The oil market shook off a very bullish draw in the Energy Information Agency status report. Oil Imports took a big hit as they fell by about one million barrels a day, mainly due to the wild, topical weather. The EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.0 million barrels from the previous week putting them at 353.1 million barrels.
Yet the oil market seemed torn. The weekly jobs number was poor yet the trade balance numbers seemed to suggest a bottoming out of the manufacturing sector and perhaps even some signs of life. There was also some hope that Federal Reserve Chairman Ben Bernanke would hit us with some immediate stimulus. While the market will remain volatile I still believe that long-term a bottom is in, perhaps for the rest of the year. In fact even the story by Gregg Myers from the Financial Times points out that exchange data revealed a surge of interest in options that convey the right to sell oil at $50 a barrel by December, almost $40 below current prices. Open interest has risen by 60% in the past month, making it the second most widely owned December crude put on the New York Mercantile Exchange and this does not waver me in my prediction. In fact it makes me even more bold in that prediction.
Once again we remember the attacks of September 11, 2001, a day freedom came under attack. Today the CME Group will observe the 10th anniversary of the attack on the World Trade Center. NYMEX/COMEX markets on the CME Globex will observe voluntary moments of silence at the following times.7:46 am CT/8:03 am CT/8:59 am CT/9:29 am Central Time. The CME requests that all electronic market participants refrain from trading NYMEX/COMEX products on CME Globex and CME ClearPort during these moments of silence. God Bless America.
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 firstname.lastname@example.org.