OPEC's Secretary General Abdullah Al-Badri says he hopes to see a recovery in the price of crude by the end of the second half of next year, with CNBC's Joe Kernen.» Read More
Yesterday (Thursday), WTI prices fell 2.13% while the USD strengthened 1.13% against the Euro. On cue, analysts and talking heads began to raise the WTI/USD inverse correlation argument to explain the price movements. Not so fast.
Be that as it may, there is a large consensus that crude oil is headed to $100 this year. That translates into around $3.30 for the U.S. consumer at the pump…and that could translate into a headache for GM’s shareholders.
While the natural gas market consolidated yesterday after Monday’s moon-shot, crude oil bears assumed the spotlight on Tuesday. The spot market for February WTI dropped 4.6% (peak-to-trough) through the first two sessions of 2011. However, bearish momentum yesterday stalled just below the midpoint, 88.83, of a congestive range from the first half of December.
Counter to the historical tendency for Nymex natural gas values to peak in the fourth quarter, the spot market in New York kicked off the first quarter yesterday by surging 6½% to a new winter high, 4.689. This event was likely spurred by two factors.
Aside from Friday’s end-of-year surge, spot crude oil on the Nymex has gone nowhere since analysts at The Schork Report switched their daily trading bias into Neutral on December 07th.
With winter bearing down on key natural gas markets in the Midwest and East, the Nymex Henry Hub gas contract has never looked weaker. Yesterday the spot market for January delivery plunged by nearly 5% after the EIA reported a 164 Bcf drawdown in inventory last week. Mind you, there was nothing bullish about the report, i.e. a 164 Bcf draw is on the extreme of the seasonal norm.
According to the latest revelation from WikiLeaks, an official (name redacted) from Venezuela’s state-owned oil company, Petróleos de Venezuela (PdVSA), complained to visiting U.S. economic officers last February that China was profiting handsomely from a sweetheart deal between Caracas and Beijing.
Fourth-quarter crude oil supplies in the U.S are defined by two distinct phases.
In the two weeks leading up to the Fed’s decision in early November to commence with QE2, NYMEX crude oil for January 2011 delivery rallied 7.8% from $80.88 to $87.16 and the U.S. dollar fell 3.4% against the euro, from €0.7285 to €0.7039; all on the assumption that the Fed’s actions, which are intended to spur inflation, would be bearish for the dollar and bullish for commodities.
Last week spot NYMEX crude oil traded through the $90 a barrel threshold. It was the first time since the implosion of the 2008 bubble that prompt barrels traded above this key psychological level. Be that as it may, the contract finished the week at a disappointing $87.79, down 1.6% Friday-to-Friday. Moreover, the contract failed above the neckline (≈$89.50) of an inverse head-and-shoulders pattern, writes Stephen Schork.
Bottom line, outside of the Corn Belt, ethanol is losing political favor on both the Left and Right, Democrats and Republicans.
To say the least, it was an inauspicious two-thirds of a quarter that usually produces the highest prints of the season.
Spot Nymex crude oil traded above the $90-barrier for the first time since the implosion of the 2008 bubble. Crude oil for January delivery hit an intra-day high of 90.76. It was the highest price paid for prompt delivery since October 2008.
Now that Al Gore has admitted his “mistake,” the U.S. ethanol industry finds itself at the center of what is setting up to be one ugly political spectacle.
Here we go again … oil bulls returned with a vengeance on the first of the month last week as desperate fund managers scrambled in a last ditch effort to salvage what has been a rather dismal year for most of them thus far, writes Stephen Schork.
As first reported by our friend Joshua Schneyer at Reuters, far greater volumes of crude oil than previously reported are flowing from the U.S. Midwest (PADD II) into the epicenter of the U.S. refinery market in the Gulf Coast (PADD III). This is troubling.
Yesterday (Wednesday), spot Nymex gasoline for January delivery surged by 11.4 cents a gallon (+5.2%) on an apparent physical squeeze in the Northeast. The contract was lower past midnight EST, but as soon as it went positive (around 4am ET) the rally was on.
With the implicit volatility in futures contracts, market participants turn to options contracts as a way to hedge risk.
On Wednesday of last week, the Bureau of Economic Analysis released its latest personal income and expenditure figures. The former came in at 0.5% for October, above analyst expectations of a 0.4% increase, while expenditure, or spending, came in at 0.4%, slightly below analyst expectations of a 0.5% increase, but much better than the 0.2% increase seen in September.
In last Wednesday’s edition of The Schork Report, we expressed our disagreement with the 2.00 MMbbl draw in crude inventories expected by analysts from the DOE report.