Technical Talk…

Just a chart that may help you understand the current head and shoulders that is forming on the CLG4 60min chart as mentioned in the Newsletter (Trends).

We don’t believe in the “rule of threes”, but we’ve never much believed in the head and shoulders to work in CL very much either.  This would be the third time we’ve seen it follow through in as many weeks.  One thing that can be said though, when there’s a lack of fundamental reason, technical trading wins.  Without much moving us out of this range, this may be a viable play to the downside.

ECLG14 ~ 1 Hour_12182013_055933am

HO HO HO

In the holiday spirit?  Well it looks like Shell is about there and we’re going to see all of that crude that is coming down the new Keystone Pipeline (~700K b/d) have another outlet to Louisiana refineries.

Shell says that the Houma-to-Houston (now Houston-to-Houma) pipeline reversal has completed its second stage.

The third and fourth stages, which will increase the lines capacity to 250,000 bpd then 375,000 bpd will be completed early in 2014

Run away!

I want to say I’m surprised, but I feel a need to make a good joke about the French and labor strikes.  Hmm, I guess that would be too easy.  It does make me wonder if this was getting played out in the market yesterday ahead of the Brent collapse.

This should give more lift to the WTI/Brent spread today along with a lift to HO (ULSD) in anticipation of more exports.

Total Workers go on strike, almost 824,000 bpd of refining capacity shut in: Total workers at the French La Mede, Gonfreville, Grandpuits and Donges refineries voted a strike on Friday ahead of annual wage talks with management, a CGT union source said.
Output levels at the four refineries had reached the minimum, the union official said, adding that workers at the Feyzin refinery were not on strike.
“There are no (oil) products leaving the refineries nor crude entering the sites,” he said, adding that workers were pushing for higher wage rises than those offered.
Total workers were set to vote later in the day on whether to fully stop the refineries over the weekend.

* Total La Mede – 155,000 bpd
* Total Gonfreville – 339,000 bpd
* Total Grandpuits – 99,000 bpd
* Total Donges – 231,000 bpd

Combined Capacity = 824,000 bpd

Good = Bad?

US JOBLESS CLAIMS ROSE TO 368,000 DEC 7 WEEK (CONSENSUS 320,000) FROM 300,000 PRIOR WEEK (PREVIOUS 298,000)

US JOBLESS CLAIMS 4-WK AVG ROSE TO 328,750 DEC 7 WEEK FROM 322,750 PRIOR WEEK (PREVIOUS 322,250)

US NOV RETAIL SALES +0.7 PCT, LARGEST RISE SINCE JUNE (CONSENSUS +0.6 PCT) VS OCT +0.6 PCT (PREV +0.4 PCT)

We like to think that this might put the tapering off until January, but even then, it’s going to be hard to pull the trigger right before Big Ben Bernanke’s retirement party.

IEA: the A stands for “arrgh”

I don’t know why they bother.  It was not more than a few months ago that they had said demand was weak, supply was overwhelming.  I guess they are lost on the concept that a country in a recession doesn’t make it out in a recovery.  Yeah, rethink that thing along with the US and our insistence on being the biggest and best economy in the free world.

IEA SEES PERSISTENT UPSIDE RISKS TO OIL FROM BOTH SUPPLY AND DEMAND SIDES OF THE MARKET – MONTHLY OIL MARKET REPORT
IEA SAYS OIL CONSUMPTION GROWTH “GAINING MOMENTUM” AS U.S. DEMAND TOPS 20 MILLION BPD FOR FIRST TIME SINCE 2008 FINANCIAL CRISIS
IEA RAISES FORECASTS FOR GLOBAL OIL DEMAND GROWTH BY 145,000 BPD TO 1.2 MILLION BPD FOR 2013 AND BY 110,000 BPD TO 1.2 MILLION BPD FOR 2014

Better late…

I know we’re all waiting on the API numbers, but this late note from Shell is interesting:

SHELL SUBMITS PIPELINE TARIFFS FOR HOUSTON-TO-HOUMA PIPELINE EFFECTIVE DEC 12

This might mean that all of that crude coming down from Keystone in Jan and all the rest from Seaway is going to find it’s way to Louisiana.  Good for WTI spreads and draining Cushing.  More bad news for Brent.

TRANSCANADA SAYS BEGAN FILLING 700,000 BPD GULF COAST LINE ON SATURDAY, DOES NOT SAY WHEN PROJECT WILL ENTER COMMERCIAL SERVICE

TRANSCANADA SAYS FILLING GULF COAST LINE WILL REQUIRE ABOUT THREE MILLION BARRELS OF OIL TRP.TO – RTRS

Well here we go.  We were expecting this since they are going to start sending barrels down in mid January, but now it’s going to be more about where we send those refined products.  We do know that the US economy is picking up with an unseasonal jump in demand, but the question now is where do exports lie?

There was a report from Genscape that said crude oil supply is growing in ARA storage in Europe, but to us, that helps validate the idea that refineries in EU are hitting the maintenance season and possibly slowing on the weak refining margins.  We may continue to see the WTI/Brent continue to come in, but we’re thinking that we’re pushing away from the norms.  We may see US refining “cracks” find support regardless as long as domestic demand and export demand keeps pace with room for higher.

America! It’s our time.

We’re running behind trying to keep up with all the calls and commentary this morning on the back of these Unemployment numbers.  It seems that Obama’s Xmas gift has come early.

US Unemployment Rate 7.0%   Non Farm Payrolls 203K

We will once again clarify these few things; more workers, more oil demand.  That includes driving, spending and flying.  Next thing is the QE tapering fears are behind us.  The smart money has already working in the first round and they are looking to June for what’s next on this front.

There’s a few things that I love in life and I love $100 WTI

Right is Wrong

Jobless Claims under 300K (298K) …. GDP above 3% (3.6%) …. cats and dogs living together

We’re going to be one of the first to look past this silly QE tapering fear and start thinking about economic growth.  Bring me $100 WTI and bring it to me now.

More is still more…

The Saudis have raised OSP (official selling prices) for their cash market barrels of crude.

SAUDI ARAMCO RAISES ARAB LIGHT PRICE TO ASIA FOR JANUARY BY 30 CENTS TO OMAN/DUBAI AVERAGE +$3.75 PER BARREL

Now we can look at this in two different ways.  One, they have strong demand and need to raise prices (doubtful) or two, they need the money.  I defer to the second one and with that in mind, we just may see the Saudis come out with a heavy hand in tomorrow’s OPEC meeting regarding production cuts to quotas.