The Energy Price Outlook for 2013

Published on January 1, 2013 by in Energy


The Outlook for Energy for 2013

It was the year of the printing presses. Country after country rushed to debase their currencies. European indebtedness brought about a myriad of patches to stem the decline of their economy and preserve the euro. The Fed embarked on a crusade to buoy the economy by keeping long term interest rates at historic lows for an extended period of time.
This had the effect of boosting risk assets early in the year, but the glow of overworked printing presses started to fade as the dysfunction in Washington became more pronounced. In fact, the economy is being held hostage by the intransigence of the parties to work out a deal.
There are huge sums of money on the sidelines waiting to game the markets. Dysfunction in Washington will rear its head again on the debt ceiling negotiations. This will keep the money at bay until there is certainty in public policy. We mention this only as a backdrop to the undercurrents of the energy markets.
We feel the deliberations in Washington have created a condition for chaos in the financial markets. Variables are changed through the negotiation process. The effect on the output is not linear, nor is it continuous. The system now jumps to a quantum state.
If one takes the chaotic process to be similar to that of a manifold of stretching and folding, one gets the sense of the changing geometry. This can be much the same as a baker taking and stretching dough to make a pie. The baker takes the original lump of dough, spreads it thin and folds it over to double the surface area of the dough. Let’s say there is a cut out in the dough of some design. After three applications of the process, the shape of the design is corrupted to be unrecognizable. This is important because the two sides start out close to one another, and then through the process explained above the sides get further apart. This is true for people, insect populations, molecules and any naturally occurring phenomena. The financial markets are such an organism. The paradigm discovered it was on the third application of the equation that the system was greatly altered. If the output is lower than the initial state, it is said to be chaotic or that it jumped out of the system that it originated in. This is similar to Einstein’s view on light. One has a much different perspective within the system. For his example, he noted that if one were traveling on a light beam at the speed of light, the system is “dark” behind the traveler.
As we examine the talks in Washington, there was a point that sides were closer to an agreement. Then the first trial balloon popped. A second was floated that also burst. Finally Mr. Boehner withdrew. That was the third iteration of the function. Now the output of the system moved below the starting point. This will make getting back to a zero point more difficult if not impossible. There will be an attempt to remediate the situation by a Band-Aid approach, but it is unlikely to bare fruit. Perception will tip to a more negative outlook on the economy. How can the economy operate efficiently when the elected leaders are in such disarray? It cannot nor will it. Yes there is a huge amount of money on the sidelines waiting to be invested. But this too will change the dynamic of the system. One sees the two points of attraction are recession or rampant inflation if the velocity of money picks up. That is similar to increasing the population of an insect colony. It is unsustainable. The “weight” of the system forces a collapsed state.
Although the weather will be turning severely cold in January, we think that the initial reaction to the Washington news will be negative for the upcoming weeks. However, it will reach a point of demand due to the cold and reverse higher. This is likely to be more reflective in the distillate than the crude. Moreover, it will also positively affect Nat Gas prices.
The financial markets no longer follow a Newtonian model of the universe – that every action has an equal and opposite reaction. The financial markets are following a quantum process. The perceived reality “jumps” from one view or energy level to an opposite view and quantum state. This will only increase in the upcoming year. One can see the effects on one’s P&L at the month’s end through heightened volatility. The recent extended ranges in the financial markets are likely to continue throughout 2013.

There was concern through 2012 that China would experience a hard landing of its economy. But an orderly transition of power has been seen there. The new Premiere, XI, has promised to keep the economy as his number one priority. He wants to bring down the wealth disparity. The World Bank has issued a report looking for China’s GDP to average 7.8 to 8.1 percent. They also noted that increase demand for fossil fuels will come from the Asian theater.

On a bright note, domestic oil industry production in the U.S. has climbed 15 percent since 2008. However, this has caused a bottleneck at Cushing. This is likely to mitigate when the Seaway pipeline expands capacity to 450 mb/d.

Although the IEA has increased their outlook for demand in 2013, it is likely to be met by increased production in the U.S. and China. They will also be the two sources of increased demand as the forecasters feel the economies will turn around and start to recover.
We do not share the same view; we strongly feel that the antics in Washington have disturbed the mathematical fabric that weaves through nature. The mathematical discipline is called Complexification or Chaos Theory.

