Posted 07 June 2006 - 10:22 AM
 | Tomorrow the market is expecting the EIA to report the ninth injection of the 2006 refill-season into underground storage, 85 Bcf. This compares with last years 112 Bcf injection and the five-year average of 110 Bcf. Thus, a draw in-line with expectations will serve to narrow the 465 year-on-year surplus and the surplus to the fiveyear average of 695 Bcf. Be that as it may, the current overhang still translates into four additional weeks worth of last summer’s record gas-fired a/c load.
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The market is expecting the DOE to report a draw in crude oil inventories of around 0.5 MMbbls. Last week the DOE reported that utilization rates climbed over 90% for only the fourth time since Katrina’s landfall. Capacity actually surged to 91.4%, a post Katrina high as refiners ramped up summer-blendstock production in a bid to maximize $20 cracks. Despite the increased demand, crude inventories increased to 345.5 MMbbls, pushing the year-on-year surplus to 11.7 MMbbls or 3.5%.
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As far as the DOEs are concerned, the market is looking for a build of around 1.5 MMbbls. As of two weeks ago U.S. refiners ramped up gasoline production over 9.2 MMbbl/d for only the second time ever. Reported production of 9.208 MMbbl/d was the second highest weekly tally ever recorded in 26 years.
Post DOE bids above Monday’s 219.50 pivot area high alert to fresh bullish thrust and a push against the Jul’06 223.00 life-of-contract high and the April 21st (continuous) high at 225.50. Alternatively, a failure to hold the 216.38 bottom of yesterday’s pivot area alerts to further weakness towards last Thursday’s pivot range between 212.60 and 212.35. Sellers here can then target the 30-day pivot moving average, 208.41. |  |
As of two Friday’s ago diesel stocks stood at 73.7 MMbbls. That is a large amount of fuel that translates into approximately 23 days of forward demand cover, i.e. one full day ahead of last year’s pace. Regarding today’s DOE’s, the market is expecting a total build in distillate stocks of around 1.75 MMbbls.
Post DOE bids above unchanged (204.26) should target the May 12th/23rd gap from 205.00 to 206.30 and the May 12th pivot area from 207.20 to 208.50. Clearance here clears a track to longer term resistance around 212.56. On the other hand, failure to hold yesterday’s 202.90 pivot area low alerts to further corrective trade into support between the 30 and 14-day pivot averages from 201.70 to 199.42. Weakness here clears a track to longer term support around 196.79. |  |
Fuel oil values continue to retreat despite last week’s strength on the NYMEX. Consequently, the LSFO/WTI crack remained at a historically wide margin. As of last Friday the crack plunged to minus $22.45 per barrel. On the week the crack averaged minus $21.43 per barrel, out another $0.62 or 3.03% week-on-week. Meanwhile, gas at the gate in New York failed to ignite last week despite the appearance of weather-related load. As a result, gas went out last Friday at a discount to fuel oil (0.7LP, 0.3HP and 0.3LP) in the Harbor for a tenth straight week. |  | | Reserved for Subscribers |  reccomendations | |
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