Oil today should be guided by the Fed statement. All of the people that complain that the price of oil is out of touch with the fundamentals really have to start paying attention to the Fed. The Fed has been the major reason oil is trading where it is because of the massive amounts of QE and bond buying that has supported the economy and made oil prices what they are. Today’s statement will be key as it is apparent that within the walls of the Fed there is a growing reluctance to promise QE forever. The Fed minutes brought the expectations of when the Fed will start raising rates by almost a year as some suggested that QE could end before this year is out. As for Fed Fund Futures, they are pricing in an interest rate rise at this point after the June 2014 meeting.
Natural gas fell on the big warm up but the seeds for the next bull market are starting to be placed. Oh sure, it could take years but long term traders want to start thinking long when prices are at historic lows.
Reuters News is reporting that Royal Dutch Shell Plc will tie up with Kinder Morgan Inc to export liquefied natural gas (LNG) from a terminal near Savannah, Georgia. El Paso Pipeline Partners LP, a Kinder Morgan unit, and Shell will form a limited liability company to develop a natural gas liquefaction plant at Southern LNG Co LLC's existing terminal. Recent drilling innovations have unlocked vast shale oil and gas reserves, placing the United States in a position to be a major exporter. A number of companies, including Exxon Mobil Corp, have lined up to get permission to sell the country's cheap abundant natural gas overseas, where it can fetch much higher prices. The Energy Department's authorization is needed to export natural gas to all but a handful of countries with free trade agreements.
Cattle soared after a friendly seven state cattle on feed report but also on the news that Japan will further ease restrictions on U.S. beef imports starting Feb. 1 to allow entry of beef and beef products from cattle less than 30 months of age. After the mad cow scare in 2003, Japan banned U.S. imports. In 2006 Japan loosened and allowed limited U.S. beef imports to products from cattle less than 20 months of age. Now Japan will to relax restrictions on U.S. beef imports on cattle up to 30 months old, effective Feb. 1.
The move in cattle also gave corn a boost. Increased demand for cattle means increased demand for corn.