We look for WTI to have a probable yearly range of 70.00 to 65.00 on the low side and an upside restraint at 105.00 to 110.00. It is likely that it will average 87.00 to 90.00 for the year, which is down   slightly from the average of 90.60 for 2012. We feel the increase in North American production is going to keep pressure on WTI until such time as the Seaway pipeline capacity increase has been accomplished. Once that occurs, the arb between WTI and Brent should begin to favor the WTI. Nevertheless, we look for this grade of crude to average 87.00 to 90.00 for the upcoming year.
The chart above is a linear regression analysis of the monthly crude prices. What one can discern from this view is that the front month contract is below the mean of the regression. It is likely that the upper channel line will meet the market with a formidable resistance that will be difficult to pierce unless there is a geopolitical event that upsets supply. However if inflation begins to show on a global basis, it is likely that both grades of oil will rise.






Below is a linear regression of the monthly Brent chart. The difference between the two grades is that Brent impulsed higher from the 2009 low. It means that it had a distinct five-wave move to the upside. Although on the monthly chart the high appears to be truncated, on the weekly chart its pattern is clearer. In 2012 this market averaged 108.50 per barrel. This is a more bullish looking chart than that of WTI, but with the Seaway pipeline increasing throughput WTI may take that designation relative to the Brent.
As one can see from the plot, there remains strong resistance at the upper end of the channel. It is unlikely that Brent will surpass that level for an extended period if at all. It will take a geopolitical event to engender a romp of that magnitude. Based on this assessment, it is likely that Brent will average 105 to 110 for 2013. However, if a drop to the 82.00 to 79.00 area is seen, a bullish rebound will take place.











The efficiencies of autos have steadily improved over the last four years. The U.S. fleet is aging and stands at an average of ten years. These cars will need to be replaced at some point which in turn will lead to greater efficiencies. Moreover, since the Great Recession has befallen the U.S. the numbers of miles driven by the populace has been in a steady decline.
This paints a demographic shift in the paradigm for refineries.

The four charts below are the rbob quarterly cracks. These are the calendar quarter representations. As the first quarter opens for 2013 we are struck by the fact that the first quarter cracks have likely seen their high.

1st Quarter Rbob

This is depicted by the structured five wave move that shows a pattern completion. It is likely that the economy remains soft for the early part of 2013. This of course depends on the dysfunction in Washington. Nevertheless, it is likely that the first quarter of
2013 will recognize an easing of the cracks. With a breakdown of the represented trend line, the first quarter rbob crack is likely to retreat to the 20.00 to 19.50 zone as a first objective of the corrective pattern. The model reverts to its bullish ways with a break above 28.50.






2nd Quarter Rbob

Below is the second quarter calendar rbob crack. Although this shows a completed structure at the labeled 3, it is likely not to have completed the wave to the upside. Our view here is that the second quarter cracks will retrace. That will probably test the red line on the chart. That is the pivot to a deeper correction. It will take a daily settle of the quarter semester crack. With removal of the labeled 3 the cracks are likely to press above 30.00 to see a marginal push above to a possible 33.00 to 34.00 zone. In keeping with our lower U.S. demand theory, this will be a good place to lay in hedges.
One can immediately notice that the patterns are similar. The difference is the labeling of the 3 on this chart corresponds to the labeled 5 on the previous graph. This is an important distinction. It suggests that there will be more upside to come for the Q2 crack following an ample correction. This is likely to mean the quarterly crack will slip to the horizontal red line as the initial support. Although this model allows for the crack to fall below that level, it cannot remove the labeled 1 on the chart below without damage to the bullish intermediate term outlook.

3rd Quarter Rbob

There is likely to be a similar outcome. A retracement will test the red horizontal line. The upside pivot to this model is 22.50. A retreat to 18.00 to 17.50 will produce the base for the next leg to the upside and a peak to this formation. If this model is correct, a rise to the 27.00 to 28. 00 zone is seen.

4th Quarter Rbob

This is a pattern that looks complete to the upside. But with the expiration so far into the future, it is an educated guess as to the final outcome. Nevertheless, it is likely that this quarterly crack responds to the retracements of the previous two quarters to put in a base from which to launch a test of the high.


