Hedge funds are beating the natural gas drum

Get Fracking!

These are interesting points, but what it also shows is that between natural gas and diesel, the competitive juices are flowing. Natural gas is up and coming and diesel will have to be smart to hold its lead. Obviously clean, cheap diesel is what is going to be needed to thwart this upstart natural gas!

Gasoline, the kind we power our cars with, is also causing some surprise. Strong refining runs and an abundance of crude is making gasoline the weakest of the petroleum sector. Of course, as I have reported before, the pain that we experienced during the historic run up in February in gasoline prices probably is the reason that gas is falling today. Early forced maintenance and weak demand and an abundance of crude should mean that we will be in much better shape as we head into this summer driving season. Seasonal traders have been warned that this market is out of whack, so do not be surprised to see RBOB fall a lot further.

Despite the fact, the American Petroleum Institute reported a much larger than expected draw down of 5 million barrels of gasoline. The thought is that reflecting the removal of the winter blend will soon be replaced with ample summer blends. Dow Jones reported that, "Reformulated gasoline blendstock for May delivery settled 6.07 cents, or 2%, lower at $3.0408 a gallon, the lowest finish for the front-month contract since February 25."

Heating oil stocks fell 1.9 million barrels in another unseasonal draw that is another reason the spread won't work. Trading the calendar now is a losing proposition. Crude stocks fell in Cushing Oklahoma.

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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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