Refined Products | MarketWatch

Overview Friday’s market held early gains, ending higher for the 3rd straight day, supported by stronger than expected Chinese GDP data that eased worries about global economic growth and the tight outlook for North Sea crude oil supplies. This capped the 3rd consecutive week of increases, bringing prices up $4 and 4%, with corresponding increases in US East Coast products (see more on a potential developing trend below). Prices are holding steady this morning, supported by Chinese government comments that it was ready step up efforts to boost its slowing economy.

Back on the July 5 report, “Have the fundamentals changed?”, which raised the issue of whether the abrupt reversal of the three month sell-off at the end of June was a lasting phenomenon or not. The argument then was that the long slide had set up an oversold market ripe for repositioning, the “inverse of a bubble on the long side”. Anything that upset the downward momentum would almost inevitably result in knee jerk shortcovering, which as soon as it was over, would see the reassertion of the overriding bearish elements of oversupply and slackening demand growth. Not that that wasn’t true, but what the argument may have overlooked was that the resultant shock to the system would leave the bears reluctant to start selling again, certainly with the same dedication. In turn, that would generate an increasing appetite for buying the dips rather than selling the rallies and this was certainly evident last week. One key – speculators have been adding steadily to length since the end June reversal. Nothing dramatic, just a steady claw back, but one which may be hard to shake without dramatic new indications that the fundamentals really haven’t changed. Technicals, in line with the failure to resume the downtrend, are increasingly biased on the bullish side. A close over $102.39 resistance, looking very possible today, suggests further advances, and the same with $2.82and $2.8250 in Heating Oil and Gasoline respectively. Petroleum Charts Market Commentary

Feedback welcome: Hugh Macnaughton, 888.440.4944 or hmacnaughton@spragueenergy.com

Natural Gas Market Watch

Natural Gas Market Watch July 2012

On Friday, August Natural opened up around $0.03 and the market looked to be in rally mode coming out of the overnight session. As soon as the opening bell sounded, however, August dropped around a nickel and spent the next half hour clawing its way back to the opening range. From there, prices moved in a $0.04 range on one of the quietest trading days we’ve seen in a while. There is an uneasy feeling in the market, although it’s not supported by the chart analysis in the purest sense, that Natural Gas is over-bought at these levels. The bulls would love to see that $3-handle on a daily closing price, but nobody seems to believe that prices can stay there for any length of time. Last week’s storage report should serve as a cautionary indicator of what can happen to the supply/demand balance when prices are too high. This morning in Globex, Natural Gas is almost unchanged, Crude Oil is down around $0.35, Heating Oil is up around half a cent and Gasoline is up around a penny.

The Tropical Atlantic remains quiet this morning with no storm development expected over the next 48 hours.  Basis markets were generally lower on Friday. This could be the result of some pre-weekend profit-taking or it could be the result of the ongoing squeeze that has delivered markets caught in between the surging futures and the price of
coal.

Northeast city gate cash markets were strong on Friday. The market was anticipating very strong power generation burn over the weekend, with temperatures forecast to be in the 90’s for most of the region. New England markets were up $0.35 to $0.40 while Mid-Atlantic markets were up around $0.08.