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Update for Friday, June 27th: Yesterday was expiration of the July futures contract. It went off the board at $13.105. Prices were hovering in the $12.70s for most of the day but then they went up over 30 cents during the 30-minute settlement period. Nothing changed to warrant the move. It was all related to the settlement. Based on the price action, it looks like shorts were more aggressive in trying to get out of their positions than the longs were. The shorts were driving the price action through more aggressive buying while the longs may have been the price takers.
This came on top of the EIA storage injection earlier in the day. No surprise there. EIA reported 90 bcf injection, which was within expectations. The injection has left total stocks at 2.033 tcf, which is 382 bcf (15.8%) below last year and 56 bcf (2.7%) below the five-year average.
On the weather front, the East is cooling off while the West is expected to remain warmer than normal during the next two weeks. Also, the tropics remains quiet. There are a few waves but nothing is expected to develop over the weekend. The weather situation should help the injections during the next few days.
In crude, the August contract closed up $5.09 at $139.64 on the comments from the OPEC president stating that prices could go up as high as $150-$170 before falling down. To add fuel to the fire, Libya said that it could cut production. I don't know what was the purpose of the comment from the OPEC president other than to inflate the market. This is somewhat unusual for OPEC to be engaging in price predictions since the group tries to focus on supply and demand issues. It is also a rather irresponsible comment.. OPEC knows how much this market is driven by words and headlines. It also knows that any comments OPEC is making is price-moving. And the market did listen and respond by buying. It is almost as if it were a fact: if OPEC says it then it must be true. And if it must be true, then speculators, fearful of loosing any profit opportunities, came in force and moved the price closer to the target.
This morning the entire energy complex is trading higher driven by a weaker dollar. There's a belief among speculators that the FED will postpone increasing interest rates for a while longer and therefore the dollar will remain weak. In the lack of overwhelmingly bullish fundamental news this is translating into higher crude prices. Also, with the stock market falling commodities are seen as offering better investment returns than the stocks can offer at the moment. This continues to add to a bullish momentum.
Please be advised that although the information contained in this report is compiled by SCANA Energy Marketing from sources believed to be reliable the views provided herein are based upon a number of estimates and assumptions that are subject to significant business, economic, regulatory and competitive uncertainties. The prices provided do not reflect the actual prices at which SCANA Energy Marketing will enter into a transaction. SCANA Energy Marketing makes no representation, warranty or guarantee as to, and shall not be responsible for, the accuracy or completeness of this information and has no obligation to update any information provided to you. SCANA Energy Marketing is not liable to any recipient or third party for the use of or reliance on the information contained herein. SCANA Energy Marketing is actively involved in energy trading and may take positions consistent or contrary to the information presented, at its discretion. SCANA Energy Marketing is not acting as an agent or advisor and encourages the use of independent consultants, as necessary, prior to entering into any transactions.
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