Oil hit by falling China trade deficit

China trade drop

China's trade deficit dropped to a 22-year low on lower factory output and weaker retail sales rating concerns that China may be heading for a hard landing. According to Bloomberg News, Eeports from China rose 18.4% last month from a year earlier, while imports gained 39.6%. Analysts forecast a 31.1% increase in overseas sales and that inbound shipments would rise 31.8%, based on estimates from Bloomberg News surveys.  Oil prices fell hard after the number but it is really unclear that this is actually bullish or bearish for prices.

You see if China is slowing it would signal that China may loosen its monetary policy which in turn might be bullish. It might also mean that China is buying more goods as their economy gets less dependent on exports.

Gas Prices rise to $3.80 a gallon according to AAA. President Obama is on the offensive because as prices continue to rise his popularity falls.  As I wrote the day after the State of the Union and has since been quoted many times after, the President should give credit where credit is due. I asked, “why he is trying to take credit for the work of others?”

You see, these methods of fracturing and directional drilling is the key and yet Obama has not really come out in favor of it. Reuters News reports, "The administration's views on fracturing and drilling generally remain ambiguous. The president has yet to offer a clear endorsement of the technology or offer much leadership on the issue. His party on Capitol Hill remains concerned about the environmental impacts (on local communities and global emissions). Large sections of the Democratic party and its support base continue to push for restrictions, stricter regulation or outright bans on fracking."

Yet at the same time the President said, "The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don't have to choose between our environment and our economy." Yet he is also calling to kill tax breaks for the energy industry, the one industry that could transform our economy and help our national security. To try to make the case that tax breaks helped create our success and now he is taking it away shows how confused he is on this issue.

The truth is that this President has been presented the greatest gift of any President in modern history and I give him credit for finally realizing it. It is about time.

Crude supply should rebound this week as supply in Gulf Coast should return and oil should continue to rise in Cushing, Okla. in anticipation of the revisal of the Seaway Pipeline. Look For crude to increase by 3.5 million barrels.

On a sad note we lost a great guy: Oil Analyst Peter Beutel. He really was a class act and will be missed

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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