Oil finds support in falling dollar, natural gas blindsided by EIA

He's got a way

He's got a way about him I don't know what it is but the euro can't soar without him! Mario Draghi the magic man that proves time and time again that words are more powerful than the sword. The ECB chief without doing anything charmed the global markets like the Pied Piper and with the enthusiasm of a young girl at a Justin Beiber concert. The man that single handedly stopped the fall of the euro by vowing he would do whatever it takes to save it continues to wow the markets by the force of his personality. No, he did not lower interest rates and he did not actually vow to print more euros, he just sang and the market danced.

Mario Draghi warned that this year's growth in the EU will be less than thought for in 2013 but should come roaring back in 2014! Oh joy! The markets went crazy! The euro took off like a rocket and the Japanese yen soared along with it. The upbeat forecast seemed to even help the beleaguered Australian dollar that had been tanking as fears that Australia was going to have to cut rates.  Of course what was good for the euro was bad for the dollar and U.S. stocks added to their recent correction Fears over today's jobs report now have taken on epic importance in a world where the market fears the tapering of bond purchases. Expectations for the report have been falling and stocks reversed on a short covering rally. Talking to traders of both the bearish and bullish ilk are not quite sure what to root for. A much better than jobs report should be good for the market but then we have to fear the increased odds of Fed tapering and then we might fall again. A not-too-hot, not-too-cold report should give stocks a modest rally. A much worse than expected jobs report would send stocks tanking but then we would rebound on more stimulus hopes. A slight bad report would just be bearish.

The oil market also got support from the falling dollar but also from tropical Storm Andrea that will slow imports into the Gulf of Mexico. The good news is that crude supply on the West Coast should surge as imports should surge after the passing of Tropical Storm Barbara. Brent Crude found support on more problems with Buzzard and those always erratic geo-political worries.

Nat gas got blindsided by a wildly bearish weekly EIA report, which showed that  working gas in storage was 2,252 Bcf as of Friday, May 31, 2013, according to EIA estimates. This represents a net increase of 111 Bcf from the previous week. Stocks were 616 Bcf less than last year at this time and 69 Bcf below the five-year average of 2,321 Bcf. In the East Region, stocks were 106 Bcf below the five-year average following net injections of 58 Bcf. Stocks in the Producing Region were 10 Bcf below the five-year average of 898 Bcf after a net injection of 37 Bcf. Stocks in the West Region were 47 Bcf above the five-year average after a net addition of 16 Bcf. At 2,252 Bcf, total working gas is within the five-year historical range.

Traders scrambled to explain why they were so off. Some pointed to increased coal use and others to the force majeure in Oklahoma after the storm. Or maybe it is as simple as over estimating the heat in the east and under estimating the cool Midwest.

He's got a way about him I don't know what it is but the euro can't soar without him! Mario Draghi the magic man that proves time and time again that words are more powerful than the sword. The ECB chief without doing anything charmed the global markets like the Pied Piper and with the enthusiasm of a young girl at a Justin Beiber concert. The man that single handedly stopped the fall of the euro by vowing he would do whatever it takes to save it continues to wow the markets by the force of his personality. No, he did not lower interest rates and he did not actually vow to print more euros, he just sang and the market danced.

Mario Draghi warned that this year's growth in the EU will be less than thought for in 2013 but should come roaring back in 2014! Oh joy! The markets went crazy! The euro took off like a rocket and the Japanese yen soared along with it. The upbeat forecast seemed to even help the beleaguered Australian dollar that had been tanking as fears that Australia was going to have to cut rates.  Of course what was good for the euro was bad for the dollar and U.S. stocks added to their recent correction Fears over today's jobs report now have taken on epic importance in a world where the market fears the tapering of bond purchases. Expectations for the report have been falling and stocks reversed on a short covering rally. Talking to traders of both the bearish and bullish ilk are not quite sure what to root for. A much better than jobs report should be good for the market but then we have to fear the increased odds of Fed tapering and then we might fall again. A not-too-hot, not-too-cold report should give stocks a modest rally. A much worse than expected jobs report would send stocks tanking but then we would rebound on more stimulus hopes. A slight bad report would just be bearish.

The oil market also got support from the falling dollar but also from tropical Storm Andrea that will slow imports into the Gulf of Mexico. The good news is that crude supply on the West Coast should surge as imports should surge after the passing of Tropical Storm Barbara. Brent Crude found support on more problems with Buzzard and those always erratic geo-political worries.

Nat gas got blindsided by a wildly bearish weekly EIA report, which showed that  working gas in storage was 2,252 Bcf as of Friday, May 31, 2013, according to EIA estimates. This represents a net increase of 111 Bcf from the previous week. Stocks were 616 Bcf less than last year at this time and 69 Bcf below the five-year average of 2,321 Bcf. In the East Region, stocks were 106 Bcf below the five-year average following net injections of 58 Bcf. Stocks in the Producing Region were 10 Bcf below the five-year average of 898 Bcf after a net injection of 37 Bcf. Stocks in the West Region were 47 Bcf above the five-year average after a net addition of 16 Bcf. At 2,252 Bcf, total working gas is within the five-year historical range.

Traders scrambled to explain why they were so off. Some pointed to increased coal use and others to the force majeure in Oklahoma after the storm. Or maybe it is as simple as over estimating the heat in the east and under estimating the cool Midwest.

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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