Bloomberg Oil, Gasoline Fall on Bigger-Than-Forecast Fuel Supply Increase

July 1 (Bloomberg) -- Crude oil and gasoline fell after a U.S. government report showed that fuel supplies in the world’s biggest energy-consuming country rose more than forecast.

Gasoline stockpiles increased 2.33 million barrels to 211.2 million in the week ended June 26, the Energy Department said. Inventories were estimated to rise by 2 million barrels, according to a Bloomberg News survey. Stockpiles of distillate fuel, a category that includes diesel and heating oil, gained 2.9 million barrels to 155 million, the highest since 1987.

“Supply and consumption remain really bad,” said Bill O’Grady, the chief markets strategist at St. Louis-based Confluence Investment Management LLC, an investment advisory and management firm. “It’s hard to make a bullish case for anything.”

Crude oil for August delivery fell 58 cents, or 0.8 percent, to settle at $69.31 a barrel at 2:42 p.m. on the New York Mercantile Exchange. Prices are up 55 percent this year. Futures were up as much as $1.96, or 2.8 percent, to $71.85 before the department released its weekly supply report at 10:30 a.m. in Washington.

“The market’s rally was overextended early today and when we got the bigger-than-expected gains in gasoline and distillate,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The product gains are a sign that demand for fuel isn’t improving.”

Gasoline for August delivery declined 4.3 cents, or 2.3 percent, to end the session at $1.859 a gallon in New York. more...

Bloomberg Oil, Gasoline Tumble as World Bank Predicts a Deeper Recession

June 22 (Bloomberg) -- Crude oil fell more than $2 a barrel and gasoline tumbled after the World Bank said the global recession will be deeper than forecast, bolstering concern that fuel consumption will remain depressed.

Oil dropped 3.8 percent after the bank projected the world economy will contract 2.9 percent this year, more than its previously forecast decrease of 1.7 percent. Prices also declined as the dollar strengthened, reducing the appeal of commodities as an alternative investment.

“We’re lower because reality is asserting itself,” said Chip Hodge, who oversees a $9 billion natural-resource-company bond portfolio as managing director at MFC Global Investment Management in Boston. “Prices have rallied in anticipation of an economic recovery. Now it looks like the recovery will take longer and be less steep that was previously thought.”

Crude oil for July delivery fell $2.62 to $66.93 a barrel at 2:55 p.m. on the New York Mercantile Exchange, the lowest settlement since June 3. It was the biggest one-day decline since May 15. Prices, up 50 percent this year, have dropped 8.6 percent from a seven-month high of $73.23 reached on June 11.

Futures for July delivery expired today. The more-active August crude oil contract slipped $2.52, or 3.6 percent, to settle at $67.50 a barrel.

Gasoline for July delivery declined 6.47 cents, or 3.4 percent, to end the session at $1.8597 a gallon in New York. It was the lowest settlement since May 26. more...

Bloomberg Oil, Gasoline, Fall on Record European Industrial Output Drop

June 12 (Bloomberg) -- Crude oil and gasoline fell for the first time in four days as a record plunge in European industrial production prompted speculation that bets on an economic recovery are premature.

Futures dropped from a seven-month high after a report showed that output in the euro region declined 21.6 percent from a year earlier. The dollar strengthened, undermining the attractiveness of commodities as an alternative investment. OPEC said members raised production in May for a second month, straying further from quotas.

“Crude had such a powerful rally that it was vulnerable to a correction,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “The negative economic numbers from the euro zone got it going. The dollar got stronger on the news from Europe, which has hit crude.”

Crude oil for July delivery fell 64 cents, or 0.9 percent, to settle at $72.04 a barrel at 2:50 p.m. on the New York Mercantile Exchange. Futures have gained 62 percent this year. more...

MacQ Macro Strategy – bullish on gold, oil, base metals

Macro Strategy – bullish on gold, oil, base metals
[Report attached] Macquarie’s macro strategist based in Canada, Steve Harris, commented that the $1.15tr expansion of the Fed’s quantitative easing (QE) initiative is a bullish development for both equity and credit market. More QE = more future inflation. His highest conviction idea is to buy gold and gold equities. He also recommends oil, base metals, and agricultural commodities and their related equities, as prices should benefit from inflationary monetary policies. Against short term consensus view, he is bearish on US treasuries as the market could be ignoring the rising long-term inflationary implications of QE policies and overly focused on short-term supply/demand impact.

Quantitative easing factsheet
[Report attached] Macquarie’s economist Aimee Kaye provides a factsheet on quantitative easing, a subject that has become popular in recent days. Quantitative easing (QE) refers to an unconventional monetary policy tool whereby the central bank flushes the banking system with new deposits. This is accomplished by using newly-created money, in the form of bank deposits as opposed to cash, to buy up large quantities of assets from banks. This creates excess deposits in the banking system, while expanding the central banks’ balance sheet with the purchased assets.

The risks of pursuing QE are high, and most commonly cited is the risk to inflation. In the current environment, some inflationary pressures would not go awry. Rampant inflation only becomes a problem if QE works ‘too well’, with additional reserve deposits simultaneously extended as credit to households and business. The risk of this occurring is low. Indeed, with ongoing financial tensions and an economy in recession, QE can be considered the lesser risk.