Oil Supplies, Demand and the Keystone Pipeline

Stocks at Adequate Levels  

Refinery Capacity at All Time Highs

With US Supplies at comfortable levels, plenty of refinery capacity, increasing domestic production
and constrained domestic demand one would think that high prices wouldn't be an issue                  

Increasing US Production

Falling Demand

BUT this is where prices are.

Gasoline is 25% below Record High and 375% Above Dec '08 Low

It doesn't make much sense does it??? Until you look at the following chart.  Who thinks of the United States as an energy exporter, right?

Rapidly Expanding US EXPORTS

So we really don't need to rush through the Keystone pipeline. It is just another subsidy for the petroleum industry. Of course they tout all of the jobs that would be created with the project, but realistically they would be temporary blue collar jobs. Sure it is a shovel ready project but so are all the infrastructure repairs that President Obama has proposed. The oil companies are doing just fine, but our schools and bridges are in sad shape.   

UPDATE

I should have done more research into who would benefit from the Keystone Pipeline. This link 

answers a lot of questions about who would benefit from this project and why the GOP is fighting so hard for its completion.

Economic Data

ISM Mfg Index

New orders and production slowed in April while hiring remains strong as unfilled orders rise. This backlog may be ties to supply disruptions in Japan

ISM Mfg Index - Level

Prev 61.2

Est 59.5

Range 58.0  to 60.5

Act 60.4

Construction Spending

The construction sector rebounded from February’s weather-related weakness. March’11 construction spending is 6.7% below last year, but that is an improvement from the – 7.0% reading we saw in February

Construction Spending - M/M change

Prev      -1.4 %

Rev    -2.4 %

Est 0.5 %

Range            -.5 % to 1.0 %

Act 1.4 %

Market Activity

Financials+0.14%

ZB +0.26% ZN+0.12% ZF +0.05% ZT +0.03% ED +0.01%

http://www.marketwatch.com/story/treasurys-off-bin-laden-death-boosts-risk-trade-2011-05-02

Softs-0.03%

LB +2.19% KC +1.74% OJ +0.85%  CC -1.09% CT -1.61% SB -2.26%

Currencies-0.13%

USD +0.11% EC-0.01% MP-0.12% SF-0.12% JY-0.16% AD-0.23% BP -0.26% CD-0.49%

Weekly US $ Index

http://www.bloomberg.com/news/2011-05-03/yen-dollar-advance-on-concern-bin-laden-s-death-will-lead-to-retaliation.html

Energies-0.31%

RB -1.02% NG -0.06% CL-0.59% HO -0.89% ZK -1.17%    

http://www.bloomberg.com/news/2011-05-02/oil-declines-most-in-three-weeks-on-bin-laden-death-manufacturing-reports.html

Indices-0.37%

YM -0.14% NQ-0.16% ES-0.29% EW -0.57% RJ-1.15%       

http://www.smartmoney.com/investing/stocks/market-update-monday-may-2-2011-27287/?cid=djem_sm_dailyviews_h

Grains -0.65%

RR +1.15% RS +0.89% BO +0.10% S -0.18% SM-0.36% W -1.23% O-2.48%  C-3.08%

http://usda.mannlib.cornell.edu/usda/current/CropProg/CropProg-05-02-2011.pdf

Metals-1.91%

HG +0.48% PL +0.17% GC -0.37% PA -2.78% SI -8.90%   

http://www.marketwatch.com/story/silver-drops-as-cme-hikes-cost-of-speculation-2011-05-02

Market Report for 04.27.11

 Economic Activity

Durable Goods Orders

New Orders - M/M change	Prev   -0.9 %	Revised 0.7 %	Est 1.9 %	Range 0.5 % to 3.0 %	Act 2.5 %
New Orders - Yr/Yr Change	6.2 %	8.0 %			10.5 %
Ex-transportation - M/M	-0.6 %	0.6 %			1.3 %
Ex-transportation - Yr/Yr	8.5 %	9.9 %			6.1 %

EIA Petroleum Status Report

Crude +6.2m bbls

Gasoline -2.5m bbls

Distillates -1.8m bbls

Oil imports averaged 9.3m bbls /day vs 4wk avg of 8.7m bbl/day

Refinery are running at 82.7% of capacity

Gasoline demand 1.6% below year-ago levels

Distillate demand is up 7.3% from last year

Jet-fuel demand is up 4.4%

Oil Stocks

Refinery Utilization Rate

Gasoline Supplies

Crude Inventories are running on the high side of their average range
While gasoline supplies are low.  Oil refineries are operating at 82.7% of capacity.

Meanwhile, firms like BP and Conoco are reporting quarterly earnings of $5.37 BILLION and $3.0 BILLION respectively.