The IEA has issued a report that the map of the global oil trade will be redrawn in the upcoming five years. It expects the oil market to become less tight over the year as new production increases overcome minor upticks in demand. The demand from the non-OECD countries is expected to lead the demand quotient higher and is likely to take over that from the OECD countries in 2014.
The increased supply will come from North America according to the report. Moreover Iraq stands out to be a factor for increased production as new fields are opening up. The growth of products will be focused on diesel. According to the global organization, the demand for middle distillates will dominate product demand increases. This will exacerbate the weakness in gasoline as refineries increase runs for 2oil. This will relegate gasoline as a byproduct of the refinery process.

1st Quarter Distillate Cracks

As one can see from this picture a completed upside thrust has been manifest. The cracks are on their way to correct the large move higher. For those looking to hedge that strip the ship has already sailed in most probability. There will be a minor upside pivot to this model at 37.50. Breaking above that level will lead to a test of the 41.50 area. We look for the crack to test 33.00. The weakness in the first quarter cracks is a result of a mild December. This is the seasonality of 2oil in large part. The hope for an early winter has the speculators buying the market only to find the hype did not live up to reality.


2nd Quarter Distillate Cracks

This plot too shows a completed upside pattern. But unlike the first quarter seasonal tendencies, the second quarter starts a recovery process at least as flat price is concerned. Therefore, if this outlook is correct, Q2 should slip to the horizontal blue line. That will put the support at 33.25 to 33.00. The downside extension pivot is 32.50. The minor upside pivot of 37.50 when removed will signal a test of 41.00 to 41.50.

3rd Quarter Distillate Cracks

This is a fully developed pattern and an increasingly more robust bearish looking picture. This model sees Q3 easing to the 31.50 to 31.00 zone; for the spread to return to a modicum of strength will require the settle above 34.75. There will be a bottom found by the retreating process and that will provide the base for a reversal to the upside. However, that could be as low as 28.00 to 27.50.

4th Quarter Distillate Cracks

Similar to the third quarter outlook, this crack array has a fully developed bearish trend underway. In fact the levels are nearly identical for the third quarter. Minimally a retrenchment to the horizontal blue line is in the cards. This being the support before it surged to 36.50. However, based on the pattern at hand a drop to 30.00 to 29.50 will not be a surprise. It will also represent a probable buying opportunity.


This is a market that is struggling to find a balance between constantly increasing supplies and demand. Thus far the winter of 2012-2013 has been a disappointment to the bulls. We suspect that will not be the case going forward, but will it be too little too late.
Although the recent weather patterns do suggests further weakness early in the year, on the monthly chart below there has been a major wave completion at the 1.90 level. This is likely to stand at the decade low. However, there will be much sideways churning and burning before the market is to hit the mean line of the regression analysis.

We suspect that there will be a move to begin the export process (getting the infrastructure in place). Refitting heavy duty trucks or a move by the EPA to limit Fracking will spur a substantive rebound in the years to come.
To be clear, more work will need to be done before the bulls can rest assured a trend to the upside is developing. Until that time, it is right to sell any pop to the 4.25 to 4.75 area this upcoming year.

Outlook for the U.S. Dollar

The plot above shows a potentially bullish outcome for the greenback. To be sure this is a subjective view. The monthly chart above has the index completing a five wave move at the 69.00. It has tested that level and made a higher low. Note that the moving averages, which are very long term when considering this is a monthly chart, are starting to turn higher. However, there is nothing exciting about the upside until the index moves above 83.50. If this is seen with a long term indicator (monthly settle) a rise to 90.00 to 91.00 cannot be ruled out. This positive outlook is based on the monthly trend in red holding. That is at the 73.50 level.
The great imponderable: what will be the response of the markets to the fiscal cliff, which at the time of this writing seemed to be moving in the right direction, but there are still sticking points to be ironed out. This exacerbates the ramifications of the chaotic thesis stated earlier in the paper.

The Outlook for Equities

Below is a long term monthly view on the S&P. It shows that at the 1468 area a wave 3 of a larger degree wave III has been completed. This view suggests that higher prices are ahead. Although one cannot rule out a test of 1350 in the early part of 2013, it is likely that the money that has been horded will start to find its way into the market. We will need to carefully watch the velocity of money to determine if inflationary pressures are building. This puts us in the bull camp following a retracement. The outlook for the high of the year is 1570 to 1600. The key downside pivot to this model is 1340.


