Ok I just am not buying it. All of the hyperbole and
enthusiasm that we are seeing in oil. Oh sure I will buy the
breaks in oil for short term plays but it appears that the next
big move on oil may be down. Oil failed to establish a breakout
which means we are in a choppy downward correction. Which is
amazing considering the Fed promise to keep interest rates low
for an eternity and some stronger than expected Official Chinese
manufacturing Purchasing Managers Index which in January rose to
50.5 from 50.3 in December and yet another deal to deal with the
European crisis but the truth is from a long term position aspect
I am not buying It. Even the news that the UK manufacturing index
jumped to an eight-month high in January and unexpectedly
returned to growth after a quarter of contraction as production
jumped I am not buying it. I think big picture over the next few
months we are going to work lower as supply rises and shoulder
season is coming.
A lot of times you look at a market and ask .What if? For
example what if Iran wasn't a delusional regime hell bent on
proving it matter by trying to produce a nuclear weapon of mass
destruction so they can spread their hatred and show just how
tough they are. What if they really cared for their people as
opposed to feeding their grandiose visions of grandeur and their
overestimation of their military prowess, just where would oil
be. Or if for example Europe could get their act together and
change the economy that is being held back by generations who
feel entitled as opposed to valuing the things that you have.
Well we can't play with the cards that we don't have but more
and more it is looking like oil is getting ready to collapse
under the weight. In fact after looking at yesterdays softening
data in the US and tumbling consumer confidence indeed it may be
Iran's irrational saber rattling that is the only thing that is
holding this market up.
Oh sure there is the threat that the Fed will print more money
giving bears another reason for a quantitative ease off but in
reality oil supply are generally rising and refineries are
closing as we barrel into the season of shoulders or the weakest
demand time of the new year. As if gas demand could get any
worse. Right? The Forward Demand cover for oil Is rising again.
Oil technically is starting to fail. Still if Iran goes crazy
beware! Still enjoy the ranges they should continue to be
fun.
Natural Gas gets crushed as warm weather and more signs that
producers cannot or will not cut production in a significant
enough way to change this bearish trend. The Wall Street Journal
reported that Exxon Mobil Corp., the largest natural-gas producer
in the U.S., said it has no intention of curtailing gas
production even as analysts predict prices for the fuel could
remain at a historically low level through next year. The Wall
Street Journal says that Exxon which reported a 1.6% rise in
fourth-quarter profit Tuesday, said it has no plans to cut back
on the number of drilling rigs active in North America. Its
fourth-quarter U.S. gas production was up 3.5%, while its gas
production globally was down 6.6%.
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Research Division
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