Barrack rocks on energy. Is President Obama moving the energy complex at will? Ok well maybe it only feels like it, but the last few trading sessions of oil have directly or indirectly fallen under the new President's spell.
Take Thursday and Friday for example as oil on both days dug itself out of a deep hole after White House comments promised quick and speedy economic stimulus. And yesterday oil seemed to disconnect a bit with what was at that time a surging stock market as President Obama promised liberty and green energy for all. Is Obama the new energy man with a plan? Does the market believe that Obama can print the green to create the green where those in the past have failed? Should we give President Obama some credit for breaking the oil market or was the timing of yesterday's crude oil sell off just a coincidence? Could the separation from stocks and the gold market signal that oil has had enough of following these economic stress indicators in the backdrop of record supply?
Well oil is trading in a range desperate for news, any news. It is possible that Obama's pledge of green allegiance was just enough to do the trick on a boring Monday afternoon. Maybe it was as easy as Obama saying that America is ready to lead to protect our climate and our collective security to get oil focused on over supply. Monday’s trading action did show signs of a different pattern after he spoke. Oil had been following the stock market and the gold market like a shepshire sheep suddenly divorced itself from the rest of the complex. Ok it is a stretch but when a market has little news to go on it can move on just about anything even global warming when it feels like 15 below zero outside. When Obama talked tougher CAFE standards to at least 35 miles per gallon by 2020 and a 40 percent increase in fuel efficiency for our cars and trucks he basically told Detroit to stick that in their tail pipe and smoke it. Dare I or anyone question the dogma of global warming but the President's fixation on leading on global climate change may give the illusion of potential rising supply. Either because we become less dependent on energy or because his economic policies are disasters that will encourage even more destruction of demand. I guess when the government gives the auto companies money they can tell them what kind of cars to make.
Of course the market cannot ignore the fact that Obama also is pushing to allow California and other states set their own tailpipe emission standards. California needed a waiver from the Clean Air Act to pursue its own course and the Bush administration's Environmental Protection Agency denied that permission. Now Obama will direct EPA regulators to re-examine California's case and it is expected that theaters can set their own emission standards much to the chagrin of Detroit.
In fact today’s New York Times says that Obama’s energy moves are already creating friction in the Democratic Party something I wrote about months ago. We have the old Midwestern auto labor union Democratic guard versus the plant loving planet saving green California wing of the Democratic Party. The New York Times writes that, “President Obama quickly to act on the environmental promises that were a centerpiece of his campaign. But tackling global warming will be far more difficult — and more costly — than the new emissions standards for automobiles he ordered with the stroke of a pen on Monday. Already, the Congressional Democrats and Mr. Obama will need to carry out his mandate are feuding with one another. By coincidence or design, most of the policy makers on Capitol Hill and in the administration charged with shaping legislation to address global warming come from California or the East Coast, regions that lead the country in environmental regulation and the push for renewable energy sources. That is a problem, says a group of Democratic lawmakers from the Midwest and Plains States, which are heavily dependent on coal and manufacturing. The lawmakers have banded together to fight legislation they think might further damage their economies.” Oh well. Yet the Midwest might not worry because as Bloomberg news reports, “That President Obama may make it harder to increase renewable energy than his predecessor during a financial crisis that halted lending by Lehman Brothers and other alternative-power financiers.” In other words, without credit or speculative capital, lower emissions to the environment may just be a pipe dream. Of course according to some climate scientists it might not matter because the planet is already headed towards climatic doom.
The AFP is reporting that climate change is "largely irreversible" for the next 1,000 years even if carbon dioxide, or CO2, emissions could be abruptly halted, according to a new study led by the U.S. National Oceanic and Atmospheric Administration. So why worry! Go out and enjoy your frost bite because it might be your last!
The lack of global warming has been supporting energy. Reuters News reported U.S. heating demand this week is expected to average 5.4 percent above normal as cold weather will permeate most of the country, the National Weather Service forecast said in its weekly report. They say demand for heating oil is expected to be about 10.3 percent above normal this week. Heating demand for natural gas should average 7.2 percent above normal and heating demand for electricity will be normal.
Beware! The madness begins! The API, American Petroleum Institute, report is from Mars and the Department of Energy's is from Venus and they come out today! Expect the unexpected and day traders get ready to pounce as the American Petroleum Institute will report its weekly and wild U.S. petroleum industry data every Tuesday at 3:30pm central time. If you love goofy numbers and crazy moves you will love that API!
We're short March crude from apprx 4354 on what is now a quadruple rollover! Stop 5350!
Sell March heating oil at 15300 - stop 15600.
Sell March RBOB at 12650 - stop 12900.
Sell March natural gas 500 - stop 520.
