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Early Evening Market Review for Tuesday

The oil complex was higher in trading overnight on Monday night, into
Tuesday morning, and traders were talking about air travel resuming between
Europe and the US and inside continental Europe on Tuesday. Despite the
partial return, the fallout of ash from the volcano has cut European jet fuel
consumption by roughly two-thirds, and it has backed up deliveries scheduled
by pipeline and barge. European jet demand, normally at 1.2 million bpd, is
now estimated at 700,000 bpd.
Nevertheless, the partial resumption of trans-Atlantic movement seemed
to help prices psychologically. Investors also seemed to have gotten beyond the Goldman lawsuit, and
they were buying equities again on Tuesday, on strong quarterly profits reports.

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By 1 PM, the DJIA was up more than 30 points and crude oil prices were up right around $2.00 a barrel.
The US dollar was higher against the euro and yen, but precious metals prices were higher. It might be
too broad a statement to say that risk appetite has returned, but certain aspects of it did seem to be
back in play.
More than anything else, it seemed that investors felt they had over-reacted to the Goldman event
on Friday – and even more so on Monday, when there was still left-over selling. A large part of that
selling was attributed to the volcano, but it was clearly predicated on Goldman, as well – or we would
not have seen such a sharp rally on Tuesday. An additional 24,824 contracts were liquidated on
Monday, showing that investors were still getting out of existing positions as the week started.
We expect that a fair number of these were put back on Tuesday. With the DJIA higher and the
dollar lower, and with only a portion of air travel back in business in Europe, we are left with just the
Goldman element – and what appears to have been a major reassessment of the impact of the lawsuit –
as a likely reason for Tuesday’s steep advance.
The May crude oil contract expired yesterday, and prices ended where they had been at 1 PM. At
that stage, the DJIA was up 35 points, so there was a pretty decent correlation between the two moving
higher on Tuesday. That may be completely forgotten on Wednesday, when we will have the DOE
report to give oil prices direction, but on Tuesday, oil
prices were trading higher along with equities in a post- API Report
Goldman trading session. Crude Oil dn 0.741 million barrels
This week’s API report showed a draw of 0.741 million Distillate dn 3.103
barrels in crude oil stocks, a draw of 1.743 million barrels Gasoline dn 1.743
in gasoline and a draw of 3.103 million barrels in distillate Pct Operated up 0.3% to 85.1%
stocks. Refinery utilization was up 0.3% to 85.1%. Crude
oil imports were up 685,000 bpd to 9.895 million bpd. This was a generally bullish report, although it did
show another increase in refinery use, which could lead to builds in refined products down the road.
Crude Oil Daily Technical Chart

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

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