As many market participants head to the sidelines for the long holiday we are ending a trading week relatively quiet. As we have been predicting the market has been mired in a wide trading range for the last three weeks or so. WTI has traded in a range of $85 of $95/bbl as the market continues to search for the next catalyst to push it out of the range. On one side of the equation inventories have been declining but still remain within the normal operating range. On the other hand the market is worried about the potential weakening of the US economy as well as forecast for warmer than normal winter weather throughout most of the US for at least the next several weeks and possibly beyond. All of the other normal drivers have been uneventful and of little consequence to energy prices.
The result has been a quest trading week with prices of oil marginally lower on the week while NG has been able to maintain a small gain (so far). This week HO has led the market lower for the first time in many weeks as the latest forecasts continue to call for warmer than normal temps throughout the majority of the US that consume most of the heating fuels. On the gasoline side inventories continue to build at above normal rates and now stand well within the comfort range for this time of the year.
On the refinery side the gasoline crack has maintained a small gain while the HO crack has declined a bit. The overall 3-2-1 crack remains at about the same level as where it was last Friday.
| | | | | | | |
| | | Trading For the Week | | | ||
| | | | | | | |
| | Current | Change | Change | 14-Dec | Weekly | Range % of |
| | Price | From Thurs | For Week | Settle | Range | Fri Close |
| | 7:27 AM | | | | | |
| Feb WTI | $91.16 | $0.10 | ($0.39) | $91.55 | $3.85 | 4.21% |
| Jan HO | $2.5880 | ($0.0015) | ($0.0199) | $2.6079 | $0.1145 | 4.39% |
| Jan RBOB | $2.3370 | $0.0094 | ($0.0047) | $2.3417 | $0.0726 | 3.10% |
| Jan NG | $7.085 | ($0.052) | $0.060 | $7.025 | $0.336 | 4.78% |
| | | | | | | |
| Feb 08 Cracks | | | | | | |
| RBOB Crack | $8.254 | $0.26 | $0.30 | $7.956 | $0.56 | 7.03% |
| HO Crack | $17.410 | ($0.14) | ($0.57) | $17.982 | $2.50 | 13.90% |
| 321 Crack | $11.275 | $0.130 | $0.01 | $11.265 | $1.200 | 10.65% |
| | | | | | | |
This has likely been the last week with a full complement of traders manning their desks. Next week we expect liquidity to be light with trading likely to remain in the trading range it has been in for almost a month. Any major moves outside of the range (in either direction) should be analyzed carefully as often times markets make unexplainable moves during period of low liquidity. These types of moves tend to be unsustainable.
| Current Expected Trading Range | | | ||
| | 12/21/2007 | Change | Upper | Lower |
| | Electronic | From | Resistance | Support |
| | 7:27 AM | Yesterday | | |
| Feb WTI | $91.16 | $0.10 | $95.00 | $85.00 |
| Jan HO | $2.5880 | ($0.0015) | $2.7500 | $2.5000 |
| Jan RBOB | $2.3370 | $0.0094 | $2.5000 | $2.2000 |
| Jan NG | $7.085 | ($0.052) | $7.660 | $6.640 |
| | | | | |
Dominick A. Chirichella
Energy Management Institute
tel 646.202.1433
fax 801.383.7510
dchirichella@emimail.org
www.energyinstitution.org
www.advancedenergycommerce.com
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