Morning Petrospective – August 12, 2011
il prices and equities started out lower on Thursday morning, with the US dollar strengthening. All three markets that like to move together – equities, the euro and oil – were moving lower together. It made sense, again. Of course, before oil trading officially opened on the Nymex for its open outcry session, the dollar suddenly dropped almost a hundred points, before rallying 45 points. It was a sign of the kind of day that lay ahead, at least for the morning. By the end of trading, equities and oil prices were higher on the day. The dollar-euro was unchanged, more or less.
This week’s weekly unemployment figures, reflecting jobs last week, fell to their lowest level in four months. First-time unemployment claims dropped 7,000 to 395,000, which was the fewest number of applicants since early April. Economic analysts had anticipated an increase in filings, by 3,000, to 405,000. So, this set of numbers was seen as unexpectedly supportive in an economy that needs all the statistical help it can get.
The latest figures tell us that firings have slowed down. Unfortunately, though, the numbers show us nothing to suggest that new jobs are being filled. More than anything else right now, this economy craves new job creation. It is not forthcoming and the two major political parties each have a set of theories about why that is right now.
Gold prices were actually lower on Thursday, although it was certainly nothing more than a corrective selloff. Since gold has the advantage of being bid higher on inflationary and deflationary news, it almost cannot lose here. Everything drives its price higher here. So, any decline has to be a correction, at least for now.
Oil prices did, at one point, takes its cues partially from oil prices. That is not the case here, except very occasionally. It has been taking its cues from equities, from economic data, and from currencies, specifically the euro (in dollars). Based on what we had on Thursday, we would expect prices to try to work sideways from here. They are oversold enough to advance from here, and they will probably follow the stock market up and down from this point forward.
We now expect equities to try to build a base. We do not expect them to turn back up immediately, but the fact that we have now had two huge rallies of 400 points suggests to us that the worst may be over. If this had been the start of a fresh leg lower, we would have seen prices continue to sell off on Thursday.
We could still see fresh movement lower. We could still have another 500-point decline in the DJIA. But, after gaining 423.37 to 11,143.31, we think that there is support setting up at 11,000 or just below it. Investors may start looking more aggressively for bargains, and that could make Friday’s session all that much more interesting and important.
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 Nearly 9 Bcf/d since Aug 1.
- Supply Demand Balance Analytic Report – Implied Injection Rates Increase 7.1 Bcf/d Since Monday.
- Texas Observer – Texas Cash Basis Inches Lower; Supply Glut Around the Corner.
- Nuclear Plant Status Analytic Report – Nine Mile Point Returns to Service in the NPCC, Duane Arnold Goes Offline.
Platts
- Devastating March 11 earthquake leaves Japan pondering its fuel mix.
- Iran-Turkey gas pipeline closed after explosion, says Turkish energy ministry official.
- Russia to mull requiring 3% of crude oil be sold on exchanges, says SPIMEX.
- Iran's policy within OPEC centers on fair oil prices and production levels: Ghasemi.
Bloomberg
- Crude Heads for Third Weekly Drop on Concern Volatility Threatens Recovery.
- London’s Rioters Are Thatcher’s Grandchildren: Pankaj Mishra.
- Obama’s 14th Amendment Stand Counters Critics’ ’Wimp’ Factor Claims: View.
- Italy May Pass Deficit-Cutting Measures, Possibly Raise Capital-Gains Tax.
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