Oil drops after supply surge

Hitting the bricks and no, I am not talking about Brazil, Russia, India and China but about a global macro economic slowdown. Dire economic news in the US as a rotten ISM manufacturing number and a terrible ADP jobs report are causing downward revisions in expectations for Friday's jobs report. Commodity traders are lowering their demand estimates for oil and just about every other commodity on the globe! Add to that the downgrade of Greece to triple crap with a 50% chance of default and traders think the Swiss franc may be the only safe haven currency left on the planet. Gold rallies and silver breaks as it is a clear sign that traders seek safe haven in gold while selling silver as they reduce their industrial demand expectations. The Euro is in jeopardy as doubts linger about Greece and the rest of the PIIGS and even China is slowing down as evidenced by the weakening PMI.

Even the American Petroleum Institute weekly supply report seems to suggest a weak economy. Excluding distillates that may be drawing only because of China imports as they look to try to offset electricity shortages as drought has caused their hydro electric plants to go idle, the API showed that gas demand is weak with a 1.49 million barrel build in gasoline supply. They also reported that crude supply surged by a whopping 3.46 million barrels while distillates fell by 1.41 million barrels inspired by the calendar and emergency global demand.

Still, due to a flaring at the EXXON Mobil refinery in Joliet as well as the shutdown of the TransCanada Corp. 591,000 barrel-a-day Keystone crude pipeline, as well as some Enbridge power outages shut down of pipelines, Chicago gas prices are the highest in the nation and going higher! Good news Chicago!

The Energy Information Agency report is out today for natural gas and oil! Look for a 100 injection! Oil is going to be torn today! The EIA may have the biggest impact on trade as the macroeconomic side is a confusing mess.

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.

 

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