Tuesday proved to be another volatile choppy day ending with mixed results: crude & heat down, gasoline up. The U.S. dollar firmed throughout the day while the stock market soared to start the second quarter. Most of yesterday’s down move in oil was a result of a broad commodity sell-off initiated by a short covering rally in the U.S. dollar.
Overnight prices are quietly mixed as the dollar is slightly weaker and the economy still looking guidance. This morning the International Monetary Fund cut its 2008 global growth forecast as a result of the financial crisis in the United States. The world economy will expand 3.7% in 2008, according to the IMF. In January the fund projected global growth of 4.1%. This further reduction in global growth does not bode well for the commodity bulls as demand for oil and many other commodities may have peaked for the moment.
Today we get another snapshot of oil stocks. As shown in the following table the market is expected a mixed picture. Crude is expected to show the 11th gain in 12 weeks while gasoline & distillate should decline. Refinery runs are expected to stay at the low end of normal as a result of both scheduled maintenance and poor refinery margins. Overall the report is neutral at best and possibly a bit bearish as the gasoline surplus is still expected to remain over 22 million barrels as the year on year deficit of crude oil continues to narrow. Also as compared to the same week of the five year average a surplus of all oil commodities continues to persist indicating that oil remains well supplied.
Projections
4/2/08
Current
Change from
Change from
Projections
Last Year
5 Year
mmbls
vs. Proj.
vs Proj.
Crude Oil
2.5
(18.4)
1.3
Gasoline
(2.0)
22.0
21.1
Distillate
(1.5)
(8.1)
2.0
Ref. Runs%
-0.2%
-5.0%
-7.5%
Change Level
82.0%
87.0%
89.5%
BCF
BCF
BCF
NG, BCF
(35)
(327)
(1)
We expect the market to continue to trade in a choppy pattern with reversals possible at any time. Barring anything overly bullish from today’s inventory report we do expect the market continue to correct to the downside. Currently prices are firm.
Current Expected Trading Range
4/2/08
Change
Upper
Lower
From
Resistance
Support
7:39 AM
Yesterday
May WTI
$101.62
$0.64
$112.50
$99.20
May HO
$2.9010
$0.0213
$3.2500
$2.7100
May RBOB
$2.6566
$0.0174
$2.9000
$2.5200
May NG
$9.635
($0.089)
$10.250
$8.700
Euro/$
1.5597
0.0049
1.5818
1.5200
Yen/$
0.9839
(0.0006)
1.0450
0.9900
Dominick A. Chirichella
Energy Management Institute
dchirichella@mailaec.com
www.energyinstitution.org
www.advancedenergycommerce.com
