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.
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.