There is an elephant in the room! Well if it isn't in the room it is in energy storage and this elephant is getting too big to be ignored.
How big is it? Well this elephant weighs in at about 356.6 million barrels! That's right. Texas tea up to an elephant's eyeball and the most in storage since 1993! If you put glass slippers on this elephant it would be cinder-elephant for crying out loud. Yet despite this incredible spectacle the market tried to ignore it. Why? Well I guess you can call it a mixture of inflationary fears and a dose of economic bright spots.
It was like this sick economy got a get well elephant card from the durable goods orders number and another strong housing number. It also got a ray of hope from a surge in gasoline demand. As David Bird reported for Dow Jones, US gasoline demand averaged 9.058 million barrels a day in the 4 weeks ended Mar 20, EIA data show. That's the highest level in any 4 week period since the period ended Sep 12. Mr. Bird says that on an adjusted basis, gasoline demand was up 62,000 b/d, or 0.7% from a year earlier in the latest 4 weeks. But on an adjusted basis, demand was down 39,000 b/d, or 0.4%, from the 4-week level reported this time last year. In the latest week, demand was 9.1 million barrels per day up 1.6%, or 145,000 barrel from a week earlier and the most since Feb 27. Demand was down 16,000 b/d from a year ago.
The market tried to focus on the strong durable goods order and a strong housing number. You might be able to stop a charging elephant by taking away its credit cards but with Congress, it's just not that easy. A failed bond auction in the UK and a lousy 5 year auction here that sent June 5 and 10 year note futures to fresh 1week lows raising fears that this economic optimism may be misplaced. The rising, massive government spending is raising concerns that this mounting debt is going to be unsustainable. Concerns about the Fed policy of quantize easing is causing angst from the Chinese that is loaded up with the older more valuable version of the green back. The call for a global currency shook the market for a short time when Tim Geithner seemed to be open to the possibility.
As for the rest of the report the EIA said that total motor gasoline inventories decreased by 1.1 million barrels last week and are in the upper half of the average range. Finished gasoline inventories fell last week while gasoline blending components inventories rose during this same time. Distillate fuel inventories decreased by 1.6 million barrels, and are above the upper limit of the average range for this time of year. Propane/propylene inventories increased last week by 0.6 million barrels and are above the upper limit of the average range. Total commercial petroleum inventories increased by 2.8 million barrels last week and are above the upper limit of average range for this time of year.
Yes supply may matter but not as much as the global economic circus that surrounds us. You might be able to make an elephant float (two scoops of ice cream, cream soda and an elephant) but to make the economy float it is likely the Fed will have to print more money. If stocks rally then so too will oil as the combination of inflation and demand will send us soaring.
Still wait for a big break before committing to a long term position. Short term traders have opportunities hourly! Call to find out what those might be at 800-935-6487 or email me at email@example.com to open your account. See me today and every day on the Fox Business Network!
Buy May crude at 4530 - stop 3900.
Buy May heating oil at 12300 - stop 11400.
Buy May RBOB at 12500 - stop 12300.
Buy May natural gas at 400 - stop 377.
The Dan Flynn Corn & Ethanol Report
Thursday March 26th 2009
Good Morning !
The May Corn settled at 389 1/4 which was up 3 1/4 cents.The range was 390 to 386.
We must remember our focus in this market is weather related issues with planting and the Fed's ability to print money hands over fist is only going to springboard higher prices in the commodity sector.
We are trading higher on the Energy Front. As I mentioned before with U.S. Dollars abound. It makes it hard to be a diehard bear.
Have a Great Trading Day !