Oil prices slammed as bonds go for record yields

Bond Room Blitz!

Oil prices got smashed as the globe looks to global bond auctions to determine the survival of the Eurozone and by default, perhaps the prospects for the global economy as a whole. The bond vigilantes own the globe and all the cards are in their hands. If they buy your debt, perhaps we will survive and if they don’t, watch out! Record high yields on the Italian five-year note auction and a record low yield on the 30-year US bond auction clearly showed the stresses the globe is feeling! Yet could a decent Spanish auction save the day! Oil traders are watching the dollar and stocks. The euro breaking 1.30 was a key fear indicator and gold closed below the 200-day moving average! Buckle up Santa, it is going to be another wild ride!

Oil prices also were not helped by a surprising build in gasoline supply. We already knew demand was bad so why did production go up? According to Bloomberg News the MasterCard Spending Pulse showed that U.S. gasoline demand fell 3.4% last week, the biggest drop in 14 weeks. But that was lost on refiners because according to the EIA, who reported an increase in gas production to the tune of averaging 9.5 million barrels per day and in inventories of 3.8 million barrels, that's still way above the average range for this time of year.

The reason maybe two fold. One, refiners are getting ready for an increase in demand for the Christmas Day holiday but the other reason is that refiners are maxing out diesel as we are now a key exporter. The world is definitely changing.

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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