PFGBEST Energy Comment

CHICAGO - Jun 28/12 - SNS -- Following is the energy futures comment from PFGBEST Research.

The Energy Report(2)

By Kevin Rosenberg

6/28/2012

Crude Oil:

A relatively strong showing in August Crude yesterday saw the market settle once again above the $80 mark, its highest level since June 21. Largely in response to a drawdown in US inventories and increased demand as indicated in the EIA report. Although less than expected, crude oil inventories fell 100,000 barrels compared to last week when inventories were at their highest levels since 1990. Coupled with lower inventories, the EIA showed a 2.5% increase in demand. This is all in stark contrast to previous weeks where US inventories, production and imports remained high and a weakened economy curbed demand. Oil workers' strike in Norway affecting four offshore rigs curbs up to 15% of the countries production and helps to support prices. The impending Iranian Embargo could serve to do the same. This all seems a bit of a mirage as alternative fuel, decreased Western demand, and healthy supply could keep a lid on this market for the unforeseen future. As of 8:51AM Central, August crude oil futures are down 38 points, last print 79.83.

Technicals: Stochastics remain oversold, while an RSI of 31 shows weakness. Crude failed at the 9 day moving average during this morning's session. 81.06 provides for our first resistance level, followed by 81.32. Support one and two lie at 78.82 and 78.55 respectively.

Gasoline / Heating Oil:

In stark contrast to analyst expectations gasoline inventories rose 2.1 million barrels, distillates fell 2.3 million barrels and refinery utilization rose 0.7% (92.6% of capacity). Analyst expectations were for a rise in gasoline stockpiles of 800,000 barrels, 900,000 barrels in distillates and a boost in refineries of 0.2%. As one would expect, August gasoline futures traded as low as 259.31, closing down 2.47 points at 262.04. Heating Oil rallied 1.72 points settling at 2.5937. Both RBOB Gas and Heating Oil trade lower in this morning's session.

Reports (All Central time):

6/28 @ 09:30: EIA Gas Storage

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