Latest As Of Tuesday Morning

As we have been predicting the market remains in the trading range, albeit at the higher end of the range. Not much new nor not much to support the current overvalued level of oil prices. Tomorrow we get another snapshot of oil stocks and as has been the trend we are expecting builds in gasoline & crude oil and a seasonal decline in distillate & NG inventories.

 

As show in the table below crude oil is expected to show another healthy build narrowing the year on year deficit and widening the year on year surplus versus the 5 year average. This will be the 7^th week in a row of crude oil builds. I must caution that although the expectations are calling for a build in crude the market could be surprised as the Houston Ship channel was closed several times last week due to fog which likely resulted in less crude imports and possibly a smaller than expected build.

 

Gasoline is expected to build for the 10^th week in a row bringing the year on year surplus to over 10 million barrels and the 5 year average surplus close to 15 million barrels. Needless to say gasoline is well supplied with inventories at the highest level since 1993. Distillate is continuing to decline normally as the weather has been mostly normal. Distillate stocks are still a bit below last year but are still surplus versus the 5 year average. Nat Gas is showing a similar pattern to distillate stocks with a year on year deficit but a small surplus versus the 5 year average.

 

If the actual inventories come in as expected the report would be biased to the downside. However, with the market sentiment still biased to the bullish side we may see yet another week of the market quickly discounting the inventory report if it is bearish. Also watch crude oil closely as the expected build could possibly be much smaller for the reason explained above.

 

Projections		2/26/08
	Current	Change from	Change from
	Projections	Last Year	5 Year
mmbls		vs. Proj.	vs. Proj.
Crude Oil	2.5	(21.2)	7.3
Gasoline	0.3	10.4	14.4
Distillate	(2.0)	(4.0)	6.4
Ref. Runs%	-0.1%	-2.6%	-3.5%
Change Level	83.4%	86.0%	86.9%
	BCF	BCF	BCF
NG, BCF	(150)	(113)	100

 

 

We do not see any signs that indicate the current hold on high prices will break in the near term. Thus we expect the market to remain at the higher end of the range at least until the inventory reports are digested.

 

Currently prices are mixed.

 

Current Expected Trading Range
	2/26/08	Change	Upper	Lower
		From	Resistance	Support
	8:04 AM	Yesterday
Apr WTI	$99.04	($0.19)	$100.00	$85.25
Mar HO	$2.7781	($0.0072)	$2.8000	$2.4000
Mar RBOB	$2.5290	($0.0129)	$2.6500	$2.2000
Mar NG	$9.212	$0.026	$9.250	$8.250

 

 

 

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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