I did one here and this is what I got:
Hello, folks. We're live at the Olympics. Everyone is very excited about the typing race. All eyes will be on Gene Hackman who is representing Afghanistan. Gene Hackman has already won 420 medals here at the stadium. Here come the athletes now! Gene Hackman looks a little cold as she gets ready to race. And they're off. Gene Hackman and John Wilkes Boothe are neck and neck as they near the finish line. The crowd is on their feet throwing. Gene Hackman has won, and it's a world record!
We quickly move to the medal ceremony. This is very emotional. We just heard that this is Gene Hackman's last Olympics. Tears are in Gene Hackman's eyes as Afghanistan's flag is raised and Life in the Fast Lane is played. It's a loud day for Gene Hackman and all the people from Afghanistan.
That was funny, now try it for yourself.
See what I am getting at is it seems there are so many reasons why the barrel is climbing and hitting a new record everyday. News reporters, and we all know how smart and spot-on they are, seem to be just inserting any reason on why crude oil rises without doing any real research.
Tonight, on Local 6 News, oil prices hit a new record today because:
- The weakening dollar
- Inventory draws
- Geopolitical tensions
In actuality, while those suggestions equate to the situation and make sense, there is, as Paul Harvey would say, the rest of the story.
There are a few reasons why energy values are rising, and one major reason is that the standard turnaround season has hit where refineries will switch from producing more middle grade fuels, such as diesels and heating oil, to producing lighter products. Refineries are shutting down units so they can make more gasoline.
Why? Summer driving season approaches.
Additionally, heating oil and other distillates have sharply increased in relation to the NYMEX, sparking from a 0.25 cent discount last week to nearly a nickel premium today. A trader that I spoke with indicated exports have risen, with many market players sending a lot of material to South America and some across the pond.
I spoke with a seasoned colleague (not Lefty Johnson) and this is what he said:
The spring maintenance period allows refiners to make repairs as necessary and to shift production from the maximum amount of middle distillates to maximum gasoline yields. This really means about a 5% change in the amount of the products that is made. While the turnarounds will lower production, refiners tend to build inventories of refined products ahead of the maintenance work.
LSD inventories should decline in part due to the usage by trucks as well as increased demand from the ag sector for field preparations and planting. Also stocks will decline due to the lower production rate. Some of this should be offset by an increase in imports if LSD and other distillate grades. Overall, things should remain relatively well balanced, but price movements will be dictated by hedge funds and dentists that have no clue how the system works.
Oh, and don't count out the fact that there is a major industry event next week in San Diego, CA and many market players will be there, leaving inexperienced participants and noobs to deal the dirt.
Should be an interesting week. I know I am stoked about San Diego.
FYI - crude settled at $105.47 today. An all-time high.
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