Oil is brown shoes of commodities world

Comedian George Gobel once asked, "Did you ever get the feeling that the world was a tuxedo and you were a pair of brown shoes?" Energy traders right now probably know exactly what he means. Are you not feeling a little left out of all the commodity excitement and feel like you are on the outside looking in? While oil prices fail at another attempt to take out $80 a barrel this week and stumbled back down into the mid seventies, it seems the rest of the commodity world has gone parabolic.

I mean look at all the markets that have gone dong gone wild! Gold overnight hit another all-time nominal high! Silver hit the highest level since the Hunt boys diversified from tomatoes or is it tomatoes to silver. Sugar seems to be targeting doubling its price from the low it made last May. Corn is back above $5.00 a bushel as it appears that the crop and some of the ears are more than a few kernels short of the cob. Coffee has been percolating and is surging as Arabica supplies are tight and there are worries about the current crop. Yet petroleum these days have been very rangy.

For oil it is hard to get over the hump when the demand outlook is sketchy and the supply is mounting. Oh sure, you can speculate that supply will tighten dramatically in the future, but it may be hard to profit from that outlook anytime in the near future. Shoulder season is here and supply is ample. The Enbridge pipeline with Exxon already securing alternative supply means that we could have an oversupply in the Midwest not an undersupply. We have an oversupply of gas but that did not stop the seasonal bottom players from bringing the market back.

The EIA says that working gas in storage was 3,267 Bcf as of Friday, Sept. 10, 2010. This represents a net increase of 103 Bcf from the previous week. Stocks were 182 Bcf less than last year at this time and 192 Bcf above the 5-year average of 3,075 Bcf. In the East Region, stocks were 7 Bcf above the 5-year average following net injections of 54 Bcf. Stocks in the Producing Region were 111 Bcf above the 5-year average of 899 Bcf after a net injection of 36 Bcf. Stocks in the West Region were 73 Bcf above the 5-year average after a net addition of 13 Bcf. At 3,267 Bcf, total working gas is within the 5-year historical range. Still the market closed strong. Partly because oil was weak. The spreading between gas versus crude is obviously more prevalent than it has been in the days before shale gas. Make sure you are getting my daily buy and sell points on all the major commodities while you still can! Just call me at 800-935-6487 or email me 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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