ENERGY PRICES WERE WEAK ON TUESDAY… crude oil values in New York touched $75, but then tanked, while natural gas values touched our $2.954 drop-dead value, but then moved lower. As far as today’s DOE report goes, the crowd is expecting a net draw of 0.75 MMbbls in the major products and a draw of 1.1 MMbbls in crude oil.
Last Wednesday Uncle Sam reported that commercial stocks of oil fell hard, down 8.4 MMbbls or 2.4%. With the exception of a small build in the East (PADD I), draws were recorded in every market area, the largest occurring in the GoM (PADD III), down 6.7 MMbbls. For the same week a year ago the DOE reported a 9.4 MMbbl build. Thus, inside of one report the year-on-year disposition narrowed by 17.8 MMbbls.
For this morning’s report the crowd is looking for a 1.0 MMbbl draw. Last night the API reported a week-on-week true-up, a 4.4 MMbbl build. On the NYMEX yesterday spot WTI hit $75 on the Floor, but then immediately tanked and closed down $2.32 on the day.
Was this bearish action? No, no it was not. Considering the 20-day dollar vol was $2.55, yesterday’s action means nothing, it was just noise. However, this is how corrections begin. The bulls have been pushed back on their heels. Thus, a close below the bottom of the nearby channel, 72.34, will push The Schork Report off our daily bias.
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Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.