Energy breakdown

19th Market Breakdown

Ben’s the kind of person you meet at certain dismal, dull affairs, center of the crowd, talking much too, stirring' up the bulls and the bears. Well it seems to me that you have seen too much in too few years and though you try you just can't hide your eyes are edged with fears, you better stop and look around, here it comes, here it comes, here it comes, here it comes, here comes your 19th market breakdown. Oh, who's to blame, that market's just insane? Well nothing Ben does don't seem to work it only seems to make matters worse. Oh, please. You better stop and look around, here it comes, here it comes, here it comes, and here it comes here comes your 19th market breakdown.


While the oil market tried to find solace in some strong data out of Germany as its GDP jumped 2.2 in the second quarter, the fastest pace for at least two decades the market is still reeling from a dismal week and dismal initial jobless claims report that increased 2,000 to 484,000 in the week ended Aug. 7, the highest level since mid-February. A week when the Fed told us the economy is still in big trouble and a week where China’s oil demand refrain became suspect.

Of course what really sent the market south was Ben Bernanke and his friends at the Fed when they decided to keep Fed holdings of securities at current levels by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. That seemed to signal to the market that the optimism we saw in the marketplace was misplaced and fears of a jobless double dip recession may lie ahead of us. We saw a flight to quality in bonds and the dollar surged despite the fact that the Fed's balance sheet did not shrinking! We saw the yen surge so much there is talk of Japanese intervention. And the Chinese are taking steps to hurt their currency

So the oil bulls now have to grapple with near record supply and lousy demand. For the world’s largest energy consumer, supplies are gluttonous. Crude oil supply stands 8.1% above the five-year average above the five-year average and distillates a gigantic 26.6%. As the summer driving season winds down gas demand was down 2.5% last week as supply stood 8.6% above the five-year average. These are not the kind of numbers that can move oil bulls.

I am not sure what can move natural gas, perhaps nothing. With no storm threats and ample supply and support from crude, spreads that seem to be unwinding the market is finding support. Even when the Energy Information Agency reported a slightly bearish report that showed that working gas in storage was 2,985 Bcf as of Friday, Aug. 6, 2010, according to EIA estimates. This represents a net increase of 37 Bcf from the previous week. Stocks were 158 Bcf less than last year at this time and 219 Bcf above the five-year average of 2,766 Bcf. In the East Region, stocks were 21 Bcf above the five-year average following net injections of 43 Bcf. Stocks in the Producing Region were 111 Bcf above the five-year average of 859 Bcf after a net withdrawal of 9 Bcf. Stocks in the West Region were 87 Bcf above the five-year average after a net addition of 3 Bcf. At 2,985 Bcf, total working gas is within the five-year historical range.

Don’t you crack or suffer your 19th nervous breakdown! Make sure you are getting my daily buy and sell points.

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.


Comments
comments powered by Disqus