$50 dollars proved fleeting for the April crude contract as the market failed to reach that area despite an options expiration fueled frantic rally. Bolstered by some economic optimism from a strong housing starts number dreams of the good old days of massive crude rallies came trickling back. Yet after the close the reality of the massive supply of oil and weak demand is a reality that the trade is going to have to face. A whopper build of 4.7 million barrel in crude supply was reported by the American Petroleum Institute after the close putting doubt all over the validity of the oil markets optimism. It will be hard to justify dramatic continuing gains in price in the face of such over whelming supply. Sure demand can improve if the economic outlook improves but still with stocks at 349941 million barrels it is hard to imagine supplies driving price anytime soon.
Or sure the Energy Information Agency might have the final say on the supply situation but unless there is a dramatic difference it is hard to imagine that oil can stay strong for the long term. The amount of supply is massive. Still technically the seasonal players are adding support and it is possible that oil traders are pricing in a much quicker than expected economic recovery. I am wary and still believe that oil needs to go much lower before it can go solidly higher. Yet time and the charts may be working against that assumption. Still the market still has to prove to me that it can break out of this range before we can start getting bullish again.
The API also showed that gasoline supply increased by 383000 barrels even as refinery runs fell by 310,000 barrels. This is another sign that demand for gasoline may be falling once again, after the Close the Department of Energy’s Energy Information Agency reported that retail gasoline prices fell for the first time in three weeks. The EIA said that the national price for regular unleaded gasoline declined 3.1 cents over the last week to $1.91 a gallon, which is down $1.37 from a year ago. Gas prices may have a hard time going higher with ample crude supply and tons of spare reefing capacity here and around the world. It looks like with a struggling economy and less vacations this summer gas prices may stay below $200 a gallon even at the height of the summer driving season.
Cheap gas prices are not helping hybrid sales. The LA Times reports that the slowdown in car buying and cheap gas prices has been particularly brutal for hybrids. What the Times says was the industry's darling just last summer now sales have collapsed as consumers refuse to pay a premium for a fuel-efficient vehicle now that the average price of a gallon of gasoline nationally has slipped below $2. The Times says that last month, only 15,144 hybrids sold nationwide, down almost two-thirds from April, when the segment's sales peaked and gas averaged $3.57 a gallon. That's far larger than the drop in industry sales for the period and scarcely a better showing than January, when hybrid sales were at their lowest since early 2005. In July, U.S. Toyota dealers didn't have enough Prius models in stock to last two days, and many were charging thousands of dollars above sticker price for the few they had. Today there are about 80 days' worth on hand, and dealers are working much harder -- even with the help of $500 factory rebates -- to move the egg-shaped gas-savers off lots from Santa Monica to Miami.
This drop in sales should be a warning to President Obama and his massive spending on green jobs might be a much more risky bet then he thinks. Oil boom and bust cycles tend to last about a decade and a decade of cheap oil may make his green dreams economically unattainable. Oh sure it may be a good way to pay off Big Green. Who is Big Green! Oh they are the green lobbyists that have invested much money in President Obama and want to see the government pay for all of these speculative projects that may work or may not work. Green Power is not just about energy production but the green lobbyists that have bought power in Washington and the Congress to push their green radical agenda. Green Power after green money. That is what it is all about. Don’t you dare question the threat of global warming! It has been decided by the green power lobbyist and if you don’t blindly follow their green agenda the earth is doomed. In the mean time big green keeps paying off the scientists who can profit on all these green energy projects as they seek to save the world from their doom and put more green in their pockets. Want to get some government funding? Just do a global warming study on the effects of global warming on juiced up baseballs and juiced up baseball players and the government will gladly pay for this moral and noble cause. The world is in peril and the only way to save it is to spend taxpayer’s money on a slew of green energy projects so Big Green starts to see the green!
Natural gas is green but we do not hear Washington talking about it.Natural gas continues to sell off as the economic optimism is being lost on a market that is fighting the demand battle on two different fronts. Not only is it facing an industrial demand drop of historical proportions it is also fighting mother nature. Spring has sprung in many parts of the country and heating demand will be below normal. With supplied 13.3% above the five year average the bulls cannot get a break even if the stocks keep soaring. If natural gas is in trouble how well do you think the wind farms are doing?
Short April Crude apprx 4570 stop 5100!! If not stopped out roll over to may crude!
Sell April Heating oil at 12700 stop 13300
Sell April RBOB at 13500 stop 14300
Sold April natural gas Apprx 437!!!!!!! Lower stop 411!!!!!!!!