We see the oil market as likely to be close to balanced for 2013. OPEC spare capacity will increase giving more breathing room for the emerging markets. Moreover, the output from North America has been increasing steadily and will mitigate much of the increased demand from Asian sources.
One imponderable is what will civil strife in the Middle East and North America mean to oil prices. It is likely that they will spike, but unlikely that will be sustained.
The economy will continue to muddle along. The structural deficiencies in employment will need to be addressed to help get the economy back on a more solid footing. Inflation will only begin to be a concern once the velocity of money begins to turn higher. Notwithstanding the Ben Bernanke experiment on liquidity, it is the velocity of money and not the money supply that more greatly affects the outlook for inflation. Once that box has been opened, upward acceleration in commodity prices will be realized.

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Flash Crash in Oil Still a Mystery; Spain Balks

Published on September 18, 2012 by in Energy


Flash Crash in Oil Still a Mystery; Spain Balks

Oil traders everywhere are trying to place an answer to the flash crash that occurred Monday afternoon. Many theories have been advance. Some of them include a hedge fund liquidation, a fat finger mistake and the most plausible reason was HFT or high frequency trading. The violence of trading following the plunge was wild and costly for those on the wrong side of the market. However, it was revealed late Monday that the Saudis have increased their output to offer prices lower. There is a two prong approach to their reasoning. They want the oil price down to assist in a sloth like global economic recovery, but also the lower the price the more injury to their nemesis, Iran. The political fallout from the sanctions is beginning to be felt by the populace and the Saudis hope to foment dissent.

Crude is again lower this morning following the revelations above and Spain’s reluctance to embrace the EUIMF bailout plan. Thus far they have refused to ask for help from the ECB. They are concerned that the conditions attach will be too onerous for their economy. This has put risk investors on alert. Additionally, polls taken in Germany show the populace 65% of which favor Germany without the euro and 49% actually favor Germany out of the EU all together. France is not too much different. Their 64% are apposed to the Maastricht Treaty.

The underpinning of geopolitical conflict in MENA (Middle East, North Africa) has kept the bulls in an uncomfortable position for now, but they are pinning the hopes on higher prices to the 100 week moving average at the low of Monday, 94.65.

CRUDE: Hi: 97.23; Low: 95.96

Although the bullish factors in the geopolitical arena continue to support the hopium premium is being removed from the market. We see this process having more to come. Oct will have a test of 94.65 like Tuesday. Our primary model calls for an inside day, but we do not rule out more weakness developing. Oct will have minor upside pivot at 96.65. It will need to get above that level to neutralize the bearish outlook. However, the key upside pivot to the intraday chart is 97.50. The 100 WMA at 94.65 should still continue to support, although a drop to 94.25culd be seen on an overthrow. However, a daily settle below 94.65 is very negative. We are a seller of the rally.

BRENT: Hi: 114.92; Low: 112.59.

The thoughts of an SPR release are constantly in the back of the bull’s psyche. This is keeping Nov with a negative short-term pattern. Nov will have resistance at 114.25 to 114.50. The minor upside pivot is 114.65. The key upside pivot to the intraday chart is 116.00. We are in a sell the rally mode.  Ideally around the 115.50 area with a protective stop above 116.00.

RBOB: Hi: 2.9689; Low: 2.9298

This is a tricky pattern. It is probable that 2.86 will not be removed this week. It was a huge plunge that may be tested, but all things being equal will stand for the week. Nevertheless that does not mean that Oct will not slip from the 2.97 area. But the fact that it was able to move this high removes the potential for a new low in the very short-term. Oct will have a minor downside pivot at 2.93. With a break of this level a drop to the 2.9050 to 2.90 zone. However, key support is on a two point trend at 2.88.15. Key resistance is found at 2.9950 to 3.00. We neutral of this market.

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Muslims Expand Protests Outside the Middle East

Published on September 17, 2012 by in Energy


Muslims the world over have been protesting the anti-Islamic slur that was posted on You Tube a week or so ago.  Although this was not sanctioned by the U.S. government, the Islamic protestors do not think anything is done without a government’s approval. This has unleashed a spate of demonstrations in France and England. More Marines have been sent to both Sudan and Tunisia.  Moreover, there have been thirty countries that participated in a Persian Gulf exercise on the detection and clearing of mines. This plus the inflation trade of the Fed will keep the energies supported at lower prices.

However, we are very concerned with the governments’ appetite to release oil reserves. The pattern fits this type of scenario. In fact, our model suggests that the high of this leg will be established during the early part of this week. We can see that the price action following such a move will press Nov to test the 94.75 area if released. Otherwise, it will be steady to higher prices. However, prices are steady this morning with the dollar slightly higher and mild profit taking has set in. Monday’s have been a traditionally down day for equities of late. We wait to see if today follows suit. We would use any weakness in any risk asset market to buy the instrument with the exceptions of bonds.

