Get me some stimulus and get it fast. Oil goes on a bear blitz as support continues to break down. The market seems to have lost all hope that an economic recovery is just around the corner. The mood change is significant especially in a market that was willing to overlook some weak economic data but has not been able to shake off last week's poor consumer confidence and horrendous jobs number. Add to that light summertime volume and now the market is looking for some reason, any reason to believe. Technically the market on the daily chart looks like it has confirmed a major top.
Oil, gas and heating oil now will give into its bearish desires until we see either some great economic news or we see some movement by the Fed to try to increase its purchases of securities or the market feels we will get a shot of immediate fiscal stimulus. Of course the market wanted to believe that the fiscal stimulus might work but now it has lost that hope.
Still with oil and the products falling so hard so fast perhaps a bullish report from the Energy Information Agency may put a stop to the relentless selling and help the bulls get out and reposition. Last night American Petroleum Institute report was not that type of report as they reported a benign drop in crude supply to the tune of 1.4 million barrels. They reported another whopping build in distillate to the tune of 3.42 million barrels. And Gasoline supplies up 767,000 playing into the bearish mood. Today the EIA needs to surprise to get us on a bull track and you can see me right on the number on the Fox Business Network.
Of course not everyone was in a bearish mood yesterday. The Energy Information Agency in their Short Term Energy Outlook actually got more bullish than last month. The EIA says that after climbing for much of the year, the spot price of West Texas Intermediate (WTI) crude oil hovered around $70.00 per barrel through most of June. The price of WTI crude oil is expected to average near $70 per barrel through the second half of 2009, an increase of about $18 compared with the average for the first half of the year. The WTI spot price is projected to rise slowly as economic conditions improve, and to average about $72 per barrel in 2010. As for gasoline the EIA says that U.S average prices for regularâ€Âgrade gasoline, which reached $2.69 per gallon in EIA's June 22 weekly survey, have fallen back slightly. Gasoline prices are expected to stay near current levels but will be strongly influenced by any changes in crude oil prices. The annual average regularâ€Âgrade gasoline retail price in 2009 is expected to be $2.36 per gallon. Higher projected crude oil prices next year are expected to boost the average price to $2.69 per gallon in 2010. Annual average diesel fuel retail prices are expected to be $2.46 and $2.79 per gallon in 2009 and 2010, respectively.
As the green shoots are being picked out of our shoes the mood has changed and instead of buying breaks the market is selling rallies. Make sure you are getting the latest by signing up for the Phil Flynn Energy Blast and watching the Fox Business Network. Call me at 800-935-6487 to open your account.
Stopped on long August crude from apprx 6350 at apprx 6250. Sell August crude at 6600 - stop 6800.
Sell August heating oil at 16800 - stop 17300.
We're long August RBOB from apprx 17800 - stop 16900.
Buy August natural gas at 330 - stop 320.
The Dan Flynn Corn & Ethanol Report
Wednesday July 8th 2009
Good Morning !
The December Corn settled at 337 which was up 1 1/4 cents.The range was 339 to 336.
We will continue to guesstimate growing yields.
On Friday July 10th we have the following reports Crop Production,Dairy Products,U.S. Trade Balance and U.S.D.A. Supply & Demand.
These reports will be followed up with Monday's Crop Progress number.
I anticipate a short covering rally going into the numbers where the bears square up and take profits.
On the Energy Front we have lingering weakness with demand down and the change in the basis of the go green faction.
Have a Great Trading Day !