The “This Week in Petroleum” report shows that domestic oil production is increasing over the last two years after declining for the past couple of decades.

http://tonto.eia.doe.gov/oog/info/twip/twip.asp

FOMC Meeting Announcement

http://www.federalreserve.gov/newsevents/press/monetary/20110427a.htm

Federal Funds Rate - Target Level

Prior 0 to 0.25 %

Est 0 to 0.25 %

Act 0 to 0.25 %

Unanimous vote to keep the target rate at this extremely low level for an extended period.

Economic recovery is proceeding at a moderate pace and conditions in the labor market are improving gradually.

The following link shows adjustments made to estimates of growth and inflation.

http://www.federalreserve.gov/newsevents/press/monetary/fomcprojtabl20110427.pdf

Market Activity

Metals+2.02%

SI+6.65% GC+1.72% PA+1.31% PL+1.24% HG-1.38%

COMEX silver stocks are at a 5yr low.

http://www.bloomberg.com/apps/quote?ticker=COMXSIL:IND

25 year Gold Bullion chart

Indices+0.99% CRB -0.30% VIX -1.45%

NQ+1.13% YM+1.05% RK+1.04%  EW+0.90% ES+0.89%

http://www.bloomberg.com/news/2011-04-27/u-s-stock-futures-rise-before-fed-johnson-johnson-climbs.html

Energies+0.56%

RB+2.50% CL+1.01% HO+0.99% ZK-0.38% NG-0.79%

Gasoline imports from Europe decline:

http://www.bloomberg.com/news/2011-04-26/u-s-gasoline-imports-from-europe-may-drop-to-four-month-low-on-pricing.html

Weekly Gasoline Chart

           

Currencies+0.32%

EC+1.05% BP+0.94% AD+0.87% SF+0.44% MP+0.41% CD+0.26% JY-0.55% USD-0.74%

http://www.bloomberg.com/news/2011-04-26/dollar-falls-to-16-month-low-against-euro-amid-speculation-of-fed-support.html

25 year USD Chart

Financials-0.20%

FY+0.05% TU+0.02% ED+0.01% TY-0.09% US-0.46%

http://hosted.ap.org/dynamic/stories/U/US_FEDERAL_RESERVE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-04-27-15-20-50

Softs-0.36%

CC+2.40% OJ+2.17%            KC+0.20% SB-1.56% LB-1.56% CT-3.82%

Cotton supplies rose 2.5% from the previous day. The May contract, which is now the spot contract, was down almost 5.5% on the low of the day

Grains-1.70%

RS+0.28% BO-0.33% S-0.34% SM-0.86% RR-1.18% C-1.83% W-4.22% O-5.13%

http://www.bloomberg.com/news/2011-04-27/grains-soybeans-decline-on-concern-fed-may-ease-stimulus-curbing-demand.html

Market Wrap for 4.20.11

Economic Reports

MBA Purchase Applications

Purchase Index - W/W Change	Prev      -4.7 %	Curr 10.0 %
Refinance Index - W/W Change	-7.7 %	2.7 %
Composite Index - W/W Change	-6.7 %	5.3 %

Existing Home Sales

Existing Home Sales - Level - SAAR	Prev 4.88 M	Rev 4.920 M	Est 5.000 M	Range 4.750 M to 5.100 M	Act 5.10 M
Existing Home Sales - M/M Change	-9.6 %	-8.9 %			3.7 %
Existing Home Sales - Yr/Yr Change	-2.8 %				-6.3 %

Existing home sales rose 3.7% last month to an annual rate of 5.1mil. The median Price was up 2.2% to $159,600. Y-O-Y prices fell 5.9%. Distressed sales made up 40% of all transactions. 35% of sales were for cash.

EIA Petroleum Inventories

http://ir.eia.gov/wpsr/wpsrsummary.pdf

Stocks		Change From Last
04/15/11		Week	Year
Crude Oil	357.0	-2.3	1.1
Gasoline	208.1	-1.6	-16.8
Distillate	148.3	-2.5	-0.5
Propane	26.386	-0.360	-4.412

Gasoline Demand (Million Barrels per Day)

Week Ending			Year Ago
04/01/11	04/08/11	04/15/11	04/16/10
8.853	9.181	9.062	9.152

http://platts.com/PressReleases/2011/042011b

Market Activity

Metals+2.26%

PA +4.06% SI+2.81% HG+2.65% PL+1.85% GC+0.41%

http://hosted.ap.org/dynamic/stories/U/US_COMMODITIES_REVIEW_SUMMARY_BOX?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT

Indices+1.82% CRB +0.30% VIX -4.97%

RJ+2.08% NQ+1.93% EW+1.89% ES+1.53% YM+1.39%

http://www.bloomberg.com/news/2011-04-20/vix-retreats-to-lowest-since-2007-as-corporate-earnings-exceed-estimates.html