CRUDE: Hi: 99.28; Low: 98.56

Oct has managed a flat correction on the hourly chart. This is also known as a double bottom. It is at the 98.50 level. Although this level may hold, if it gives way 98.00 will prove supportive. the minor downside pivot to the 98.00 support is 97.80. It is with a simple break of 98.50 that that mark will be tested. We look for this dip to hold and give way to a test of 100.40. The upside pivot to this resistance is 100.70. Breaking this level with a daily settle will eye key resistance and a probable top at 102.80. We are a buyer of the dip and a seller of the strong rally. Any rumor or news about oil release will be met with a quick and sharp sell off.

RBOB: Hi: 3.0279; Low: 2.9970

Oct has nudged below our initial support level at 3.0050. It has broken the neckline of a minor head and shoulders top on the hourly chart. However, the downside pivot to bearish momentum is a break of 2.99. That will yield a drop to 2.96. Although we feel this will be the weaker component of the petro complex, it may recharge the 3.05 trend line with a strong move higher of WTI. Nevertheless if one is bearish on the oil market this will be the weaker market to sell on strength. Oct will have minor resistance at 3.0250. The minor upside pivot is 3.03. The key upside pivot is 3.04. We will be a seller of the strong rally.

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The oil markets were concentrating on the development of the storm Isaac, which is destined to hit New Orleans on Wednesday night. While the winds of the storm are not uncommonly strong, rain and tidal surge are a growing source of anxiety. There have been other cases in the past where strong tropical storms dumped so much rain in such a short period of time that refineries became inundated. Aside from this, there is already 8M b/d of refinery capacity shut in due to the storm. We feel that the weakness in RBOB will be reversed at least for a corrective rally.

On the geopolitical front, Iran is considering a plan to let visiting diplomats go to the Parchin Military Base,which IEAE inspectors wished to check over. The diplomats are attending the summit of non aligned nations. It is likely that if Iran is agreeing to this, they have already moved incriminating evidence. France’s Finance Minister repeated a call Tuesday for the release of SPR. Also, in a surprise move Mario Draghi informed the Fed that he will not be attending the Jackson Hole Summit of central bankers. This is a big shock insofar as the market was expecting him to announce his golden plan to save the euro zone. Economists have yet to figure out what this action means for Europe and risk assets. It should be noted, however, that the euro was positive on the day.

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The most salient feature of Thursday’s trading was the key reversal put in by WTI. We greatly respect these formation although we have instances where they were faded. Nevertheless the weakness was brought on following  James Bullard’s assessment that further easing is not implied by the recent data. Thus the immanency of the easing was removed from the market psyche. As we type WTI is testing its overnight low at 95.40. The storm in the Gulf still represents a threat. In fact, the threat is more pronounced this morning as the storm track has a more westward projection.

Moreover, the geopolitical scenario in the Middle East is anything but quiet. Thursday the Israeli Ambassador to the U.S. told the But the Israelis cannot go it alone. They need U.S. support. Their aircraft cannot reach Iran and make it back. They lack the range. However the Joint Chief of Staff said essentially the same thing last week, His words, “there really is no room to negotiate with Iran. Iran has increased uranium production by moving facilities underground.

All of this combined with the WTI pattern suggest a bounce off the 95.40 level. However we look to sell the sharp rally. But we also feel that the products will be the strong suit for the complex. Therefore if one is bullish buy the rbob and if one is bearish or wishes to hedge the position sell the WTI against it.

CRUDE: Hi: 96.28; Low: 95.41

As stated above, our model indicates a test of the overnight low. It is likely that this will mean a drop to 95.60. The key downside pivot is 95.40. However, a break of 95.00 will unleash another torrent of selling. That will push it down to the weekly trend of 93.50. There will be minor resistance at 96.70 to 96.90.. While the true upside pivot is 97.30, we would use a stop above 97.00 to mitigate risk. But we look to take advantage of extremes in today’s trading. The extreme upside area pertaining to this game plan will be 97.75 to 97.90.

