Crude Crimps Financial Futures

  • September 20, 2000
  • Marc Dupee

In its first 20 minutes of trading in New York, October
crude
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PowerRating) punched to within two dimes of $38.00 a barrel. Tuesday’s
weekly American Petroleum Report highlighted the near-crisis-like environment in
energy by recording an unexpected drop in crude stockpiles, which are standing
at a 24-year low. Refineries are operating below capacity, which does not bode
well for the Northeast and its heating (oil) needs. Stockpiles of heating oil
are 37% below last year’s levels and are currently thought to be insufficient to
meet the demands should this winter be harsh. A wildcard in the energy situation
is Iraq. Iraq could pull its oil off the market and that would cause a spike in
the price of oil. 

November crude
(
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PowerRating), from the Momentum-5
List, is up .74 to 35.75. Heating oil
(
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PowerRating) and unleaded gasoline
(
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PowerRating) are also higher.

Stock index futures and
T-bond futures are keying off the higher oil prices and are lower on the news.
Dow futures
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businesses are often more dependent on low energy costs for profitability and
generate much of their revenues overseas. 

Also from the Momentum-5
List, dollar index futures
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PowerRating) are trading to a new high. Lower
business confidence from Germany and slower Italian growth projections suggest
that Euroland’s economy will underperform vis-à-vis the the US.

Euro FX
(
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PowerRating), Swiss francs
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PowerRating), and
British pounds
(
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PowerRating), from the Implosion-5 List,
are all trading at or near contract lows. 

Coffee has made a larger-than-normal move to the downside
(-3.35%), making good on a Multiple Days Low
Volatility reading. While the volatility lists do not suggest market
direction–only that a futures is likely to make a larger-than-expected
move–the contract has been on the
Futures
Trend Matrix as in a steady downtrend.