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[DAILY ENERGY HEDGER - PREVIEW ] April 27, 2010

Early Evening Market Review for Tuesday


Oil prices were under heavy selling pressure throughout Tuesday’s trading
session. Prices had been mixed in trading overnight, but one of the first
features of trading on Monday night and into Tuesday morning was a
resurgent US dollar. Bloomberg reported Tuesday that “Standard & Poor’s
Ratings Services (S&P) lowered its long-term local and foreign currency issuer
credit ratings” on Portugal, from A+ to A-, and on Greece, from BBB+ and A-2
to BB+ and B, respectively. These revisions hammered the euro and helped
the US dollar, and it raised concerns over the near-term outlook for economic
recovery and growth in Europe. That, in turn, led to fairly heavy profit-taking
around the planet on long equities holdings, and the DJIA fell steeply from the
opening bell into the late afternoon. That pulled oil prices lower with it.

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[DAILY ENERGY HEDGER - PREVIEW ] April 27, 2010

Further hurting equities markets was long and involved testimony by Goldman Sachs executives
before the Senate Permanent Committee on Investigations, during which the Goldman officers were
grilled relentlessly (carried live on television by CNBC, Fox Business and Bloomberg), mostly by Senator
Carl Levin. Crude oil prices lost more than $2.00 a barrel in regular trading and in early afterhours
activity, the DJIA was down 135 points and the US dollar was stronger against just about everything else.
Traders ignored what had been expected to have been a major source of support this week – the
April report on consumer confidence. Early Tuesday morning, the Conference Board released its most
recent look at consumer confidence. These figures showed the index higher in April, at its strongest
reading seen since September, 2008. The consumer confidence index rose to 57.9, up from an initially-
reported 52.5 in March. This report revised that March figure down to 52.3. In addition, consumer
expectations for economic activity over the next six months advanced from 70.2 in March (subsequently
revised to 70.4) to 77.4 in April,. Currently, 45.0% feel jobs are difficult to find now, down from 46.3% in
March. Those who believe jobs are “plentiful” now make up 4.8% of the sample, compared to 4.0% in
March. The Conference Board also reported that consumers’ buying plans were higher in April, which it
sees as further evidence of economic recovery in the US.
Capital Economics (CE), read between the lines of this report to comment, “Given that the recession
ended roiughly ten months ago, consumers are still unusually depressed.” It sees these recently-
released figures as being “consistent with consumption growth of around 2.0% per year, well below the
3.5% pace we think was recorded in the first quarter. Overall, we find it hard to believe that
consumption will … drive a sustained overall economic recovery when consumers are still depressed and
house prices are falling once again.” CE expects home
prices to fall 5% through the end of the year. API Report
This week’s API report showed a build of 5.344 million Crude Oil up 5.344 million barrels
barrels in crude oil stocks, a draw of 0.658 million barrels Distillate dn 1.369
in gasoline and a draw of 1.369 million barrels in distillate Gasoline dn 0.658
stocks. Refinery utilization was down 0.4% to 84.7%. Pct Operated dn 0.4% to 84.7%
Crude oil imports were down 456,000 bpd to 9.439
million bpd. Distillate demand came in at 4.317 million bpd, while gasoline demand came in at 9.207
million bpd. This was a positive report for crack spreads, because we had expected builds in refined
products (and had draws) and expected a much smaller build in crude oil stocks.
Crude Oil Daily Technical Chart

**Note: Full version to be released tomorrow morning**


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