Energy report: Exxon Mobil boosts market

What is good for Exxon Mobil is good for America. The mood shift across the stocks and commodity markets was enough to wake a sleeping groundhog. Wake up you silly groundhog, the market seems to sense a change!

Gone is that sour and gloomy mood that was oh so January. February seems to have given the market some new life. What seemed to give us that sonic hedge hog boost? Well I guess you can say Exxon Mobil. Once again it seems that what is good for Exxon Mobil is good for America. When Exxon Mobil does well it seems America does well. It was Exxon Mobil's better than expected earnings that seemed to set the stage for what turned out to be a pretty awesome day. Oh yes there were rising geopolitical issues with Nigerian rebels blowing up pipelines and increasing tensions with Iran, but really at the end of the day it was that Exxon Mobil Magic that seemed to get the risk takers back in the market and off of the fence.

Those Exxon Mobil earnings set the stage for that awesome ISM Manufacturing number, a number that normally is a forecast for future strong energy demand. The ISM blew away expectations surging to a monster 58.4%, the highest level since August 2004, raising hopes that energy demand will stay strong as factories step up production to meet that rising demand. It also sparked some inflation fears as well as the prices paid index hit 70%, up from 61.5%. Those renewed inflationary fears, along with the perception that this number could improve the jobs outlook (the employment index component surged to 53.3% from 50.2%) gave the perception that perhaps the strong GDP number was not all smoke and mirrors and actually is showing that there is at least something happening in the real economy. You know, the economy on so called Main Street. Plenty of good houses are still available. But let this be a warning: some may have to have a groundhog removed.

Of course these economic good feelings seem to have saved the oil market from a total breakdown. Oil held key support above $72 a barrel and if you use your imagination and allow for a bit of slippage, we seemed to have put in a minor double bottom around $72.45, give or take a tick. Maybe even a triple, which could be telling us a test again in the future. With oil back over $75 if we continue to see the stock market rally, oil could make a run back towards $77. Long-term players are still looking for a move back into the forties. Use this rally to try to put on bearish option strategies. Day-traders and short-term traders are in a long-term wavy downtrend and should give us the opportunity for some pretty wide swings.

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at pflynn@pfgbest.com.

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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