Oil prices are falling despite a late day surprising dead cat bounce as oil inventories and weak industrial data weigh on the market outlook. Of course a rising stock market gave bulls some hope along with nonexistent producer price inflation, but from a preponderance of data and rising global inventories the rally is going to need some help to keep oil above $90 a barrel.
A drop below $90 a barrel will not be surprising as we have felt that $87-$88 should be near the lower end of our trading range. That means that retail gas prices should continue to fall except in the Midwest where supply is at multi decade lows for this time of year due to a rash of refining and pipeline issues. Wild swings in the Midwest cash markets have gasoline buyers going crazy. Yet it was probably the rising stock market and the upcoming Memorial Day holiday that helped gas and oil rebound because it was not the Energy Information Administration supply report. While the EIA reported that over all crude stocks fell by 624,000 barrels they actually rose in Cushing, Okla. We also saw a boost in gasoline stocks as they increased by 2.59 million barrels and distillates up by 2.3 million barrels.
The ongoing EU price collusion investigation case in the thinly traded and shadowy world of European cash energy markets may be becoming clearer. Reuters reports that "A Hungarian ethanol producer said it alerted the European Commission over the role of price agency Platts in setting prices, feeding into an investigation of three major oil companies. Pannonia Ethanol, a recent entrant to Europe's ethanol market, on Wednesday became the first company to identify itself as having complained to Brussels.”