The En-Pro Blog

Yes, the tug of war between optimists and pessimists continued last week, at issue? whether or not we’re in a global economic recovery. Seems to depend on who you listen to.

The market is closely watching every move by the third largest economy China. As they are apparently leading the world out of this debilitating recession. The NYMEX traders were hypnotized by the announced 8.7% stellar economic growth China achieved in 2009 and forecasts for possibly double digit advances in 2010.

These HUGE growth numbers compared to at best 3% growth forecast for the G-7 nations this year would mean China's growing appetite for all commodities including oil would dramatically increase. Energy prices were ready to take off. The energy market's euphoria was cooled quickly when the Chinese government suddenly announced credit restrictions and instructed banks to discontinue the practice of loaning to anyone who had a pulse for the balance of January.

Why is the Chinese government announcing credit restrictions? And, what will it mean to commodity demands and the global recover?

By: Roger McKnight, Senior Petroleum Advisor

Find out in this week’s Energy Report. Subscribe by sending your email to: info@en-pro.com.

Oil industry logic (now there’s an oxymoron for you) says that with the very low temperatures experienced in the U.S. northeast over the last two weeks, inventories of distillates should have been severely drawn down especially when you consider that the refinery utilization figures were averaging 79.9% nationally, but less than 60% in the heating oil intensive northeast.

Sorry, just didn’t happen. In fact, inventories increased due to a lack of patience. The armada of fully loaded supertankers that have been wallowing off shore around the world have finally been given their sailing orders to head to port. The low temperatures in North America, Europe and China have increased both crude prices and refined product crack spreads. The owners of these floating inventories have no doubt looked at the demand numbers which are anaemic. The inventories, which are abundant and the economic forecasts, which are about as accurate as a coin toss. They have decided that now is as good a time as any to take their profits so imports of crude jumped 540,000 bpd versus the previous week while distillate imports almost quadrupled.

We are now in the middle of winter and sooner than you think attention will be turned to gasoline prices as the driver for diesel prices. As it stands now, we see no reason for the traditional spike in gasoline/diesel prices in early spring.

Why do we say this?

By: Roger McKnight, Senior Petroleum Advisor

Find out in this week’s Energy Report. Not signed up yet? Send your email to info@en-pro.com for this and our commentary on natural gas and electricity markets.

With the New Year comes renewed hope for better times and a positive recovery in the global markets to revive our shattered retirement portfolios, not to mention our global psyche. We’re off to a rough start with the devastating news of a 7.0 magnitude earth quake in Haiti, and so the world must once again galvanize to help those in need.

As we look toward a hopeful and steady recovery in Haiti, and in the world’s economic situation, since our report in mid-December, crude prices have surged over 13% or almost $10/barrel to over $83/barrel. Crude prices have continued increasing for the last 10 trading days. This has certainly contributed to the strengthening Canadian petro Loonie helping to cushion some of the rise in energy costs at the pumps. Unfortunately, a stronger Canadian dollar will hurt many areas in our economy that could reduce Canada’s economic recovery. In our opinion the dramatic increase in crude price has been influenced by a great many factors. We’ve outlined these factors, as well as what the upcoming interest rate hike will mean for the petroleum, natural gas and electricity markets. This week’s Energy Report also discuss the sale of Shell’s national bulk fuel network, the closing of the Montreal refinery, what’s happening in the natural gas and electricity markets, and much more.

By: Roger McKnight, Senior Petroleum Advisor

To receive your copy, send your email to: info@en-pro.com.

We have decided in this last Energy Report of 2009 to avoid a detailed review of the U.S. inventory levels for the week ending December 11 other than to say that LOOK….inventories are in great shape and demand is in terrible shape. Weather is unpredictable and we will leave it that way.

Suffice it to say that even if we have an abrupt return of the Ice Age (an anti Al Gorian principle) this winter, there is enough crude and distillates in on-shore storage to cover the entire U.S. heating oil requirements for all of the upcoming winter and there are the same levels of inventories in floating storage off shore as back up. So let’s move on.

Suncor announced that Husky will “buy” into the Ontario gasoline retail market with the purchase of 98 retail service stations in southern Ontario. Our comment is, ‘why would Husky do this when they have no Canadian refining capacity east of Prince George?’

By: Roger McKnight, Senior Petroleum Advisor

Where will Husky get supply for all these additional retail locations? Here’s our view of how this deal went down.

For our analysts’ views on the Suncor buyout of Petrocan, and what’s happening in the natural gas and electricity markets, sign up for the Weekly Energy Report. Send your email to info@en-pro.com.