The dollar got up off the mat and the industrial commodities paid the price. The confidence that was creeping back into the marketplace seemed to be shaken a bit in yesterday's trading session. Talk that the International Monetary Fund was getting ready to sell about 450 billion dollars in gold reserves sent safe haven gold buyers scurrying to the dollar. The resurgent dollar and the fact that oil supplies are again expected to rise had oil back to test the $50 a barrel breakout point.
The oil market still is acting more like a currency than a commodity. It responds more to the stock-market and global currency moves than it does to stories of weakening demand and rising supply.
Currency values and perceived balances and imbalances seem to be the major factor controlling the price of oil. Today The Financial Times reports that the Federal Reserve has lined up almost $300 billion of Euros, yen, pounds and Swiss francs to lend to US based banks if necessary to meet foreign currency needs. Officials see it as a precaution to strengthen their capacity to respond to any further pressure. The Wall Street Journal is reporting that the Swiss National Bank, SNB, said Monday it has expanded its existing swap arrangements with the U.S. Federal Reserve. Should the need arise, Swiss francs would be provided to the Federal Reserve via these swap arrangements, the SNB said. The swap line enables the Federal Reserve to draw Swiss franc liquidity of up to 40 billion Swiss francs ($35.39 billion) against U.S. dollars when needed. Is the Fed worried about a run on dollars?
As I have said before, optimism in recent weeks has the market seeking the same type of strategies that helped inspire the oil run to record highs. The yen carry trade and the euro versus dollar relationship is all making oil just a pawn in the greater global economic game. As the Fed and the EU battle to save the economy the renewed confidence is bullish oil. Not because we will use that much more right away but we may see the dollar get hammered as traders look for places to park their carry trade profits. And if the dollar will stay weak then what better place to speculate but right into the oil market.
Lower oil prices are still having an impact on lowering production. Dow Jones reports that Total SA may delay its investment decision costs in Canadian oil sands. The French oil major holds a 74% interest in the oft-stalled development and had previously intended to make a go-ahead decision in early 2010. Dow says that developing Alberta's vast oil sands resource - the biggest hydrocarbons basin outside Saudi Arabia - is an expensive process with major up-front capital costs. But as oil prices sank more than 70% and North America's economy seized up at the end of last year, a number of proposed projects have been delayed or cancelled, relieving some of the inflationary pressure. Several companies are now rethinking their oil sands plans to take advantage of lower costs.
Our barrel is running over! Tonight the API will tell us by how much! A Bloomberg News survey expects that crude oil supply will increase by 1.25 million barrels in the week ended April, 3 from 359.4 million the previous week. Refinery runs flat at 81.7 percent of capacity. Gasoline stockpiles probably dropped 1.5 million barrels from 216.8 million the prior week. Supplies of distillate fuel probably declined 350,000 barrels.
We're long May crude from apprx 5075 - stop 4890. Call for intraday profit points.
Buy May heating oil at 13000 - stop 12400.
Buy May RBOB at 12000 - stop 11700.
Buy May natural gas at 320 - stop 290.
The Dan Flynn Corn & Ethanol Report
The May Corn settled 3 cents lower in last nights action
settling at 402 1/2 right on the low.
The range was 404 3/4 to you guessed it 402 1/2.
This market will continue to follow the U.S. Dollar, The Dow
Jones and weather for planting. Regardless of what the communist countries of China and Russia and trash that comes out of George Soros mouth the U.S. Dollar is far from dead. The Dollar is showing early strength this morning. The Stocks look week early.
On the Energy front I still beleive in selling in to strength !