Oil counting its bullish blessings

Yet despite the S&P warnings the market is gaining optimism that Europe is getting its bailout act together. The Financial Times is reporting, “Eleventh-hour negotiations have begun to create a much bigger financial “bazooka” to present at this week’s European Union summit that could include running two separate rescue funds and winning increased support for the International Monetary Fund. This three-pronged rescue system would form part of a carefully crafted package EU leaders hope will win over financial markets, just two months after a similar summit failed to convince bond investors Europe could contain its spiraling debt crisis. The rescue system would be introduced alongside proposals to rewrite EU treaties with far tougher budget rules for the Eurozone. According to senior European officials, negotiators are considering allowing the Eurozone’s existing €440bn bail-out fund to continue running when a new €500bn facility comes into force in mid-2012, almost doubling the firepower of the bloc’s financial rescue system. The proposal, being debated by “sherpas” ahead of Thursday’s crucial Eurozone summit, could also include speeding up cash payments into the new €500bn fund – known as the European Stability Mechanism (ESM) – to give it more heft and improve its creditworthiness in the eyes of credit rating agencies.”

T’is the season for falling oil stocks! The API reported a big drop in crude supply, reporting a fall of 5.04 million barrels. Like I said before, the end of year drops in supply are expected as yearend tax considerations take hold. Distillate inventories increased by 1.68 million barrels and gasoline supplies surged 5.97 million barrels. Gasoline prices fall and demand comes back. Barbara Powell art Bloomberg News reports that, "U.S. gasoline demand rose 1 percent last week to a 14-week high as driver refilled their tanks after the Thanksgiving holiday weekend, according to MasterCard Inc. Drivers bought 9.06 million gallons a day of gasoline in the week ended Dec. 2, up from 8.97 million the week before, according to MasterCard Inc.’s SpendingPulse report. That’s the highest level since Aug. 26 and follows a 3 percent gain during the prior week. Fuel use fell below a year earlier for the 14th consecutive time last week, down 4 percent from 2010 levels. Fuel demand over the previous four weeks was 4.2 percent below a year earlier, the 37th consecutive decline in that measure. “While the post-Thanksgiving week produced week-over-week gains similar to ones we had seen last year, given the overall depressed levels of gasoline demand, we continue to observe declines in year-over-year terms,” John Gamel, a gasoline analyst and director of economic analysis for Spending Pulse, said in the report.

Thanksgiving was on Nov. 24 this year and the holiday period extended through Nov. 27. Gasoline consumption in 2011 through Dec. 2 is down 1.5 percent from a year earlier, a wider gap than the prior week’s1.4 percent difference, according to the second-biggest payments network company. The average pump price fell 4 cents to $3.30 a gallon, the lowest level since Feb. 25. Prices were 15 percent higher than a year earlier. Gasoline demand peaked this year at 9.56 million barrels a day in the week ended July 1 as motorists filled their tanks before the July 4 holiday weekend. The lowest level of consumption came in the week ended Feb. 11 when consumers bought 8.47 million barrels a day."

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at pflynn@pfgbest.com.

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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