Gas Petrospective – March 5, 2012
Natural gas prices were up 2.1 cents per million Btu, which cut into the losses for the week. Prices dropped 21.1 cents in the April contract. Dow Jones reported Friday’s buying came from fuel-switching by utilities, and that has been an increasingly significant source of buying here. Residual fuel demand is down 46.39% in the latest four weeks against a year ago. That suggests a good amount of energy replaced by natural gas. And, it may be one of the few factors supporting this market. Lower prices have made natural gas more attractive and, at some point, this new demand will be felt in this market.
Last week’s EIA underground storage report showed storage levels 756 Bcf (43.02%) higher than a year ago, against a surplus of 753 bcf (+40.88%) a week ago, while they are now 780 bcf higher (+45.01%), compared to 744 bcf (+40.19%) a week ago – against the five-year average. The surpluses have been growing. The map to the right shows the outlook for the next thirty days, and it is warmer than normal.
Parity Crude Oil Volatility Report
Crude Oil Volatility Report
WTI Crude Oil – April 106.70 -2.14 (Range 105.80 – 108.55)
ATM Vol – J12 27.6 +1.1 \ K12 29.4 +0.6 \ M12 30.9 +0.7
Tomorrow’s Expected 1-StdDev Range for J12: +/-$1.85
Morning Petrospective – March 5, 2012
Profit-taking and technical selling pushed oil prices lower on Friday after prices failed on Friday to remove the Thursday high that left crude oil prices high and dry with a bull trap. Prices were overbought and up against resistance for most of the week, and Friday’s activity relieved some of those pressures. We are now left with a market that may have peaked. It is the wrong time of year, by a long shot, but a steep decline now could leave prices in a perfect position to buy before we get beyond March 15th. The first half of the year is almost always the best time of year to buy.
Prices advanced sharply on Thursday on a report that there had been an explosion at a Saudi pipeline. The report was vigorously denied by the Saudis, and the fact that the report seemed to get its feet in Iran complicated the nature of the rumor/report. In any event, by Friday, it was no longer a factor and selling had pulled prices down from their Thursday highs.
Gas Petrospective – March 2, 2012
Natural gas prices were unable to hold onto gains posted on Wednesday yesterday, as recent buyers kicked out long positions established over recent trading days. This market is still working on a major bottom, but yesterday did give us a setback. Traders had been looking for a rally, but they got yesterday’s sharp selloff when this week’s EIA underground storage report showed a smaller drawdown that had been expected in this week’s EIA underground storage report. As it turned out, we had a drawdown of 82 bcf against expectations for a draw of 85-90 bcf.
Stocks are 756 Bcf (43.02%) higher than a year ago, against a surplus of 753 bcf (+40.88%) a week ago, while they are now 780 bcf higher (+45.01%), compared to 744 bcf (+40.19%) a week ago – against the five-year average. The surpluses are growing. With warmer weather just around the corner, prices might not be able to hold above recent support. There is support at $2.44-$2.45.
Temperature forecasts are for moderate readings ahead. It was cold at times last week, but storage levels still increased. That was one of the surprises that killed the rally.
Morning Petrospective – March 2, 2012
A reported explosion tore into a pipeline in Saudi Arabia yesterday after markets had finished their normal open outcry session – causing oil prices to explode on exchanges worldwide. And, refined products were up more substantially than crude already, presumably on refinery maintenance issues. The Saudis denied the report, which reportedly originated with a report on Iranian television, which in turn reportedly came from Facebook or Twitter, according to Dow Jones Newswires in later market commentaries.
Dow Jones reported this morning, “Tehran-based PressTV reported an explosion destroyed pipelines in Saudi city of Awamiyah. ‘The reports are completely untrue. They originated from Facebook and Twitter, and the pipeline is still up and running,’ one official tells Dow Jones Newswires. An online website called the Arab Digest posted a headline ‘Saudi Arabia’s Eastern Revolution hits the oil sector – pipeline under fire’ and two photos of what it claimed was a pipeline fire. Neither photo showed a pipeline, and the fires didn’t appear large. The photos couldn’t be authenticated. The site quoted what it said was an unidentified resident of Qatif calling the blazes a message to the U.S. to pressure Saudi Arabia for reform. ‘This is just false propaganda, and we are not going to entertain it,’ a second Saudi official says.” The Saudi perspective seems to be that Iran perpetuated a rumor [started by agitators] it knew would roil markets.
