CAMERON HANOVER

[DAILY PETROSPECTIVE] November 16, 2010

Energy Prices Settlements

Heating Oil Crude Oil

Month High Low Settle Change Volume Month High Low Settle Change Volume
DEC 236.86 231.18 230.90 -6.19 40454 DEC 84.74 82.26 82.34 -2.52 371790
JAN 238.49 233.00 232.80 -6.08 22143 JAN 85.20 82.73 82.84 -2.45 205220
FEB 238.64 233.93 233.82 -5.91 7029 FEB 85.72 83.34 83.44 -2.40 48819
MAR 238.56 234.15 234.05 -5.81 4639 MAR 86.16 83.86 83.96 -2.35 32290
APR 237.54 232.93 232.99 -5.75 2464 APR 86.47 84.25 84.38 -2.29 13449
MAY 237.15 232.90 232.29 -5.75 1893 MAY 86.45 84.55 84.73 -2.23 12169
JUN 237.23 232.31 232.25 -5.75 3171 JUN 87.08 84.83 85.02 -2.17 26367
JUL 234.50 233.43 233.19 -5.73 357 JUL 87.00 85.35 85.28 -2.12 8376
AUG 236.25 234.95 234.33 -5.72 276 AUG 86.60 86.10 85.50 -2.09 7119
SEP 236.72 236.03 235.83 -5.75 371 SEP 86.85 86.85 85.71 -2.07 3301
OCT 239.48 238.46 237.66 -5.72 110 OCT 86.97 85.89 85.91 -2.06 2350
NOV 240.59 240.41 239.58 -5.72 375 NOV 87.23 87.19 86.13 -2.03 3609

Unleaded Gasoline Natural Gas

Month High Low Settle Change Volume Month High Low Settle Change Volume
DEC 220.00 213.69 215.57 -3.93 35231 DEC 3.919 3.782 3.818 -0.027 99262
JAN 216.02 210.82 211.41 -4.73 31192 JAN 4.092 3.964 3.994 -0.034 42048
FEB 216.28 211.67 212.03 -4.81 15259 FEB 4.098 3.977 4.001 -0.038 11786
MAR 216.54 213.10 213.68 -4.92 8542 MAR 4.074 3.957 3.981 -0.039 10757
APR 229.50 224.53 225.05 -5.00 4019 APR 4.045 3.938 3.964 -0.035 11097
MAY 229.53 225.69 226.02 -5.11 1839 MAY 4.070 3.978 4.002 -0.034 4388
JUN 231.25 226.12 226.63 -5.13 2285 JUN 4.128 4.033 4.061 -0.030 3629
JUL 228.10 226.93 226.46 -5.14 289 JUL 4.190 4.101 4.127 -0.031 1875
AUG 228.28 228.28 226.12 -5.14 228 AUG 4.227 4.141 4.169 -0.032 1475
SEP --- --- 225.16 -5.10 0 SEP 4.240 4.159 4.182 -0.034 1124
OCT --- --- 215.59 -5.10 0 OCT 4.332 4.230 4.259 -0.035 5994
NOV --- --- 214.68 -5.08 0 NOV 4.556 4.476 4.494 -0.040 1772

Early Evening Review for Tuesday

Oil prices were significantly lower on Tuesday as a tidal wave
of asset liquidation hit the markets. It started with a stronger US
dollar, which poured cold water on commodities, and it spread
into equities, which were down substantially on Tuesday. The
DJIA ended the day down 178.47 to 11,023.50.
The two “back” stories were the possibility of a eurozone
bailout of Ireland, which was in ongoing negotiations, and the
very real likelihood of Chinese monetary tightening. The first
feature, the concerns over an Irish bailout, helped boost the US
dollar. The fear of Chinese tightening helped raise worries over
the world’s economic locomotive.
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[DAILY PETROSPECTIVE] November 16, 2010
The US dollar has been rising, on and off, since a week ago Friday. On Tuesday morning, the dollar
took off to the upside, after having
traded sideways through the overnight
part of Tuesday morning. From about 8
AM Tuesday morning, the dollar
embarked on an advance that took prices
higher into Tuesday afternoon. At that
stage, it slowed and consolidated.
The stronger dollar led to heavy
selling in a number of commodities, from
gold to grains to cotton. Oil prices were
included in that group.
In Tuesday’s news, there was a
producer price index (PPI) increase of
0.4%, which was significantly less than
the 0.8% forecast. But, Capital Economics explained that the figures were “badly distorted by the new
quality adjustments applied by the statisticians to the prices of cars and light trucks.” These
adjustments helped explain the increase and the 0.6% decline in the so-called “core rate.” Raw
foodstuffs were up 4.2% while intermediate food prices increased by 1.3%. The numbers are difficult to
use, now.
And, industrial production was unchanged in October, but CE says that “the manufacturing recovery
may be gathering momentum again, driven by
demand for business equipment.” Manufacturing API Report
output was up 0.5% with vehicle production up Crude Stocks dn 7.652 mln bbls
1.6%. Business equipment output was up 1.1%. Distillate up 0.222
The biggest problem in the economy right now Gasoline dn 1.653
is the increase in 10-year treasury yields, which have Utilization dn 2.8% to 81.5%
increased from less than 2.5% on November 3 to rd Crude Imports dn 0.389 mln to 8.199 mln bpd
nearly 2.9% now. This is what is driving the dollar
and hurting equities. The Fed has only just recently
started its QE2 round of buying treasuries. The increase in yields is being attributed to traders buying
treasuries once they knew QE2 was coming and then selling them once it was announced. The Fed has
$600 billion to buy, though.
The API report showed a drawdown of 7.652 million barrels in crude oil stocks, a build of 0.222
million barrels in distillate
DOE Expectations stocks and a drawdown of
Category Dow Jones Bloomberg Reuters 1.653 million barrels in
Crude Oil dn 0.100 unchanged up 0.100 mln bbls gasoline stocks. Utilization
Distillate dn 2.200 dn 2.000 dn 2.200 rates dropped by 2.8% to
Gasoline dn 0.600 dn 0.750 dn 0.800 81.5%, which should cut into
Utilization up 0.4% up 0.5% up 0.3% futures supplies of refined
products. Crude oil imports
dropped by 389,000 bpd to
8.199 million bpd. Implied demand came in at 9.352 million bpd in gasoline and at 4.379 million bpd in
distillate, two weeks after posting a figure of more than 5 million bpd.

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[DAILY PETROSPECTIVE] November 16, 2010

Technical Views

Crude oil prices dropped again on Tuesday. Many of the factors that pushed prices higher, though, are just a whisper away from
reappearing.

The DJIA ended the day down 178.47 to 11,023.50. Tuesday’s decline is a serious drop that calls the recent breakout into question.

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