Should all of Europe's debt be forgot and never brought to mind? Should all the high yields be forgot for days of Auld Lang Syne.

Well it seems late in the session Europe and their problems were forgotten as many commodities staged a late day reversal. Is it possible that we hit the lows on gold, silver and platinum? We have seen those markets get hit hard on the deflationary aspects of the Europe debt crisis and the high yields that Italy has to pay on their debts. Is it possible that traders have taken their profits from the only sector that they had profits in and it is time to start buying again! More than likely! You see the revesal could be a sign that the commodity blood-letting is over and we should see a more bullish bias as we head into the new year.

For energy, heating oil led the way. I was speaking with Barbara Powell at Bloomberg News and we t alked about the possible return of that thing called winter! Oh no! Bloomberg reported oil rose as jobless claims slid to a three-year low over the past month and cooler weather was forecast for the U.S. Northeast in January. Futures gained after Labor Department figures showed the four-week moving average for claims, a less volatile measure than the weekly figures, dropped to 375,000 last week, the lowest level since June 2008. The National Weather Service's Climate Prediction Center forecast lower-than-normal temperatures Jan. 5-11 from Maine to Florida. Not only are we going to have a return of winter but the U.S. economy is improving and that should improve the demand for diesel and even gasoline, said Phil Flynn, vice president of research at PFGBest inChicago. January-delivery heating oil rose 2.45 cents, or 0.9 percent, to $2.9179 a gallon at 1:09 p.m. on the Nymex. Prices are heading for a 15 percent gain in 2011.

That is significant because according to Bloomberg, Distillate stockpiles rose 1.21 million barrels (DOESDIG5) to 140.4 million in the week ended Dec. 23, the Energy Department reported today. Inventories of industrial, shipping and heating fuels are 13 percent below year-earlier levels. In other indications of a strengthening economy, the Institute for Supply Management-Chicago Inc. said its business barometer (CHPMINDX) was little changed at 62.5 from a seven-month high of 62.6 a month earlier. The index of signed contracts (USPHTMOM) to buy previously owned houses increased 7.3 percent in November, the National Association of Realtors said. Distillate stockpiles rose 1.21 million barrels (DOESDIG5) to 140.4 million in the week ended Dec. 23, the Energy Department reported today. Inventories of industrial, shipping and heating fuels are 13 percent below year-earlier levels. Demand (DOEDDIST) for distillates fell 14 percent to 3.8 million barrels a day, the lowest level in four weeks. The four-week average consumption was 3.9 percent above a year earlier.

Bloomberg went on, Refiners lowered operating rates 0.7 percentage point to 84.2 percent, the lowest level in seven weeks. Utilization rates in Padd 1, where three refineries that account for about half of regional capacity are for sale, slid to 56.1 percent from 58 percent. Gasoline reversed a loss after the department reported that inventories (DOESTMGS) of the motor fuel declined 692,000 barrels to 217.7 million. Demand (DOEDMGAS) rose 0.5 percent from the prior week. Distillate stockpiles rose 1.21 million barrels (DOESDIG5) to 140.4 million in the week ended Dec. 23, the Energy Department reported today. Inventories of industrial, shipping and heating fuels are 13 percent below year-earlier levels.

My sincere thanks to all of my daily readers and clients for a very successful year! Let's make 2012 even better! Happy New Year! 

 

_________________________
Phil Flynn
Research Division
806 W. Washington Blvd.
Chicago, IL 60634
312 563-8344 / 800 935 6487

 
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