Which do you think will happen first? Will the Federal Reserve raise interest rates or will Obama close Guantanamo Bay. Well some have time tables and some do not but on both counts the answer is that nobody knows.
Now the bond markets seemed to be disappointed that there was no clear exit strategy by Federal Reserve Chairman Ben Bernanke yet it seems the oil bulls were less than impressed. Despite the fact that he said rates will stay low for the foreseeable future his optimistic tone that Central bank actions have save the global economy from total disaster is not exactly the type of stimulating talk oil bulls want to hear. With mounting supplies of oil, these bulls want the fed to say the are going to print more and more money so oil can continue to rise despite ample supplies. Real oil bulls know deep down inside that the real reason that oil has rallied the last quarter is the fed feeding in this historic stimulus. The oil rally had been a Ben Bernanke creation. Create some type of inflation to avoid the ugly alternative deflation. This is Ben’s oil market and seeing that Ben gave us the rally, he can also take it away. And even if Ben stays the course on strategy the oil bulls may want more Ben stimulus to keep the drive alive. Oil will need more outside stimulus to rally and if they do not get it the focus might slip back to worrying about supply.
Do supplies really matter when it comes to price these days? Well despite the fact that sometimes it seems like the market cares more about the stock market and the fate of the dollar, the truth is that yes Virginia, supplies really do matter.
In fact the supply side now comes into play as the American Petroleum Institute draws the focus of the market overnight. The API reported builds across the board leading with a larger than expected increase in crude supplies to the tune of 3.1 million barrels. What is even more bearish is that in the important delivery point for the NYMEX crude in Cushing, Oklahoma, supply surged by a whopping 1.7 million barrels
And what is more is that as we see crude glutting, we also see products rising.
The API reported that gasoline supplies increased by 1.3 million barrels in what is supposed to be the zenith of the summer driving season and the supplies of distillates increased by 147,000 barrels.
As we have this bountiful supply of well just about everything, it came as crude imports fell from the week before. The API reported that crude imports were off by 563,000 barrels falling to a level of 8.92 million barrels a day. Product imports on the other hand were up by 475,000 barrels a day. The report should weigh on the market especially because the stock market seems to be taking a breath.
A big down move should be coming in oil! Are you prepared? If not it is time you sign up for my daily energy blast and call me for the latest updates. Just call me at 800-935-6487 or email me at pflynn@alaron.com to open your account. Also check me out every day on the Fox Business Network.
We're short September crude from apprx 6660 - stop 6760!
Sell September RBOB at 18000 - stop 18500.
Sell September heating oil at 17450 - stop 17650.
Sell September natural gas at 390 - stop 430.
