Wednesday, January 28, 2009

The Wall Street Journal's Oil Market Contango Tag-Team

Using the Random team name generator/Random team name selector (and ignoring the first two suggestions "Cow Tipping Dwarfs" and "Fudge Dragon Express"*) Wall Street Enforcers popped up.
You could also go with the individual wrestling name generator, which for "Journal" kicked back "Professor Jackhammer"
(or the female version)
First, from the MarketBeat half of the Enforcers duo:

Oil’s Contango Rebound

Another unexpected surge in crude-oil inventories has the price of the front-month oil contract falling while buying continues to occur in later-dated contracts, contributing to a reversal of a trend that dominated energy trading last week.

The Energy Information Administration reported a build of 6.2 million barrels in crude for the week ending Jan. 23, surpassing the expectations for a build of about two to three million barrels. This follows a 6.1 million-barrel build the previous week, and puts crude stocks at 338.9 million barrels, or nearly 16% above a year ago, the largest year-over-year surplus since July of 1990.

The market, for a time, was taking this in stride. Oil moved higher briefly on news of a surprise draw-down in gasoline inventories, but of late, oil was sinking again. March futures were down 40 cents to $41.18 a barrel. In the meantime, investors are bidding up later-dated contracts, increasing the spread between those contracts and the front-month March contract. This situation is known as contango, and reflects expectations for weak demand for the time being....MORE

Next, coming in off the top rope, Environmental Enforcer:

Oil Prices: Have They Bottomed Out? A Hint on the Seas

Have oil prices finally found a bottom?

For the third week in a row, U.S. crude oil stocks rose a lot more than expected. Government figures showed U.S. inventories rose 6.2 million barrels last week, far more than expectations of a rise between 2.9 million and 3.4 million barrels.

But unlike the last two weeks, the oil market didn’t implode. Crude futures actually rose slightly, trading above $42 a barrel in New York. Some traders chalked that up to a suprising reduction in gasoline stocks, a hint that demand destruction may have run its course in the U.S.

For some analysts, there are signs that the oil-price decline, which has shaved more than $100 a barrel off crude prices since July, is finally bottoming out....MORE
*I did like "Tongue Twister Wizards".
Ooh late entrant, Unfrozen Caveman Lawyers.