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Published on August 22, 2012 by in Energy


Despite signs of a slightly better economy, the Fed signaled further easing is likely in the near future. According to the minutes, the economy is struggling, and there are deepening concerns regarding Europe. With respect to Europe, Greek Prime Minister Samarus went on a whirlwind tour of European capitals to ask for more time to meet deficit targets.  While Germany has reiterated its desire to keep the euro whole, they also warned Greece that it’s time to adhere to the negotiated settlement.

The oil markets were also supported by concerns over tropical storm Isaac. Some models have it moving into the Gulf, while others see it making landfall in Florida. The issues we’ve been discussing over the past few weeks with regards to the Middle East are growing stronger. It appears Syria is closer to the tipping point, as reports claim Russia is removing its men from the port at Tartus. There is also fighting occurring in Libya. Further, the Egyptian Israeli Sinai dispute has yet to be resolved. The bellicose babbling surrounding Israel and Iran continues unabated.

The DOE confirmed the large draws in crude that the API reported. Far more important is that gasoline stocks for the east coast are now 12% below the 5-year average. Additionally, they are at the lowest level since 1990. The same can be said for distillate, as it has inventories at a 12-year low. To this end, it was reported that the Obama administration helped spark the sale of Sunoco’s Philly refinery to the private equity firm Carlyle. Ironically, the same administration has been denouncing its political opponent for being in private equity.

All of this leaves the energy complex on more positive terms with products likely to lead the way higher.

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Published on August 21, 2012 by in Energy


Although volumes were subdued, the energy markets rose Tuesday on the anticipation that the ECB will come to the rescue of the European markets. While it is true that the bulls in energy are betting heavily on this outcome, the boat is becoming a bit too full. It has been noted that managed funds hold over 123K net longs in WTI. Talk of the ECB capping interest rates on the peripheral countries has been dismissed. The capping of interest rates suggests an open ended stimulus package, which the ECB’s balance sheet cannot afford, and it would be violating the treaties for the European community. Nevertheless, both WTI and Brent were stronger on the day amid optimism for a Greek breakthrough on the credit crisis.

The geopolitical storm that is Syria lingers on. The situation with regards to Egypt and the Sinai peninsula has taken a more bellicose tone.

A storm brewing in the Atlantic is also a concern for the bulls, although the course is uncertain at this time. Most models see the storm moving west to northwest. This has the potential to bring it in to the Gulf of Mexico. It’s expected to become a hurricane within the next two days, and you can be sure both the bulls and bears are watching the storm.

The market expectations for the DOE are as follows:

Crude +100KB            Mogas -100KB                Dist +1.3MB

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One can attribute the weakness in the energy complex to continued concerns emanating from Europe. Germany has made sure that Greece understands it has a choice to make, and the choice must be made now. What Germany refers to with the timeline is that there will be no further negotiations regarding Greek austerity, nor will there be any further delays in the implementation of the agreed upon corrections to their economy.  Germany and the ECB have also repudiated reports that the Central Bank and German government will cap borrowing costs of the peripherals. For its part, Spain wants to see the ECB commit to massive open ended sovereign debt purchases before it takes on the stigma of asking for aid. We think its unlikely that Spain sees what they are looking for; apparently oil traders feel the same way, as they pushed the market slightly lower on Monday.

Helping to support the energy market early in the day was the outlook from the Chicago Fed that although US economic growth remains below its historical trend, an uptick in industrial production has countered that weakness. Oil traders are also watching a new tropical wave development off the coast of Africa that continues to strengthen in the Mid Atlantic. The path of the storm is uncertain for now.

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Bulls Get Prizes As Crude Rises

Published on August 16, 2012 by in Energy


It was a supply driven rally that moved crude over a dollar higher on Thursday. Part of this was follow through buying from the surprising DOE stats released Wednesday. But the situation in Syria and nearby Lebanon continues to underpin the oil. The recent concern in Lebanon stems from the kidnapping of Saudi, Kuwaiti, and UAE citizens. The overriding thought is that the situation in Syria will break down into sectarian violence. Crude bulls rationalize that this can spill over and infect the entire Mid-Eastern region.

We have been consistently saying that the target for our pattern was 95.80; we missed that target by 5 cents (our pencil will be sharpened next time).

On Thursday, the White House began floating a trial balloon by releasing SPR crude. This is not without precedent. Although we don’t have the exact date, we believe it was done around 2010 as well. This knocked the prices down, but the decrease did not last long. However, energies are higher on the hope of stimulus, and this has kept the funds pumping on the long side of the market.

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