Latest As of Wednesday

Prices continue to move higher on anticipation that the FED is going to cut interest rates another 50 basis points as well as this morning release of oil inventory data due out at 10:30 AM EST. The Fed is expected to conclude a two day meeting today and after previously cutting the interest rate to help ease growing economic concerns, is expected to announce another cut to shore up the economy. With a combination of warmer than normal temperatures expected in the majority of the US that consumes most of the heating fuels and a building of gasoline inventories we do expect prices to remain under pressure over the next several week (barring any major shift in the direction of the equities markets). Over the next week or so we believe the short side of the ledger will be the trade of choice for the spec community as we continue to recommend to the buy type hedgers to remain poised to buy but not just yet.

 

This morning we get another snapshot of the fundamentals for the oil and expectation are calling for a build in crude of 2 million barrels and gasoline is expected to show a build of 1.9 million barrels. Distillate is expected to show a draw of 2.1 million barrels and refinery runs are expected to have fallen 0.3% to 86.2 %. If the numbers come in as expected we expect the market to view them as neutral.

 

Oil Inventory Projections		January 30, 2008
Millions of Barrels
	Current	Change from
	Projections	Last Yr
		If Actuals = Proj.
Crude Oil	2.0	(33.5)
Gasoline	1.9	(2.4)
Distillate	(2.1)	(13.5)
Ref. Runs%	-0.3%	-0.9%
Change Level	86.2%	87.1%
	BCF	BCF
NG	(100)	(135)

 

Overall the market will be looking for OPEC’s decision on production due out Feb. 1 after a meeting of cartel members in Vienna.  Indications leading up to the meeting suggests members will leave production unchanged. "As I said before, I don't believe there is a need for OPEC to do anything," Shokri Ghanem, head of Libya's oil policy and chief executive of Libya's National Oil Co., reportedly said ahead of his arrival in Vienna. "The market is well supplied." Underscoring expectations the group will hold production steady, an OPEC advisory committee won't meet ahead of the gathering of ministers, OPEC said today. To ease concerns, U.S. Energy Secretary Samuel Bodman Tuesday suggested that the U.S. would be able to make do if members of the OPEC decline to boost oil production.  If OPEC nations fail to raise production, "then that's what they decide and we'll move forward," Bodman said.

 

Currently price are higher

 

Current Expected Trading Range				Jan 30,2008
	Wednesday	Change	Upper	Lower
	as of	From Prev.	Res.	Support
	8:55 AM
Mar WTI	$92.03	$0.39	$92.50	$86.00
Mar Brent	$92.23	$0.23	$95.50	$86.50
Feb HO	$2.5515	$0.0097	$2.7500	$2.4400
Feb Gasoil	$813.00	$2.50	$840.00	$750.00
Feb RBOB	$2.3321	$0.0026	$2.6500	$2.1800
Mar NG	$8.046	$0.103	$8.000	$7.600

 

 

Salvatore Umek

Energy Management Institute

tel. 201.659.7410

cell. 201.697.5834

fax. 201.624.7164

Sal@energyinstitution.org

www.energyinstitution.org

 

 

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