As we have been forecasting the market remains on the defensive. A weakening equities markets (Dow down almost 6% since the beginning of the year), an improving fundamental position and a relatively quiet Geopolitical environment have all contributed to the oil complex approaches long term support areas. Today we get another snapshot of oil stocks.
As shown in the following table the projections are calling for across the board builds with gasoline leading the way higher. Refinery runs are expected to decline only marginally. The supply situation is continuing to improve with year on year deficit starting to narrow a bit for products. Versus the 5 year average the situation looks very comfortable with a surplus now projected for gasoline. If the actuals come in as expected the market will view the results as biased to the downside.
| Projections | | 1/16/08 | |
| | | | |
| | Current | Change from | Change from |
| | Projections | Last Year | 5 Year |
| mmbls | | vs. Proj. | vs. Proj. |
| Crude Oil | 0.7 | (37.9) | (10.7) |
| Gasoline | 2.3 | (1.4) | 1.5 |
| Distillate | 1.2 | (12.0) | (5.5) |
| Ref. Runs% | -0.1% | 3.3% | 1.8% |
| Change Level | 91.2% | 87.9% | 89.4% |
| | BCF | BCF | BCF |
| NG, BCF | (65) | (251) | 161 |
The financial markets are not improving at all and will continue to put pressure on the energy complex. We also do not believe inventories will be supportive and as such we do expect to see even lower prices before seeing any surge to the upside. The market has a decent shot at testing the support levels shown in the following table. Volatility will remain above average.
Currently prices are lower in very early overnight trading.
| Current Expected Trading Range | | | ||
| | 1/16/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 1:51 AM | Yesterday | | |
| Feb WTI | $91.37 | ($0.53) | $100.00 | $90.00 |
| Feb HO | $2.5350 | ($0.0122) | $2.7500 | $2.4500 |
| Feb RBOB | $2.2930 | ($0.0162) | $2.6500 | $2.1800 |
| Feb NG | $8.145 | ($0.051) | $8.750 | $8.000 |
| | | | | |
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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