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Energy Blog

Afternoon Energy Update - 03/09/2010 12:00 AM - BAL 3:20 PM EST

*Crude down .50 but first line support held today *Dollar main driver most of the day *How fragile will gasoline demand structure be? *API inventory out this afternoon Crude is down .50 at 81.37 this afternoon. Distillate is down 1.7 cents and gasoline having led the way up is also leading the way down…is off 2.9 cents. Propane is 1 ½ cents lower and nat gas is just a penny or two lower. We have basically the same story as this morning with the dollar gaining today and putting downward pressure on energy markets. Crude fell to a low today of 80.16 before we saw significant buying interest (at the nearest moving average on the charts)and we actually traded positive a short period before lunchtime as the dollar fell off it’s high mark. The consensus seems to be that inventories this week will show a significant build and that has contributed to the weakness today as well. Several analysts jumped into the camp yesterday that a we were ready for a significant correction in this market and played off a technical sell signal. The way we bounced off that support level today causes me to be doubtful about any huge move to the downside at this point. As gasoline approaches $3.00 per gallon many begin to question whether the economy is able to sustain these levels or if demand will weaken. It’s entirely possible we could see some weakness in late spring or early summer if demand does show signs of faltering. We’ll also have to keep a close eye on diesel demand as spring arrives. B

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