CAMERON HANOVER

[DAILY PETROSPECTIVE] August 2, 2010

Energy Prices Settlements

Heating Oil Crude Oil

Month High Low Settle Change Volume Month High Low Settle Change Volume
SEP 217.00 208.74 215.38 6.57 46813 SEP 81.77 78.83 81.34 2.39 280913
OCT 219.69 211.59 218.19 6.66 12761 OCT 82.15 79.28 81.76 2.37 77170
NOV 222.26 214.90 220.98 6.73 7686 NOV 82.67 79.87 82.30 2.35 35421
DEC 224.90 217.35 223.56 6.69 10555 DEC 83.22 80.44 82.82 0.46 63788
JAN 227.42 222.40 226.15 6.69 2487 JAN 83.56 81.19 83.30 2.24 8238
FEB 229.23 224.80 228.08 6.69 599 FEB 83.91 81.75 83.74 2.19 3308
MAR 230.06 227.50 228.98 6.67 547 MAR 84.49 82.55 84.15 2.15 2564
APR 229.87 227.50 228.62 6.49 155 APR 84.58 83.84 84.54 2.11 1531
MAY --- --- 228.45 6.32 0 MAY 85.12 84.20 84.91 2.08 1393
JUN 229.56 225.00 228.58 6.15 1036 JUN 85.61 83.42 85.26 2.04 8826
JUL --- --- 229.83 5.98 0 JUL 85.59 85.25 85.59 2.00 2297
AUG --- --- 231.20 5.85 0 AUG 86.00 85.71 85.80 1.99 1231

Unleaded Gasoline Natural Gas

Month High Low Settle Change Volume Month High Low Settle Change Volume
SEP 219.24 211.91 216.85 4.61 38291 SEP 5.01 4.68 4.70 -0.222 111895
NOV 207.82 201.67 206.16 5.09 6578 OCT 5.01 4.70 4.72 -0.210 48860
DEC 208.15 202.03 206.63 5.31 7923 NOV 5.15 4.89 4.91 -0.164 25700
JAN 209.68 206.77 208.51 5.39 964 DEC 5.34 5.13 5.15 -0.114 19010
FEB 211.34 210.55 210.67 5.46 279 JAN 5.47 5.27 5.28 -0.108 17516
MAR 214.00 212.04 212.97 5.42 193 FEB 5.43 5.24 5.25 -0.103 4875
APR 226.50 224.39 225.22 5.32 159 MAR 5.33 5.14 5.15 -0.101 6320
MAY --- --- 226.10 5.25 0 APR 5.12 4.96 4.97 -0.088 4969
JUN 226.10 224.45 226.70 5.20 189 MAY 5.07 4.98 4.99 -0.084 1265
JUL --- --- 226.90 5.20 0 JUN 5.17 5.01 5.02 -0.079 694
AUG --- --- 226.65 5.20 0 JUL 5.13 5.07 5.07 -0.074 757
AUG 5.17 5.11 5.12 -0.069 826

Early Evening Market Review for Monday

Oil prices broke out decisively to the upside on Monday, breaking above
resistance at $79.69, $80.00, $80.40 and $80.82. It is what the bulls needed to
do to generate a convincing signal that this market intends to move higher. By
settling at $81.34, above all of those resistance levels, the bulls wwere able to
negate last Tuesday’s technical failure and they broke decisively over all the
resistance generated since the end of May.
Technically, prices now have a sound reson to advance on the major highs,
the highs for 2010, at $87.19. It was from that high that we had a technical
failure in early May, which effectively set us upon a course of steep decline and
then consolidation. Prices have now broken out of their trading range.
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CAMERON HANOVER
[DAILY PETROSPECTIVE] August 2, 2010

It could not have come at a less likely time, in a number of ways. Last week’s inventory figures showed the
US sitting on generous supplies of crude oil and refined products, and economic statistics since early May have
been almost all either anemic or downright disappointing. For weeks, economic data have done little to allay
fears that we may be headed into a double-dip recession. Some figures have had ‘silver linings’ or
‘underpinnings of hope,’ but few have been unequivocally bullish.
Monday’s manufacturing sector data seems to have turned everything around, and is being credited with
renewing “investors’ faith in the global recovery,” according to Dow Jones. Equities certainly seem to have
been convinced, and the DJIA gained 208.44 to 10,674.38 in Monday’s trading. A number of other
economically-sensitive commodities also benefited from this set of figures.
July manufacting indices in the US, UK and in the euro-zone all came in stronger than had been anticipated.
And these figures seem to have caught a number of people leaning the wrong way, especially in oil after we
had what looked like a technical failure a week ago. It now seems to have been just the latest in a long line of
‘fake-outs’ and traps in the oil complex. The US dollar sank to its lowest level since May 4th and copper and
other ‘industrial’ commodities had strong days.
The US ISM manufacting index actually dropped in July, to 55.5, from 56.2 in June. But, it was much less of
a decline than had been feared and was a sign that US manufacturing was stronger than believed. Capital
Economics (CE) pointed out on Monday afternoon that “Even after July’s dip, it is still consistent with
annualized GDP growth of around 4%,” which is more than most analysts have been talking about lately. The
index also drew strength from its employment index, which led CE to comment that “labor market conditions
are better than most realize.” Oil, copper and equities were convinced. And equities may be the key to
rebuilding flagging confidence over the near term. Of course, we do need to be aware that new orders fell to
their lowest level since June, 2009, in the latest set of figures. Analysts had expected worse news, though.
And construction spending unexpectedly increased in June. There was a 0.1% increase in expenditures that
once again caught market participants leaning the wrong way, especially after a revised 1.0% decline in May.
Economists had been predicting a decline of 0.5%, so any gain had to be seen as being constructive.
The bottom line seems to have been that diminished expectations have not been realized, and that
represents a kind of good news.
In other oil-relasted news, a DOE Expectations
tropical depression has reportedly Category Dow Jones Bloomberg Reuters
formed in the middle of the Atlantic Crude Oil dn 0.200 dn 1.500 dn 1.000 mln bbls
Ocean, according to the National Distillate up 0.700 up 1.000 up 1.100
Hurricane Center. This will give us Gasoline dn 0.800 dn 1.000 dn 0.700
something to watch and may keep Utilization dn 0.7% dn 0.5% dn 0.6%
sellers at bay.
Crude Oil Daily Technical Chart

Crude oil prices had a decisive upside breakout on Monday.

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