When you think of Independence Day you think of fireworks.And we all knowfireworks were invented by the Chinese. So leave it to the Chinese to provide a little fireworks to awaken a flat lining oil market.
Oil was aflat line as the market got pulled in different directions on a confusing mix of market fundamentals.Once again the Chinese are calling for a global currency so they can loosen their dependence on the dollar and talk of more big purchases of oil yet at the same time we have Bank of China Governor Zhou Xiaochuan playing down dollar worries by saying that China's foreign exchange reserve policy is stable. That kind of talk may give the dollar a boost but the other key question for the oil market is whether or not the Chinese are going to continue their recent strong buying in oil.
Well the answer to that question is probably yes. Over the weekend it was reported that China plans to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years by the Nikkei English News citing an unidentified official from China's National Energy Administration. According to the report China will spend 30 billion yuan ($4.39 billion) for stockpiling facilities with a capacity to hold 169 million barrels. China Petrochemical Corp., China National Petroleum Corp. and other companies will construct and use the storage sites. If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support.
Yet demand worries still fester. The International Energy Agency made a 3.7% downward revision to their medium term forecast for global oil demand. The IEA says that global oil demand will average 87.90 million barrel of oil a by 2013 and according to Dow Jones isa big downward revision of 3.3 million barrels a day compared with its previous forecast in December and a reduction of 6.24 million barrels a day, or almost 7%, versus the IEA's original forecast last July. The report also underlines how reduced investment and other cabove-ground factors like resource nationalism in past months are hurting the supply-side equation. That could yet mean much higher crude prices down the road should economic growth return to rates seen north of 3% globally prior to the downturn.
On the bullish side it was reported that there was another attack on oil interests in Nigeria. The Movement for the Emancipation of the Niger Delta said it, has struck at the Shell Forcados off-shore platform in Delta state, in the western Delta early Monday. Cluster 11 and 30 are currently on fire after a massive explosion. Dow Jonesreported that aShell spokesman said they are aware of reports of an incident. This comes after MEND rejected a presidential amnesty offer to militants unveiled the previous day. He argued it didn't address a demand to modify oil revenue redistribution at the federal level.
BuyAugustcrude 6550 -stop 6260.
Buy August heating oil at 16500 - stop 16300.
Buy August RBOB at 17300 -stop 16900.
Buy August natural gas at 384 stop 377.
The Dan Flynn Corn & Ethanol Report
Honduras is on the verge of a military overthrow.
This has Latin American leaders scurrying to meet and try and quell the overthrow.
Stay Tuned !
On Friday China's Bank called for a new reserve currency other than the U.S. Dollar.
The Dollar is trading at 8014 up 3 1/2 tics as I write.
On the Corn Front we have the July contract settleing at 382 1/2 which was down 1 3/4 cents.The range was 384 1/2 to 380.
Funds continue to follow the current weather patterns and pressuring the market.
The Energy Complex is trading mostly higher with the exception of Natural Gas.
This should be an interesting Trading Day ! Good Luck and Good Trading !
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