Month: February 2008

Another good DOE report!

Its very good news this time of year when the DOE releases a “favorable” report like they did moments ago at the normal 10:30am time.

Highlights:

Cons:

  • Refineries operated at a low (albeit slightly higher than last week) 84.7% of capacity last week

Pros:

  • Crude oil inventories rose by 3.2 million barrels last week. At 308.5 million barrels, we are now into the MIDDLE of the average range for this time of year… we’ve had consecutive oil inventory gains the last couple months. NOTE: we are 11 million barrels below our last year level. We need to fill this gap ASAP.
  • Gasoline inventories rose by 2.3 million barrels last week and are above the upper limit of the average range
  • Gasoline demand remains flat compared to last year, averaging about 9 million barrels per day
  • Distillate demand fell about 3.5% last week compared to last year
  • Overall demand of petroleum products fell 2.4% last week, averaging about 20.6 million barrels per day
  • Midwest (PADD2) storage is nearing 57.5 million barrels or storage. Anything over 57.5 million barrels would be the highest level since March of 1999!

This is good news, I’m mixed on a hike- but due to the ever increasing Midwest storage, don’t believe a hike to happen. If it does, it would only be to 3.25 or so.

Patrick

NYMEX traders on another planet?

Comment on February 19 prediction:  So, the day after a price hike, NYMEX prices jump 10 cents, so you’d think we’d get another hike.  No, that would be WRONG.

Saturday, February 23, 2008, 6:45PM:  Estimate of wholesale price using NYMEX:  $2.60.  Estimate using AXXIS:  $2.45.  That’s quite a difference!  The past several weeks, $2.40 on AXXIS has corresponded to about $3.09 retail, so now we see why prices didn’t rise on Thursday.  In fact, looking at the national map, it doesn’t look like the jumps on the future markets have shown up anywhere in the country.  Going into this week, then, it isn’t clear if we’ve got a price hike coming or not, so no prediction.

Rumor of expensive gas soon… *not* true (as of yet, maybe in a few months!)

Just got a call asking if I could verify a rumor or not…

We will not be seeing gasoline for $3.85… heck, we won’t even be seeing gas for $3.30 until *maybe* Monday, we’ll see.

Rumors like this seem to start circulating every Spring.

If you *ever* hear of a rumor of a large spike in gasoline- check here first. If you want to ask me about what I’m anticipating, leave a comment and I’ll let you know 🙂

Patrick

The DOE report- is it enough to slow down the inevitable?

Before opening the DOE report today, one day later than normal because of President’s Day, I thought how much today’s report could either help or hurt. Well, after reading through all the numbers and descriptions, I think is report is some much needed good news; however, it does not come without some concerns.

My concern: refineries operated at a dismal 83.5% of capacity, the lowest utilization in recent years.

The better news:

Midwest gasoline storage is nearing its peak (PADD 2) again. Last year we hit 57 million barrels, and last week the Midwest gained 2 million barrels of gasoline (Are these Winter Storms really helping slow demand that much?) We’re currently sitting at 56 million barrels.

Total gasoline inventories rose by 1.1 million barrels, and we’re ahead of last year’s numbers by about 8% which definitely is good.

Total oil inventories rose by 4.2 million barrels, and we’re still behind of last year’s numbers by about 4%. However, we’ve gained 24 million barrels of oil the last 9 weeks- pretty impressive! (However, much of that could be due to lower refinery production)

Overall petroleum demand is down 1.1% over last year.

We should start seeing the Chicago Discount really kick in as supplies have continued to climb in the Midwest… this could help Michigan stay under the national average for gasoline.

I’ll be watching closely for more refinery trouble as some refineries start to switch from heating fuel to summer gasoline- there are bound to be issues… and with oil prices so high (hardly any refining profit, thus the reduced utilization), we’re bound to have some refineries continue their low utilization rates.

Due to the Chicago Discount, we have an equal chance of seeing a hike to 3.29 or no hike… its hard to tell at this point.

Patrick

Yeah, this has the potential to get ugly this week

Comment on February 9 prediction: We did get the hike to $3.09 as predicted. CORRECT. There was another price hike to $3.19 on February 18.

Tuesday, February 19, 2008, 8:45 PM: I am probably the last to the party to make this prediction, but let me agree that there will be another price hike soon. Oil is back to $100, and we’ve got the switchover to summer gasoline looming. If I didn’t know about AXXIS prices, I would use NYMEX to predict a hike to $3.46. However, NYMEX prices have been pulling ahead of AXXIS prices lately, so the new price could be just $3.29. So, I’ve provided a 17-cent range for a price hike, but the bottom line is fill up Wednesday morning for $3.19 or less. Gas is $3.12 in Wyoming right now.

$4/gas, $100/oil PREDICTED… Rehike to 3.29+ likely

With wholesale market prices rising almost 10 cents already this morning, we will see another hike this week to 3.29-3.35, depending on if this rally holds, but I expect that it will. In fact, I see another rally tomorrow of this magnitude. I think the only thing that will slow these bulls down is the weekly DOE report released this week on Thursday due to the holiday Monday… but thats still a few days off!

After pouring over data from previous years Spring Run-ups, I think I can announce what I found when I did some calculations. Are you sitting down? If this year goes like ANY of the past 8, we WILL see $4 gasoline here in Michigan this Spring. Is it likely? Not immediately, but will take time. This prediction may not some to pass until April or May, like previous years. Not only is $4 a reality, it is LIKELY.

The refinery unit that exploded yesterday in Texas resulted in the entire refinery to shut down. While its a pretty small refinery, this is going to feed the market. They, and I think that more of these refinery problems will be likely, especially when refiners do maintenance this Spring.

Patrick

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