Oil's big flirt: Once again oil flirted with 40 but failed to close below that magic number. Oil bulls and OPEC need to see that area hold or all their efforts to support that area will have been for naught. For a market so battered on the demand side of the equation it seems that this market is trying to grab hold off every bullish ray of light it can get its hand o. Yet somehow there is a perception by the market in the short term that anything under $40 a barrel is just too darn cheap. Yes the market saw pressure after it was reported that The United Steelworkers union and Shell Oil Co agreed to a basic contract for U.S. refineries and chemical plants. But as I told you yesterday that was expected. Even last night after the close the oil seemed to focus more on a stock market rally that was predicated on a sharp rise in pending home sales than on a whopper build in crude supply from the API.
The API reported that US crude oil inventories increased by a whopping 8.13 million barrels after the close. They also showed a surprise increase in gasoline supply to the tune of 2.15 million barrels. And the fall in distillates was less than expected as well falling 184,000 barrels. Numbers that if echoed by the Department of Energy should crush the oil and take out $40 unless…….. Well unless the stocks begin to rally. As I said yesterday OPEC has been Impressive. The cartel is vowing to cut even more production even add to that impressive 1,050,000 barrels a day cut in production from just a month ago. After subpar earnings oil producers are leading stocks in Europe higher and giving a slight boost to oil yet even OPEC has to admit that a turnaround in their fortunes will take a turnaround in the economy. The oil market may be inspired as much on today's ADP employment report as it is on the DOE report.
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Short March Crude apprx 4354 on what is now a quadruple rollover!!! Lowed stop to 5170!!!!Sell March Heating oil at 15100 stop 15600. Sell March RBOB at 12900 stop 13300 Sell March Natural gas 500 stop 520