Dare to Be Flat
Iran admitted they are enriching uranium at its underground nuclear enrichment Fordow site and imposed the death sentence on U.S. man they accuse of spying and oil closes...flat? Oil prices yesterday failed to make significant gains despite some disturbing revelations coming out of Iran perhaps because the markets were less than impressed with the meeting between German Chancellor Angela Merkel and French President Nicholas Sarkozy. While Iran has played a major role in keeping oil prices elevated, it does not seem that Iran is enough to keep the oil market on fire. Oil needs other news to keep the bullish move going, especially out of Europe and China.
Early on today we did get some. This morning we saw a report that French industrial production climbed 1.1% in November that MarketWatch said was lifted by production of electronics and refinery output. Angela Merkel also tried to say that there was progress made in the European situation.
The Financial Times reported "Negotiations on a new European treaty to reinforce budget discipline in the Eurozone are making rapid progress and there is ‘a good chance’ of reaching agreement by the end of January, according to Angela Merkel, Germany's chancellor. Her confidence was mirrored by Nicolas Sarkozy, French president, speaking after a bilateral Franco-German summit in Berlin on Monday. He said the new treaty, including a requirement for all 17 Eurozone members to agree to constitutional amendments to balance their budgets, should be signed by March 1.”
Today Dow Jones says that “A cautiously optimistic tone prevailed in European trading hours Tuesday, helping the euro and commodity-linked currencies of Australia and Canada make small gains against the dollar ahead of a key meeting scheduled for later in the day between German Chancellor Angela Merkel and International Monetary Fund Managing Director Christine Lagarde.”
Market Watch reported that "China's trade surplus yawned wider in December, beating expectations as exports shot higher. December exports rose 13.4% compared to a year earlier, the General Administration of Customs said Tuesday, with the result above a 12.5% median forecast reported in a Dow Jones Newswires survey. Exports had risen 13.8% in November. Imports rose 11.8%, below a forecast 18% and cooling sharply from November's 22.1% increase. This resulted in a $16.52 billion surplus for December, which Dow Jones Newswires said compared to expectations for a $7.8 billion. November's surplus amounted to $14.5 billion."
Also Dow Jones is reporting that some oil buyers are asking for more Saudi grades after recent price cuts. Even China that says they don't think punishing Iran for nuclear ambitions should be tied to the oil exports, yet they say that they may seek more Saudi Arabian crude oil to make up for lower Iranian supply . Dow Jones says at this time that Japanese and Korean refiners are not seeking any extra barrels yet to replace Iranian oil.
The products got a boost on a report from Barbara Powell who said that Motiva Enterprises in Port Arthur, Texas shut a diesel hydrotreater for repairs and will idle a crude unit Jan. 17 and a coker March 1 for work quoting two people with knowledge of the operations. Powel says that the hydrotreater will be down for about 24 days and the 75,000-barrel-a-day crude unit for about 17 days, said the people, who declined to be identified because they aren't authorized to speak for the refinery.