02
Mar

Wrap – Week Ended 02/29/08

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Last week was a week of records (see red circles above).

  • 1) Oil Soared To Record Highs:
  • Front month (April) crude reached a record $103.05 before settling the week at $101.84. Blame the dollar which is circling the drain as the U.S. attempts to export its way out of a recession while denying that a recession is in the cards.
  • The 12 month crude strip closed at $100.98 (also a record) ... what a great time to be hedging my E&P friends.
  • Gasoline Prices Lag Crude; Remain Near Record Levels. Wholesale gasoline hit a record in the prior week but settled essentially flat last week, as the headline "14 year high in gasoline supplies" curbed an oil following rally. The Friday and Saturday night evening news spent several minutes showing pictures of people driving away from service stations with prices in the low $4s in California. They cite the high oil prices as reason for the seeming contradiction in inventory levels and prices. I would add that the Finish Gasoline inventory mix has never contain so much in the way of high priced blending components. See Tuesday's piece for further detail.
  • Heating Oil Hits All Time Highs. Blame high oil, the switch to increased ULS (ultra low sulfur) diesel and the persistent cold in the Northeast.
  • 2) Short Interest in NYMEX Natural Gas Hits New Record of 315,000 (futures and options combined) contracts. Longs are beginning to lose faith up here which is not surprising given the recent rally in natural gas prices. I'm still short (UNG), the natural gas ETC, and still confident that when the fall comes, it will be swift and significant.

 

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  • 3) The gassy (XNG) Index hit new highs on Thursday. The fact that we hold several gassy stock calls provides more than offsetting solace for (UNG) puts.

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Closed & Expired Trades For The Month of February. Not too shabby.

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  • New Prices For New Subs. As go the price of the important things in life (otherwise known as the non-core components of inflation (aka, food and energy)) so go my costs. If you're already a subscriber, relax I'm not upping your rate (you're locked in until at least March 31, 2009). But fair warning, higher rates for new subscribers will go into effect March 31, 2008.

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