Wednesday, February 24, 2010

Is March a Good Time For Energy

March tends to be one of the best months of the year for both crude oil and natural gas. The the charts in the link which cover roughly the past 20 years show the price of oil at the end of March is on average nearly 4 percent higher than the closing price in February. For natural gas, the increase is even more eye-catching – gas on average climbs more than 7 percent in March. The main reason for the oil price rise in March relates to the demand pull created by refiners ramping up in advance of the summer driving season. Crude price increases fall off through the early summer before picking up again in the late summer. From September to October, there is typically a big price drop that continues through year-end. For the refiners, March marks the end of a five-month stretch in which monthly crack spreads (value of refined products minus the price of the crude oil feedstock) tends to increase. If next month follows the pattern, spreads would be 4 percent wider than February. So far in 2010, however, the results have lagged the longer term trend – January saw spreads narrow by about 3.5 percent and for February to date, spreads are up about 2 percent. For natural gas, which is always extremely volatile, March is a strong month in large part due to late winter snowstorms that move across the country. When you couple that weather variable with the fact that inventory levels for natural gas have usually been drawn down substantially during the winter heating season, the result can be some dramatic spikes for gas. A cold January lifted spot natural gas prices about 6 percent higher than the December forecast, and in early February gas for April delivery was on average trading 16 percent higher than the same period in 2009. For energy equities, the typical rally period is February through May. So far, 2010 is not straying too far from that long-term trend: from a peak of 1,122 in early January, the Amex Oil Index (XOI) fell 12 percent by February 9 before heading back up 5 percent over the next six trading sessions. Of course, seasonality is not a perfect barometer because each year brings its own distinct market conditions. In 2010, the extent of global economic recovery will be a factor, as will economic growth rates in the large emerging nations. In the U.S., petroleum consumption fell by 820,000 barrels per day (4 percent) last year. Federal officials predict daily oil demand will increase about 1 percent this year, while natural gas demand is expected to increase nearly a half-percent. Gasoline prices may top $3 per gallon this spring, according to the federal outlook. In its latest monthly report, the International Energy Agency raised its forecast for global oil demand growth to about 1.6 million barrels per day this year, with all of that incremental demand coming from the emerging markets. China accounts for a quarter of the new global demand for oil. That incremental growth could be revised upward again if it looks like global GDP growth – led by the large emerging economies – will be stronger than the anticipated 4 percent. And if the supply response to additional demand is weak, higher oil prices could result.

http://news.goldseek.com/GoldSeek/1266850620.php

24 comments:

  1. Analyze & Kli,

    PBR gave a nice gap within an hour, from 41.05 to 41.73, yummy!

    joe

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  2. miners continue to look very weak and remain in downtrend...lets see how they close today..

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  3. Joe, that's a great gap trade. Going quite well, going very well from this side today. Kli See $rlx chart versus $tran, $ndx laggard but flagging for breakout. - Analyze.

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  4. Analyze,

    look at SGY, look at low of the day and where it is now.

    joe

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  5. Nancy,

    Look at the turn around by SGY,wowww!

    joe

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  6. Missed it? should we be buying now on pullbacks? -N

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  7. Nancy,

    Buy little on the pull back so when it makes sharp moves like this, you won't be out of it. MMs and GS short squeezed those who were short SGY at 15.20. So far the low of the yr for SGY is around 14 ( february 5th). Between now and june, you can make more money from oil and natural gas stocks than miners.

    joe

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  8. thanks again. I own a little apl--look at it today, woah! didn't look at it until I read your post...N

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  9. By low of the yr for SGY, I am not refering to 52 week low, I am talking about 2010 low.

    joe

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  10. Nancy,

    You need to have the list of the stocks you are targeting on your screen daily so when you see stock turn you can act. I saw SGY hit 15.20 and then started moving up with heavier volume which was the indicator.

    joe

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  11. Sidestepped here, had a weird tech meltdown, maybe an insider sell, but a position gapped on me, out with 50% win. X looks dicey as well, taking a seat until clarity resumes. - Analyze.

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  12. will do. They changed my watch list so it isn't on my trade page so adjusting to flipping pages.

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  13. Nancy,

    I told kli to buy ALU at 2.80 when it hit last week since it seemed oversold and so far it's working out fine, that's the only non-commodity stock I am in.

    joe

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  14. Ignore my earlier post, they were expaninding a channel to go into a consolidation entry against overhead resistance, just caught me by surprise given the structure, looking for re-entry points again. - Analyze.

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  15. Nancy .....took profit on ALU but will continue to trade ......my only complaint is Joe didnt say "load the boat"....hehehehe...if I hear load the boat I don't buy any though.

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  16. Late to the party, out of commission last week. Are you holding jag in your miner core? It's behaving quite badly in here, along with slw. -N aka sis

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  17. Kli - Just looked at the chart, nice gap @$2.83, hope to enter there tomorrow. Also hoping to unload some shorts so could be another up day. - Nancy Nurse

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  18. Joe just slapped me for my trade....so tomorrow I am required to repurchase......hehehe

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  19. Kli, Nenner called for Oil low on 2/23 and Natural Gas to hit it's all time low this year just an FYI

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  20. May be correct but one last dip would help.....then the ramp....play sgy pbr for the long ride

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  21. BTW PBR and SGY were Joes recommendations for the next ramp.....reds been playin PBR but don't know if he is in it now......futures are bleedin bad .......this ponzi needs a correction bad

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  22. Don't like shorting in this environment because of the stop shopping. Guessing next target is around 1055 on S&P and PBR will be around 38-39, based on daily lower bollinger bands, weekly is not that much further down about 5 or so points.

    Beware that the 200 dma on the S&P is still in play over the next 5-10 days at around 1035. That would be where a well planned algo would stick it to the P3 shorts. The 20 month moving average on the S&P is around 1000, a February closure below 990 would limit severely limit the momentum to the upper band and put ~750 downside target sometime this year. After this week they can mess with the shorts all the way to 990 or lower briefly at a more leisurely pace and still keep the 200 week moving average at 1225 as the target high.

    Gold has much more support around 1040 and 970, miners will trade more with the markets.

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  23. Joe, Looks like we may have a gap to play in a couple positions this morning ; - Analyze.

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