Gov’ Taps Stash, Oil Falters
In a rare move, the U.S. Department of Energy dipped into its Strategic Petroleum Reserve to prevent a Louisiana facility from running
out of oil to refine into increasingly scarce gasoline. Although the 500,000 barrel infusion came as a result of an
industrial accident, it is a sign of looming shortages and the DOE’s concern
about low stockpiles and rising prices.
The energy market tanked early, falling in relief from
comments from OPEC officials that they would adhere to informal agreements to
pump more oil. Crude oil fell a hefty 2.5% early in the New York futures
session, falling to a low of 31.20 after a minor OPEC oil minister (from
Indonesia) said the cartel would "stick to that agreement." The
minister was referencing informal plans made at the last meeting by the
producing group to boost output by 500,000 barrels a day once the price of a
basket of OPEC crude rose above $28 for more than 20 days.
But crude rallied more than $1.25 in the last 30 minutes
as traders seemed to take heed of lingering doubts about what effect the
production increases might have. Two qualifiers linger about any reaffirmation
of the informal agreement. First, only three of the 11 members have the capacity
to increase production as the remaining members are already operating at full
capacity. Second, OPEC already "cheats" or exceeds production by the
500,000 barrel limit. Theoretically the group could leave production at current
"unofficial" levels and the world would see no net increase in oil
supply.
Roughneck unrest could also have a bullish impact. An oil-workers strike in one of the world’s largest non-OPEC exporting countries,
Norway, could take more oil off the world market. The strike, now one week old,
is already keeping over one-half of the projected OPEC increase(250,000 barrels) off the market.
July crude
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fell 4.13% or .0225 at 1.0655 and
heating oil
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From the Momentum-5
List, natural gas spiked to a new contract high, surpassing the previous
record set on May 31 after hinting it could move higher by rallying to its
highest level in four years Thursday. The low supply situation in the commodity
is being aggravated by high demand from gas-fired electrical-generation plants
which are running on overtime to power air conditioners turned up
to provide relief from heat waves on both coasts. But nat gas fell below 4.555, its old 20-day
and contract high and level which served as trigger for a Turtle Soup (reversal)
sell setup. This same-day reversal strategy goes short below 4.555 and places a
stop at the high of the day which currently stands at 4.490. Natural gas
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ended Friday up .025 at 4.488.
Dollar index futures, from the Implosion-5 List,
are plunging on economic data showing the US economy is continuing to slow. The
September index futures
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105.52 and at the bottom of a recent range and handle of an inverted O’Neil
cup-with-handle pattern. The
Euro FX
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or .01190 to .97100.Swiss francs
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to .6243.
Pork bellies moved higher Friday after finishing strong
Thursday in a reversal off a significant low that continued to make good on a Turtle Soup Plus One Buy
set up. The July contract followed through by gapping higher in Friday’s
session. The trigger of this setup, at 84.900, remains key as it represents a
multi-month low and a potential neckline of a head-and-shoulders pattern. July
bellies
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of Traders report tonight to see if the heavily overbought situation of of the
last report has changed.
Sugar
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clipping nearly 4% or .33 to 8.19. As mentioned two days ago, sugar left a doji
star candlestick pattern, a sign of a change in trend.
Orange juice has been showing higher lows inside its
protracted base which could be indicative of direction for a potentially
explosive move. Juice is poised to make a big move out of a Multiple Days Low
Volatility situation. July juice
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over two months, up 1.40 at 84.70.