Morning Petrospective – July 15, 2011
il prices opened slightly lower on Thursday morning, and they rallied to positive territory. But they were overbought and in resistance, up against the upper Bollinger Band. This gave the market technical reasons to stall on its quest to reach higher prices. Traders reassessed the likelihood of there being another round of quantitative easing, QE3, and Ben Bernanke reiterated his stance, which is that he will not launch QE3 on a whim; there will need to be signs of deflation first. This brought in selling as the technical resistance was augmented by a rethinking of the Fed’s position.
The US dollar was steady after falling on Wednesday afternoon, in trading overnight. As we moved through the trading session, the dollar gained and the euro lost ground against it. Early in the day, the euro had received some help from an Italian bond auction that had gone surprisingly well, when there had been fears that the auction might actually fail. That was welcome news for Europe’s third largest economy. As the day wore on the dollar strengthened, putting additional pressure on oil prices.
Traders were also looking at this week’s DOE statistics with more interest in the non-headline numbers. Supply changes had dominated on Wednesday, and demand considerations became more important on Thursday. Demand has been below year-ago levels for the last few weeks, after being higher earlier in the year.
And everyone was watching the August 2nd deadline for a compromise measure to raise the US debt limit. At this stage it is making slow progress. Without assigning one side or another any higher ground, it says something less than pleasing about our country when Republicans and Democrats are squabbling over debt limits, at the exact moment that owners and players struggle to slice the huge and growing pie of NFL profits – with an equal lack of success. These two great debates have shaped this as a summer of discontent, as groups that should be working together for a better America shred each other over more money than any American worker could ever easily imagine. Ah, well, they give us something to remember this summer for.
The biggest moment of the day came from Ben Bernanke addressing the US Senate. He told the senior branch of the legislature that “We are not prepared at this point to take further action,” reiterating the need for deflationary influences to be felt before another round of quantitative easing would be started. This was the day’s biggest influence, pushing oil and equities prices lower. The DJIA ended down 54.49 to 12,437.12. The dollar advanced on the speech.
It will take the markets a while to sort it all out and to understand fully how any QE3 might factor into the Fed’s arsenal of possible actions. Ultimately, it will limit the extent that any bear movement can carry prices. In that respect, we expect it to be a bullish influence.
In other news on Thursday, the weekly employment fuigures showed an unexpectred decline of 22,000 to 405,000. Analysts had been looking for a drop of 12,000, according to Bloomberg. Retail sales rose by 0.1% in June, reversing a decline of the same amount in May. “The level of retail sales has been pretty much unchanged in the three months to June,” Capital Economics noted on Thursday.
FMX Newswire
FMX Newswire is an overnight news summary designed to meet the needs of professional energy traders. The content is to-the point, professional grade and not widely reported in the mainstream media. All sources are professional respected firms and newspapers.
Bentek Energy
- Power Burn Analytic Report – Power Burn Continue Decline, Expected to Recover Next Week.
- Gulf Coast Production Analytic Report – Drilling of Ultra-deep Gas Well in Atchafalaya Bay Nears Completion.
- Supply/Demand Balance Analytic Report – US Production Declines 0.5 Bcf/d, Mainly Due to Drop in SE/Gulf.
- Nuclear Plant Status Analytic Report – Salem 02 Goes Offline in Unplanned Event.
Platts
- EC plan to cut maritime fuel sulfur content to 0.1% from 1.5% by 2015 may outweigh implementation costs with Eur34 bil health benefit saving.
- Putin says a 3rd gas line for Nord Stream via the Baltic Sea to Europe is possible as Japan quake and N Africa unrest sees 'thinner' market.
- Intercontinental Exchange Thursday said it will pay $512 million for a 12.4% stake in Brazilian clearinghouse Cetip.
Bloomberg
- BHP Billiton to Acquire Petrohawk for $12.1B
- Crude Heads for First Weekly Decline in Three Weeks on U.S. Debt Concern
- Canada Seeks China Oil Sales Amid Environmentalist ‘Rhetoric’.
- ConocoPhillips Seeks New Oil Identity With Planned Spinoff of Refineries.
Technical Recap
Crude Options Report / Straddle Runs
NG Options Report
Market Prices
Premium Subscriber (click here to register):
Volumes & Open Interest
End Of Day Straddles
Settlements
To view our energy news and articles on your PDA or mobile device, click here.