Crude Awakening
Despite the agreement by OPEC to increase production by
3% at its closely watched meeting over the weekend, October crude oil
(
CLVU |
Quote |
Chart |
News |
PowerRating)
is opening higher AND SURGING, currently up 1.72 to 35.35. The New York
futures market is showing disappointment about the additional 800,000 barrels
promised, intimating that the promised additional production is too little, too
late.
Heating oil
(
HOV0 |
Quote |
Chart |
News |
PowerRating), from the Momentum-5
List, is jumping by the largest percentage (up 5.5%), up .0551 to 1.0500 to
a new contract and 10-year high. Heating oil has the largest stockpiles deficit,
down 38% from last year.
In the long run, OPEC’s muted response to the tight
global supplies situation will reduce global dependence on oil through
conservation, higher levels of non-OPEC production, and alternate
technologies/sources. In the short run, the lower production levels that have
resulted in higher prices will slow the global economy by causing the
dislocations, dry fuel pumps and protests that were seen in Europe (France,
Britain, Belgium, and Italy) over the weekend. The higher oil prices could also
force European governments to lower fuel taxes in response to the
demonstrations. Taxes make up an average 75% of the price of a continental liter
of gasoline.
Rising energy prices will act as a speed bump in Europe’s
drive to revitalize its economy. But the weak euro is exacerbating the
situation, and is acting to further deteriorate euro FX futures
(
ECU0 |
Quote |
Chart |
News |
PowerRating). And
here’s one of the reasons why. While crude oil prices have gone up an average of
170% over the past 18 months in the US, a declining euro (trading Monday at an
all-time low) and dollar-based oil have resulted in European prices going up an
average 270% over the same period. This added cost of doing business dims the
economic prospects of Europe (by hiking input costs) and could result in an even
lower euro as a slower economy cuts demand for the continental currency.
September euro FX futures gapped to an all-time-low and are down .00890 at
.86100. The euro FX, Swiss francs
(
SFU0 |
Quote |
Chart |
News |
PowerRating), and
British pound
(
BPU0 |
Quote |
Chart |
News |
PowerRating), all from the Implosion-5 List,
are down and trading at or near all-time lows.
Four signals from the
Market
Bias Indicators Page are pointing up. Three or more of these signals
pointing up are considered a strong indication that the market will move higher.
With four upsignals, the bias remains up for stock index futures.
December gold
(
GCZ0 |
Quote |
Chart |
News |
PowerRating) inched a Turtle Soup Plus One Buy
signal Friday, and although the contract is down slightly on the morning,
it is interesting to note that precisely one year ago, gold also traced a Turtle
Soup Plus One Buy signal that went on to log a one-month, $75 pop. Gold is
currently trading down .1 on the day at 276.7, but is above its TS+1
trigger.