The Goldman prediction of oil possibly hitting $150 to $200 acted as yet another reason for the market to push to higher levels on Tuesday. We are now once again sitting at new historical highs as we head into inventory day. The early expectations are calling for a build in crude oil and distillate and a small decline in gasoline. Refinery runs are expected to continue their recovery.
As shown in the following table gasoline remains well supplied versus last year and the longer term 5 year average. With distillate and crude oil now clearly in their normal seasonal building pattern the year on year deficit is expected to continue to narrow while the surplus versus the 5 year average is expected to widen. With spring maintenance quickly coming to an end refinery runs are likely to continue to increase over the next month or as they return to more normal historical levels.
Overall this week’s inventory report is likely to be neutral. However, once again with the market sentiment decidedly bullish if the actual come in as expected we believe the market will view the number as bullish and use the report as another reason to continue the price push to higher levels. The numbers are going to have to be very bearish for the market to react to them in a negative way.
| Projections | | 5/7/08 | |
| | | | |
| | Current | Change from | Change from |
| | Projections | Last Year | 5 Year |
| mmbls | | vs. Proj. | vs Proj. |
| Crude Oil | 1.5 | (19.8) | 1.2 |
| Gasoline | (0.5) | 17.1 | 5.8 |
| Distillate | 1.3 | (11.7) | (2.2) |
| Ref. Runs% | 0.5% | -3.1% | -5.7% |
| Change Level | 85.9% | 89.0% | 91.6% |
Expect more of what we have seen since the end of last week, high volatility and most likely higher prices heading into the second half of the week. Currently prices are mixed as the dollar gains some ground in early trading.
| Current Expected Trading Range | | | ||
| | 5/7/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 7:23 AM | Yesterday | | |
| June WTI | $121.88 | $0.04 | $125.00 | $99.20 |
| June HO | $3.3639 | $0.0104 | $3.4000 | $2.7100 |
| June RBOB | $3.1050 | ($0.0005) | $3.1500 | $2.5200 |
| June NG | $11.125 | ($0.025) | $11.500 | $8.700 |
| | | | | |
| Euro/$ | 1.5408 | (0.0092) | 1.6000 | 1.5200 |
| Yen/$ | 0.9518 | (0.0053) | 1.0450 | 0.9900 |
Dominick A. Chirichella
Energy Management Institute
tel 646-202-1433
tel 845.368.3904
fax 801.383.7510
www.advancedenergycommerce.com
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