Oh those rascally Russians. The Russians are giving the Saudis the full court press and making sure that if OPEC does not cut production at its March 15 meeting, it won't be because the Russians did not try. A few days after the Saudis sent signals that they were going to play hard ball before agreeing to another production cut, the Russian's raised the stakes a bit. The AFP reported yesterday that those generous Russians will join OPEC in their hour of need. They have unselfishly decided to back the Organization of Petroleum Exporting Countries cuts in any oil production cuts that they happen to make and will participate in such noble and worthwhile efforts. What great guys. But wait. Won't Russian production fall anyway after this long cold winter? Are they not already having a hard time maintaining production? Oh, excuse me for questioning the Russian's motives. I'm sure they have OPEC's best interests at heart, they are such great guys to deal with. Just ask the Ukrainians. (This is another problem that may flare up again).
Of course the market bought into the Russia promise because they saw perhaps more a political threat. Desperate times bring desperate measures and with oil producers, things do not get much worse than they already are. With the smaller OPEC countries clamoring for the Saudis to cut perhaps a magnamonous gesture from BIG brother Russia will be just the trick that will pressure the Saudis into going along with another cut. Libya also came out strongly in favor of a cut saying that the market is just over supplied. The Russians need a cut badly as their economy is in turmoil. If it can use its production might and join the chorus of OPEC counties calling for a cut it would isolate the Saudis and at the very least make them a bit uncomfortable. There is rising pressure for the Saudi's to go along with the crew because the crew hopes the Saudi's will cut and carry the load for the rest of them. Then they can go back and try to cut into the Saudi's market share.
The impressive turnaround in oil was not all about the politics of OPEC. It had a lot to do with the surging stock market. Retails sales were better than expected and Bank of America said they actually made money and just like that all our economic worries have gone away. Don't focus on over supply and spare production capacity just focus on better days ahead.
But commodities in general rallied on news that the Swiss National Bank announced plans to intervene in the safe haven Swiss franc trying to drive out those seeking shelter from the storm. The threat of intervention sent the Swiss tumbling and the precious metals soaring. The rally in the gold helped the other commodities look more attractive in a day when economic optimism permeated the air.
We're short April crude from apprx 4570 - stop 5100.
Sell April heating oil at 12700 - stop 13300.
Sell April RBOB at 13500 - stop 14300.
We're short April natural gas from apprx 437 - lower stop to 411!
The Dan Flynn Corn & Ethanol Report
Friday the 13th and a Full Moon in the same week.
The Markets are no different. After a big surge in the day session the May Corn settled on the high at 386 3/4 up a 1 1/2 cents.
Small range which was 386 3/4 to 383. Don't get sucked into a rollover squeeze.
I remain bearish Energies regardless of the rhetoric heard from OPEC and the Russians.
Have a Great Trading Day !