Sell The Meeting, Buy The Shortfall
Oil and its derivative products sold off as
traders exited long positions ahead of a highly
anticipated OPEC meeting this Sunday that will set the output policy through the end of the
year. Energy contracts are trading at 10-year records but comments from the Saudi
Arabian oil
minister implied the cartel would
take action this weekend to bring prices down, sparking the downturn.
The market followed a pattern of selling off before the
meeting. Sell offs have been followed by price rises that have
taken energy contracts to 10-year highs. The question remains, will any production increases be large enough and soon enough
to avert shortages. An increase of 500,000 to 800,000 barrels a day has already been promised
and discounted by the market. OPEC agreed at previous meetings this year that it
would raise output once the price of an OPEC basket of crude prices rose above
$28 a barrel for more than 20 days. Scenes from the energy shocks (crises)of the 1970s began to appear
in France due to demonstrations against high taxes. The demonstrations have limited the distribution
of oil and gasoline. Many French public agencies said they had only a few days supply
on hand to provide essential and emergency services. Some traders said such shortages provide–although induced by a strike–provide a glimpse of what could occur
if production is not increased.
Heating oil registered a Turtle Soup Plus One
Sell signal, tipping off a potential reversal-from-highs of energy
contracts. The October
contract hit the sell trigger (the previous
20-day high) and kept tumbling to close .0306 lower at .9980. Crude oil fell 1.69 to 33.70
and unleaded gasoline plummeted 5.36%, or .0538 to .9505.
Currency traders ignored
German Chancellor Schroeder’s about-face on statements that he made earlier this week where he said he quot;welcomed" a weaker euro. Skepticism that Europeans will support continental currencies are showing up on the TradingMarkets.com Futures Indicators page as currency futures are
dominating the Implosion-5 List.
Euro FX
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fell back to multi-year lows, down .0020 at .5624.
Strong relative economic growth is one of the factors
propelling the dollar higher. The US
economy expanded at nearly twice the pace of Europe’s and is also experiencing higher
productivity, lower unemployment and higher interest rates.
September dollar index futures
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post on the New 10-Day High
list and on Thursday’s Momentum-5 List, setting a new contract closing-record of
114.37, up .69. The dollar got an extra boost from a decline in the
Japanese yen
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PowerRating), which suffered from a Moody’s downgrade on the
country’s credit rating. A sharp decline in
British pounds
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propel the dollar index to a new contract record.
Stock index futures fell with December NASDAQ 100 futures
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lows, down 101.50 at 3850.00.
A lower-than-expected crop forecast and surprisingly strong export sales figures
boosted November soybeans
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PowerRating) after a two-day pullback from three-month highs. Beans added 15 to
505, December soybean oil
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soymeal
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Finally, from the Implosion-5 List,
orange
juice
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PowerRating) sank .75 to 70.55.