Meeting or no meeting West Texas Intermediate (
WTI
) oil continued to fly and the spread between the Brent crude
continued to come in. The upward momentum in WTI was slowed a bit
when European finance ministers sent chills down trader's spines.
With the Euro Zone in termoil it is another reason why the WTI/
Brent spread has come in recent days.
The other reasons are as follows:
The market is pricing in the faster than expected return of
Libyan crude. We continue to get reports from Libya that the
damage to some of the major oil and gas fields are not that bad
and the market expects production to ramp up quickly. The price
of Brent was pricing in some worst case scenarios for the return
of Libyan crude.
The other reason is that we have seen the spread come in is
because of the continued decline in stocks of crude in Cushing,
Oklahoma since the beginning of this conflict. In April Cushing
stocks were at 41.9 million barrels in the beginning of the
conflict and are now close to 31.1 million. That was ok when we
thought the US was sinking into recession but now the US will
have to see a higher price for WTI if we are going to be
competitive for imports.
The other reason is that the Fed is laying the groundwork for
QE3D! That will support oil as it has the gold and the silver
markets.
The market will focus on Europe today but also the weekly
supply reports from the Energy Information Agency. The API
reported crude oil stocks up 2.7 million barrels. Gasoline up
153,000. Distillates down 1.8 million barrels. Stay tuned.
And stay tuned to the Fox Business Network where you get the
power to prosper and see me every day! Also sign up for a free
trial to my daily trade levels. Just call me - Phil Flynn - at
800-935-6487 or email me at
pflynn@pfgbest.com
.
_________________________
Phil Flynn
Research Division
806 W. Washington Blvd.
Chicago, IL 60634
312 563-8344 / 800 935 6487
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