Wednesday, June 15, 2011

Fundamentals and Stuff

Last night's API's ;
Crude down 3 million bbls             vs. expectations of down 1.5

(Cushing down 1.7 million)
Gasoline up 1.1 million bbls           vs expectations of up 1 million
Distillate down .426                        vs expectations of up 1 million

Reuters Global Oil Forum has a number of analyst reports quoted this morning (they do an excellent job of that)
Lawerence Eagles of JP Morgan is bullish products based on Chinese stock draws and demand.

 Goldman Sachs ;
"The recent collapse of the WTI-Brent spread raises something of a puzzle in that the usual suspects, the logistical issues surrounding the WTI delivery point in Cushing, Oklahoma, are not to blame."
"Consequently, the recent decline in the LLS-Brent spread suggests that the arb between the US Gulf Coast and Europe has flipped, and the market is now directing light-sweet crude oil away from the US Gulf Coast and toward Europe and Asia."


Olivier Jakob of Petromatrix on the Goldman Roll,
"We are not sure at all if there is a direct causality here, but we just observe that the Brent premium to WTI exploded during the roll of the indices. The rolls ended on Monday and Brent started to lose some of its premium to WTI on Tuesday. Is this the beginning of a reversal? Unfortunately, we cannot be sure of that because we are not fully clear on the type of flows that were behind the surge these past few days," Jakob says.
Barcap on WTI/Brent;  
"Brent extends gains toward our targets at $120.95 and then $121.80 while WTI consolidates above support near $95.00. We look for the WTI/Brent spread to extend widening toward our target near -$24 before easing toward the $19 area. Medium term: Bullish."
Pru Bach thinks Brent is overvalued and the WTI./ Brent overdone.

Presumably consumer demand for high priced products will not decline significantly enough to affect these scenarios.

This mornings relative resilience of WTI in the face of Euro weakness (making new lows for the month) perhaps reflects some profit taking by the WTI/ Brent shorts but  how long can that last?

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