The market is currently trading up across the board. NYMEX WTI, which is now trading in June, is up at $43.84/bbl, RBOB is up an aggressive eleven points to $1.5320, and heating oil is up slightly over a penny at $1.3203. Take this with a grain of salt though, as I have witnessed this market change colors like a chameleon since walking into the office this morning.
The market is completely in limbo from my point of view. Each article posted on Bloomberg, Reuters, NY Times, etc… deviates from one to the next; bullish to bearish. As an article from oil broker PVM will tell you, it’s quite difficult to make up our own minds about whether we are bullish or bearish of the market, so think about how technically tough it is for the market to go one way or the other.This morning’s gains can be attributed to a few things: the EIA showed another weekly drop in U.S. crude output last week, Baker Hughes data disclosed another weekly decline in U.S. oil rig counts, and the U.S. dollar weakened. On the other hand, at any moment the market could go red. Iran is feverishly approaching 4mbpd, Iraq and other non-OPEC countries are planning on increasing production, and last week’s supply disruptions in the Middle East have ceased.
As a PVM fundamental report perfectly states, bullish and bearish cannot be viewed as black and white. This market has gray area, it is shaded, unclear, and indefinite. The worldwide crude oil market is completely exposed and vulnerable to rumors, making it one of the most impossible games to pick teams for. Additionally, point of view changes the entire game. Are you an insider looking out or an outsider looking in? For example: $45 a barrel is “not bad” according to Indonesia’s governor to OPEC; however $45 crude has brought U.S. oil rigs down under November 2009 levels which, among other things, has caused tens of thousands of jobs to be cut.
On an unrelated note, our local market RVP season is upon us. Starting next week, all gasoline deliveries into Pittsburgh locations and its surrounding areas will be lower RVP product. Anticipate a slight increase in wholesale prices and prices at the pump as summer grade gasoline season kicks off.
**To further prove my point regarding volatility, the market is now red across the board. As I write this, crude is down $0.36 to $43.37, RBOB is down fifty points and heat is down ten points.