Oil holds $80 despite commodity sell-off

Oil at $80.

Well, oil was able to hold $80 a barrel is spite of a global selling onslaught. While gold and silver had the biggest one day drop since the 1980's or 2008 depending on who you believe, oil was able to hold it's $80 a barrel ground. Of course with oil you probably don't have to worry about central banks selling oil to raise cash to bail out their banks or countries. Still, one has to wonder what the sell- off in precious metals might be saying about the current dismal state of the global economy. Are we headed back into a deflationary death spiral?

Margins on gold and silver and copper were raised by the CME Group. The margin for gold was hiked by 21%, silver by 16% and copper by 18%. It shows that margins can go up even when prices fall. It is not just about price but it is about volatility. Still, if markets continue to fall the odds go up for QE! Stay tuned as the printing presses are getting warmed up.

Natural gas rig counts are staying high despite the recent weakness in price. Rig counts held steady at 912, which is an eight month high. As far as oil and gas goes, according to Penn Energy The number of rotary drilling rigs actively drilling for oil and gas has increased in the U.S. and Canada, according to the most-recent report from oilfield services firm Baker Hughes. The number of drilling rigs active in the United States increased by six this week, with five rigs added onshore and one rig joining offshore. There are 1,939 rotary rigs active onshore the U.S. and 33 rigs drilling in the waters of the US Gulf of Mexico and offshore Alaska. With that kind of activity the producers don't see that much of a slowdown.

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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