts recently. You could hear the fabric tearing further this morning after the U.S. Energy Department released its latest inventory numbers.
Analysts' tip sheets were glaringly off pace this week. At least with respect to crude oil and gasoline stocks.
Crude oil inventories dropped a whopping 5.9 million barrels last week, stunning traders who'd expected a drawdown of only 1.4 million barrels. According to the Energy Department, oil inventories still remain well below seasonal averages.
Crude oil had traded higher overnight, largely on short covering ahead of the report. Memories of last week's supply surprise (see "Oil Guesses Getting Better, Still Off") were still fresh in traders' minds.
August crude oil futures had sold off $9.25 a barrel, or 6.3%, over the past two NYMEX trading sessions, but rebounded today. The contract opened $1.51 a barrel, or 1.1%, higher as traders reacted to Iran's test-firing of long-range missiles. Ahead of the Energy Department report, prices had moderated on news from Royal Dutch Shell that deliveries of crude from Nigeria's Bonga field resumed after a month-long shutdown.
For the week ending Tuesday, the August NYMEX crude oil contract had lost $4.93 a barrel, or 3.5%.
On Tuesday, crude oil's quarterly contango ballooned to $1.84 a barrel, a new high since the market shift from backwardation a month ago. Such premiums in the back months tend to develop when supply concerns diminish.
Crude Oil Contango Building
Last week, refineries operated at 89.2% of capacity, as gasoline production backed off in favor of heating oil and diesel. Usage had been expected to increase only marginally.
Heating oil and gasoline futures, which also featured short covering in the overnight markets, opened higher on NYMEX this morning in anticipation of the Energy Department numbers.
Gasoline stocks, which had been expected to increase by 300,000 barrels, shot up by 900,000 barrels instead, bringing inventories in line with seasonal averages.
Distillate fuel inventories, including diesel and heating oil, increased by 1.8 million barrels, on pace with expectations of a 1.7-million-barrel boost. Stocks of middle distillates are average for this time of year.
Crack spreads - the gross refining profit represented by NYMEX futures - were boosted by yesterday's price action. The nearby spread stood at $12.68 a barrel on Tuesday's close for a gross margin of 9.3%. A week earlier, the spread was $13.72 a barrel.
Crack spreads tend to contract this time of year. A year ago, the nearby spread was $21.17 a barrel, or 29.3%. By August 1, the spread shrank to only $7.45 per barrel, or 9.7%.
NYMEX Crack Spread Shrinking
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This article has 7 comments:
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Paul Killinger
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1025 Comments
Jul 10 02:40 PM-
Paul Killinger
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1025 Comments
Jul 10 02:49 PM-
Paul Killinger
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1025 Comments
Jul 10 02:50 PM-
iThinkBig
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1067 Comments
My Website
Jul 10 03:56 PMAssumptions will change in the market after we see which lametard wins the election and after Q1 when the stated energy policy going forward has been made transparent. Government will do half of what it should in any case, so agree long-term we will retest these highs and perhaps go even higher. Wild card is Iran and if we go at it with them, but I assume some of this risk premium was already baked in at $145 spot. Any retaliation from the Iranians which could include an attempted nuclear attack on our fleet would certainly change my mind in a big hurry...
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Cash_and_Fetal
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23 Comments
Jul 14 05:57 PMTake a look at some of the futures prices of a barrel of oil.
futures.tradingcharts....
Do you see a pattern there?
Look at the 2012 future prices for a barrel of oil...they are trading in the $70's
2012 will be "election season"....
Speculators don't want to touch buying it...if we were really living in a "tight" market....and $150/$200 a barrel is here to stay...That's the BEST deal OF THE CENTURY you could find, you could TRIPLE your investment in 4 short years...what other investment exists with that kind of "guarantee".... 300% return in 4 years....?!
Why are people not buying up those futures contracts as fast as
they can?
You want further proof?!
How and why would a COMMODITY price...we're talking a COMMODITY, have $4-$5 swings in a matter of HOURS...that's a 3% price swing within HOURS of trading in a single DAY!!
Because the price is FALSELY inflated....and Oil Pricing is a SCAM manipulated on the ICE markets.
Has EVERYONE completely forgotten (or IGNORED) history? We've seen this EXACT SAME THING when Enron was around.
They were the Market makers and they manipulated the market to their whim......Anyone remember Dick Cheney saying "we can't pull anymore kilowatts", yet Enron was shutting down Power plants in California, to close grids and falsely increase demands on the rest of the grid...
it is the EXACT same thing ICE is doing.
Eliminate the Graham/Enron loophole, put more transparency on ICE Markets, and a price of a barrel falls in HALF, OVERNIGHT
I'll bet EVERYTHING I OWN on it.
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Cash_and_Fetal
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23 Comments
Jul 15 08:26 PMAbout ICE,IntercontinentalEx... Inc.
Ice, Ice Baby Part 1
www.star-telegram.com/...
Ice, Ice Baby Part 2
www.star-telegram.com/...
Here are some teaser quotes:
When Enron failed and took its private, unregulated energy exchange to the grave, another rose to take its place. The Intercontinental Exchange (ICE) was the brainchild of
Morgan Stanley,
Goldman Sachs,
British Petroleum,
Deutsche Bank,
Dean Witter,
Royal Dutch Shell,
SG Investment Bank and
Totalfina.
In 2001 ICE purchased the International Petroleum Exchange in London; renamed ICE Futures, it now operates as an "exempt commercial market" under section 2(H)(3) of the Commodity Exchange Act. As the Senate hearings pointed out in the summer of 2006, "Both markets operate outside of any CFTC oversight."
www.star-telegram.com/...
We started as a society that worships hard labor and the basic business ethic of building value into the goods you create. How’d we get from there to worshiping Wall Street’s billion-dollar boys — who create nothing, build nothing, own nothing and deliver no goods, and yet can throw so much money into products made by others that they determine what we consumers will pay for those goods?
Oil Movements tracks every tanker at sea, from both OPEC and non-OPEC oil countries, along with their cargoes’ final destinations. Anne O’Shea responded immediately to my request with their report dated May 8, 2008. Just so you will know, oil shipments are up from a year ago in almost every class, including Middle East oil in transit and Non-OPEC in Transit. The only class of oil shipment that has declined is covered on page 3 of that report. That chart is labeled, "4-Week Changes in Westbound Oil at Sea."
That’s right, shipments of oil headed west have shown serious declines during the month of April, down 800,000 barrels per day in the week before the publication of the report
This is EXACTLY what Enron did when it's Electricity Manipulation, Turning off power grids to falsely inflate demand on other grids....
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Managing Editor
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130 Comments
My Website
Jul 16 11:37 AMCheck one of your quotes for accuracy and your presumptions. You cite one source saying:
"When Enron failed and took its private, unregulated energy exchange to the grave, another rose to take its place. The Intercontinental Exchange (ICE) was the brainchild of
Morgan Stanley,
Goldman Sachs,
British Petroleum,
Deutsche Bank,
Dean Witter,
Royal Dutch Shell,
SG Investment Bank and
Totalfina. "
Enron entered bankruptcy in 2001. Dean Witter was merged out of existence in 1997 after combining with Morgan Stanley.
Yhe creations of ICE's backbone, the former International Petroleum Exchange, predates by decades the Enron mess.