March 29, 2010

Hedge Funds & Technical Factors:
Technicals remain mixed, but the bias is still to the downside as momentum slowly grows.

Slight Bear (Short-Term) & Neutral (Long-Term)

Inventory (DOE weekly report)


Distillates (Diesel) & Gasoline:
Crude saw a build of 7.3 mb, gasoline a draw of 2.7 mb, and diesel a draw of 2.4 mb. Refinery utilization was at 82.1% (last week 81.5%)

Neutral (Short-term) & Neutral (Long-term)

Natural Gas Storage:
This week’s injection was 11 BCF. The prior year number was an injection of 3 BCF. The current inventory balance is 1.626 TCF which is 149 BCF above the 5 year average and 28 BCF below the prior year.

Bear (Short-Term) & Neutral (Long-Term)

Weather Outlook

The 6 to 10 day forecast calls for warmer than normal for the Midwest and East, while cooler than normal for West.

Neutral (Short-Term), Neutral (Long-Term)

Economy (Macro-economics)

Q4 GDP was revised to a final +5.6% from the last reading of +5.9%, a fairly large adjustment for a final reading and a lower one at that. Within the data consumer and business spending was seen being lower than previously reported while overall the largest contribution continued to come from inventory building. That inventory building is not likely to provide a boost moving forward, as with any GDP reduction…energy demand is also being trimmed ever so lightly.

Slight Bear (Short-Term), Slight Bear (Long-Term)

Geo-Political/International

Geopolitical risk is a continual risk for energy prices, especially with respect to Iran. If/when geopolitical issues hit the forefront we can expect oil moves above $100. Due to the ongoing risk of geopolitical tension, crude is expected to average $85 for most of the year.

Bull (Short-term), Bull (Long-term)

Natural Gas

As we sit today we remain at a loss to find something to be bullish about for natural gas in the short-term. We are in one of those rare times when no hedge is the best hedge (short-term). This will eventually change, but for now we expect the monthly premium seen in the outward months to drift lower for the prompt month.

	Crude Oil	Technical	Storage	Rigs	Weather	Economy
Short Term
Long

 

Gasoline & Diesel

The dollar and equities continue to drive energies, but overall the complex remains reluctant to follow which could indicate a swift sell-off if the macros were to turn more bearish.

	Crude Oil	Technical	Storage	Weather	Geo Political
Short Term
Long

	Icon Legend
Bear	Bull	Neutral

Russ Paluch
630-470-9176
Paluch@maverickec.com