As a follow up to our May 13 recommendation to enter the July/December Crude spread (buy Dec/sell-Jul) at- 1.29 prem to the December buy side. Our previosly mentioned target of -200 has been reached today and we will exit the trade today rather than wait till the June 7 timing date that we had initially proposed.
Information contained herein is believed to be reliable but its accuracy cannot be guaranteed. Past performance is not indicative of future results and the risk of loss is substantial in futures trading. Hornsby & Company, Inc. and W.H. Brown may, from time to time, have positions in the futures market relative to these recommendations.
US Crude Stocks- Up 0.616 MB
US Gasoline Stocks- Up 3.794 MB
US Distillate Stocks- Down 2.04 MB
Late yesterday the API reported that for the week ending May 20, crude oil stocks declined by 860,000 barrels to 368.108 million barrels, but a reconciliation of the components suggests the decline “should have” been much larger. Gasoline supplies rose by 2.442 million barrels while distillate inventories fell by 846,000 barrels. Thus far this morning the NYMEX is easing off yesterday’s gains as the market forgets bullish forecasts for the moment and refocuses on the euro zone debt crisis, thus confirming a continuation of the recent trading range. If the DOE data are universally bullish it would seem the prompt NYMEX crude oil contract will wish to challenge $100.00 once again, and if it breaches this bogie the odds probably favor a near-term peak at around $102.00-$103.00 per barrel, but unlikely much higher.
