Latest As Of Wednesday Morning

Yes it is inventory day and no the oil market is still not paying much attention to any of the normal oil drivers, especially the fundamentals. WTI is now trading over $101/bbl and leading the complex higher (just look at the weakening crack spreads as oil products lag crude oil). When crude oil leads the way higher it is normally being driven by the spec side of the equation and for reasons not normally followed by the vast majority of the oil industry.

 

Overnight the USD hit another record low against over a dozen various currencies and as a result oil continues to nudge higher. The relationship between oil and the USD dollar are very much in sync again almost moving tick for tick. As new signs emerge (yesterday ) that the US economy is continuing to weaken the expectations are for additional interest cuts by the FED and thus a further weakening of the USD and resulting firmness in oil. The Euro/USD & WTI price chart at the end of the report shows the Euro breaking out to the upside (US dollar weakening) and WTI continuing to gain ground. For the moment the financials are the main drivers influencing oil prices.

 

Although they have been put to the side today is oil inventory day. As shown in the following table we are expecting another mixed report…builds for crude oil & gasoline and a seasonal decline for distillate & Ng (tomorrow’s report). This will be the 7^th week of builds for crude oil and the 10^th week of builds for gasoline. Versus the 5 year average for the same week we still have an across the board surplus. Gasoline is the most oversupplied showing year on year surplus of over 10 million barrels with inventories at the highest level since 1993.

 

If the numbers come in as expected the report would normally be viewed as biased to the bearish side. However, we are not sure the market is going to pay much attention to the numbers today for the reasons discussed above.

 

 

Projections		2/27/08
	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

 

As we have been projecting the market is likely to remain in the current trading pattern for the foreseeable future as we see rallies in most all commodities, especially as the USD weakens. It remains to be seen when the energy complex will re-couple itself back to the fundamentals and other normal market drivers.

 

Currently prices are steady for crude oil and slightly lower for everything else.

 

Current Expected Trading Range
	2/27/08	Change	Upper	Lower
		From	Resistance	Support
	8:01 AM	Yesterday
Apr WTI	$101.02	$0.14	$102.50	$85.25
Mar HO	$2.8130	($0.0020)	$2.8500	$2.4000
Mar RBOB	$2.5429	($0.0076)	$2.6500	$2.2000
Mar NG	$9.131	($0.075)	$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

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

 

This message and any attachments relate to the official business of the Energy Management Institute ("EMI") and are proprietary to EMI. This e-mail transmission may contain information that is proprietary, privileged and/or confidential and is intended exclusively for the person(s) to whom it is addressed. Any use, copying, retention or disclosure by any person other than the intended recipient or the intended recipient's designees is strictly prohibited. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or the taking of any action in reliance on this information is strictly prohibited. If this message has come to you in error, please immediately notify the sender by telephone or return e-mail and delete the original transmission and its attachments without reading or saving in any manner. Thank you.

 

 

Latest As Of Monday Morning

After a strong week of price gains in the energy complex (as well as most other commodity markets) the complex is starting this week with only minor losses so far in overnight trading. Last week saw mostly bearish new, however, the market focused mostly on the few supporting items keeping WTI prices near the psychological summit of $100/bbl.

 

The bullish drivers were a weakening dollar, concern over Geopolitical issues (like Nigeria & Venezuela) that could cause a supply interruption and a strong technical trading pattern. None of these drivers are overwhelmingly supportive but interesting enough to keep the market sentiment and the momentum biased to the upside.

 

We expect the market will continue in this pattern for at least another few weeks and/or until the current overvalued price scenario runs out of steam and recognizes that the majority of the energy complex drivers do not support current levels. Volatility should remain high and prices remain susceptible to sudden strong reversals on little notice.

 

Currently the complex is mixed.

 

Current Expected Trading Range
	2/25/08	Change	Upper	Lower
		From	Resistance	Support
	7:00 AM	Yesterday
Apr WTI	$98.56	($0.25)	$100.00	$85.25
Mar HO	$2.7545	($0.0085)	$2.8000	$2.4000
Mar RBOB	$2.5287	($0.0050)	$2.6500	$2.2000
Mar NG	$9.300	$0.154	$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

 

This message and any attachments relate to the official business of the Energy Management Institute ("EMI") and are proprietary to EMI. This e-mail transmission may contain information that is proprietary, privileged and/or confidential and is intended exclusively for the person(s) to whom it is addressed. Any use, copying, retention or disclosure by any person other than the intended recipient or the intended recipient's designees is strictly prohibited. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or the taking of any action in reliance on this information is strictly prohibited. If this message has come to you in error, please immediately notify the sender by telephone or return e-mail and delete the original transmission and its attachments without reading or saving in any manner. Thank you.