Energies+0.92%

CL+2.91% HO+1.91% RB+1.10% NG+0.94% ZK-2.14%

Currencies+0.60%

AD+1.66% EC+1.26% SF+1.24% MP+0.59% BP+0.55%     CD+0.38% JY+0.03%

Grains+0.17%

RR+1.61% S+1.17% BO+1.06% SM+0.81% RS+0.63% W-0.10% O-1.65% C-2.17%

Softs-0.11%

SB+3.83% OJ+1.41% KC+1.10% CC+0.61% CT-3.50% LB-4.10%

Because of the holiday shortened week, front-month (May) cotton was sharply lower as traders liquidated long positions ahead of 1^st notice day, which is Monday

Financials-0.28%

ED+0.01%  ZT-0.02%  ZF-0.23% ZN-0.31%  ZB-0.46%

Market Wrap for 4.13.11

Economic Reports

MBA Purchase Applications

Purchase Index - W/W Change	6.7 %	-4.7 %
Refinance Index - W/W Change	-6.2 %	-7.7 %
Composite Index - W/W Change	-2.0 %	-6.7 %

Retail Sales

	Prior	Prior Revised	Consensus	Consensus Range	Actual
Retail Sales - M/M change	1.0 %	1.1 %	0.5 %	0.0 % to 1.2 %	0.4 %
Retail Sales less autos - M/M change	0.7 %	1.1 %	0.7 %	0.2 % to 1.8 %	0.8 %

Business Inventories

	Prior	Consensus	Consensus Range	Actual
Inventories - M/M change	0.9 %	0.8 %	0.7 % to 1.1 %	0.5 %

EIA Status Report

EIA Petroleum Status Report

The Federal Reserve beige Book

“Reports from the twelve Federal Reserve Districts indicated that economic activity generally continued to improve since the last report. While many Districts described the improvements as only moderate, most Districts stated that gains were widespread across sectors, and Kansas City described its economic gains as solid”.  (Source: US Federal Reserve)

http://www.federalreserve.gov/fomc/beigebook/2011/20110413/default.htm

Market Activity

Energies +0.94%

RB+2.38% NG+0.98% HO+0.95% CL+0.69%  Ethanol -0.08%

http://in.ibtimes.com/articles/132998/20110412/gasoline-sales-fall-ins-for-5th-consecutive-week.htm

http://www.platts.com/BlogDetails/oilblog

http://www.bloomberg.com/news/2011-04-13/crude-oil-rises-for-the-first-time-in-three-days-before-u-s-supply-report.html

I am confused by the discrepancies between the Mastercard gasoline sales figures and the EIA implied demand estimates.

Indices+0.40% CRB 0.15% VIX -1.93%

NQ+0.86% EW+0.49% RJ+0.29% YM+0.14% ES+0.11%

http://www.cmegroup.com/education/market-commentary/eq/2011/04/recap-equity-index_350.html

ESM11 has closed below the 50dMA for 2 consecutive days for the 1^st time since closing above that line on 03.24.11

Softs +0.36%

LB+4.15% KC+2.10% CC+0.43% OJ-0.24% CT-1.19% SB-3.09%

http://online.wsj.com/article/SB10001424052748703551304576260991182322926.html?mod=googlenews_wsj

http://www.bloomberg.com/news/2011-04-13/kenya-coffee-jumps-23-at-sale-as-buyers-boost-stocks-before-end-of-season.html

Financials +0.22%

US+0.39% TY+0.22% FV+0.15% TU+0.04% ED+0.01%

Grains +0.18%

RR+1.91% RS+0.69% C+0.40% S+0.28% BO+0.21% SM-0.06% W-0.89% O-1.09%

Currencies +0.07%

MP +0.48% AD+0.30%       USD+0.14%BP+0.08% SF+0.04% JY-0.08% CD-0.13% EC-0.29%

Metals -0.12%

SI+1.26%  GC +0.21% PL+0.05% -0.86% HG-2.33%

COMEX silver inventories have fallen over 2% from 3.31.11 (See Chart)

http://www.bloomberg.com/apps/quote?ticker=COMXSIL:IND

http://www.cmegroup.com/education/market-commentary/metals/2011/04/pre-open-copper_322.html

Earnings

Before The Open		Actual		Consensus	Yr Ago		Yr/Yr Rev
ASML Holding	ASML	1.30		1.19	0.25
JPMorgan Chase	JPM	1.28		1.16	0.74		-8.5%
After The Close		Actual		Consensus	Yr Ago		Yr/Yr Rev
JB Hunt Trans	JBHT	0.40		0.38	0.29		18.5%
Universal Forest	UFPI	-0.19		0.01	-0.06		-1.5%

Read more: http://www.briefing.com/GeneralContent/Investor/Active/ArticlePopup/PagePopup.aspx?PageId=3272#ixzz1JRsfBzxd