Blue mooned markets

July 31, 2015 07:34 AM

Every once in a while, blue moon commodities get killed. As July ends the month with its second full moon, the commodities markets end their worst month since 2011.

Crude oil was a big part of that sector crash as it fell from the $60 a barrel handle to the $47 a barrel handle in just a month. The crash started as the market fretted about Greece leaving the Euro-zone and ended with fears that China's economy was falling apart raising doubts about demand in the world's most ravenous commodity consumer.

Even with bullish numbers from the Energy Information Administration that shows U.S. production topping and demand rising sharply the market can't get over the fear that demand may drop due to a potential slowdown in China. Even talk of a Saudi oil production cut was overshadowed by comments by OPEC secretary general Abdullah al-Badri who said that demand would prevent a further fall in oil prices and suggested cuts in OPEC output would have little impact on the market prices. It's kind of funny how OPEC has gone all "free market" on us.

On top of that, you have a run to the Dollar Index, not only because of the Federal Reserve talking about interest rates, but also it seems that the dollar index is a preferred safe have against the risks that we have noted in China and in Europe. The Greece situation hasn't gone away as the International Monetary Fund says they can't participate in a bailout.

The AP Reports a Senate panel has approved energy legislation that would lift the 40-year-old ban on crude oil exports and open some areas of the Outer Continental Shelf to oil and gas exploration.

Senator Lisa Murkowski (R-Alaska) chairman of the panel, championed the plan to lift the restrictions. It passed by a party-line vote of 12-10. Murkowski said lifting the ban would turn the Unied States into an energy superpower. Senator Maria Cantwell (D-Washington), who opposes lifting the ban, describes the votes as an important first step in a long journey.

The Senate Energy and Natural Resources Committee approved an array of energy legislation on Thursday. Lawmakers wanted to move the energy legislation out of committee before the August recess.

Oil may have hit bottom today! Massive production cuts should set the stage for a rebound! Buy calls. Plus, it's a blue moon Friday and the last day of the month. Funds may cover to book profits, especially if rig counts fall.

About the Author

Phil Flynn is a senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. Phil 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.