ISSUES....
Inside,
confidential, off the record
Be aware
WE SHALL REPEAT THE REFRAIN OF THE PAST SEVERAL DAYS HERE THIS
MORNING: ENERGY PRICES CONTINUE TO RISE SKYWARD, as $124/barrel
is now obtained. We stand in awe. Two things have our attention
this morning. Firstly, it appears that despite
record oil prices and despite growing opposition to doing so,
the US will continue to add to the SPR. Yesterday, US. Energy
Secretary Mr. Sam Bodman said that the Energy Department will
not delay its plan to accept bids next week from oil companies
to supply millions of barrels of additional crude to the U.S.
Strategic Petroleum Reserve. He noted that companies will submit
bids on mid-week next week to deliver oil to the SPR in exchange
for receiving nearly 13 million barrels of royalty-in-kind crude
drilled from federal leases in the Gulf of Mexico. The SPR is
very near to being topped off, with only a few odd million barrels
needed to finish the task. Secondly, we cannot help but notice
the extreme manner in which the backwardations in both WTI and
Brent have "
come in." Yesterday, the average June/October backwardation
for WTI and Brent was $1.44; this morning it is $1.00. Indeed,
June WTI is now barely premium to July, and if the trend of the
past week continues, June/July WTI will soon be in contango.
This is not who a bull market is supposed to react, and unless
there is something wholly beyond our "ken" taking place
out there, this is a signal that all is not well with the bull
market and that when it breaks, it shall break swiftly, violently
and materially:
Jun WTI up 87 124.41-46
July WTI up 111 124.33-38
Aug WTI up 125 124.00-05
Sep WTI up 135 123.60-65
Oct WTI up 143 123.20-25
OPEC "Basket" $116.03 05/07
Henry Hub Nat-gas 11.31
Finally, regarding nat-gas, the EIA reported yesterday that natural
gas in underground storage facilities rose by 65 Bcf or 4¾%.
This was on the high end of the Street's pre-report consensus "guess-timate," which
ranged from 50 to 70 Bcf. Typical the movement into storage for
this week of the year is a .89 Bcf and last year 89 Bcf went
in. Thus, in reality, yesterday's report was rather small, from
a seasonal perspective as well as from a year-on-year comparison.
-
Dennis Garthman/The Gartman Letter/ 05 09 08
-
For more on interesting comments, you can subscribe to The Gartman
Letter by contacting Dennis Garthman: Phone 757 238 9346, Fax
757 238 9346 or dennis@thegartmanletter.com
Petroleumworld
News 05/09/08
ISSUES....
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