Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
Lightning Striking Again!
I thought that lightening was not supposed to strike in the same place twice. Yet when it comes to gas prices in the Midwest it seems that lightning strikes again and again and again. Just when it seemed that Midwest refineries were starting to get their act together, lightning strikes and prices go crazy again. Lighting struck the Citgo refinery in Lemont and at the end of the day to add insult to injury reports of a crude unit problem at the perpetually in maintenance BP refinery in Whiting Indiana gave RBOB futures a late day surge that also coincided with the Brent crude expiration. The combination makes it hard to settle down, am I asking too much for it to stick around? Lightning strikes again!
The markets rally back to the upper end of their ranges on supply worries and a soaring stock market. A stunning change of fortunes as US data outperforms letting US forget about Japan and a reduction of fears of tapering. Retail sales boosted by car sales led to speculation that people might actually put gas into them. Next week the Fed meets so does anyone really believe that oil can breakout to the upside ahead of that meeting? Yes we did see some support when the US said that there is clear evidence that Syria used chemical weapons on its own people. The US says it will support the rebels along with allies but do we know who we are backing. The lack of early action by the US has allowed al-Qaeda to inflate he ranks and there seems to be a losing situation. Russia, China and Iran of course are backing the Assad regime. Our enemies and advisories always seem to seize on perceived weakness.
Natural gas traders seem to seize on what was a bullish report. Reports of buying ahead of the EIA report is raising eyebrows and some speculation that there could be an investigation surrounding the early release and option settlements. Stay tuned!! The Energy Information Administration reports that “Working gas in storage was 2,347 Bcf as of Friday, June 7, 2013, according to EIA estimates. This represents a net increase of 95 Bcf from the previous week. Stocks were 587 Bcf less than last year at this time and 58 Bcf below the 5-year average of 2,405 Bcf. In the East Region, stocks were 102 Bcf below the 5-year average following net injections of 57 Bcf. Stocks in the Producing Region were 2 Bcf below the 5-year average of 915 Bcf after a net injection of 25 Bcf. Stocks in the West Region were 46 Bcf above the 5-year average after a net addition of 13 Bcf. At 2,347 Bcf, total working gas is within the 5-year historical range.”
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