Here’s Who’ll Win If They Cheat
Two fundamental factors coming into focus which hint at
lower prices in oil are “cheating” and Russia. “Cheating,”
or selling more than OPEC members agreed to in cartel quota arrangements, was
widespread among OPEC members as recently as a few years ago and was
instrumental in driving prices down to $10 a barrel. OPEC is acknowledging that
it exceeded quotas by more than 1 million barrels a day in September. Increased
supply from oil producers in need of cash in a time of slowing global economic
activity is a negative for oil prices.
And Russia, the world’s third-biggest producer, said it
would not comply with a request from OPEC to cut production. Both Russia and
Norway hope to usurp market share as OPEC cuts output. When Russia cheats,
Russia, Norway, and oil consuming nations — win.
The rapid demise in energy prices last month — as much as 30% from the
September highs — however, has left energy prices short-term oversold.
Predictions by the International Energy Agency that oil demand will grow at
its slowest pace in 15 years amid a 30% decline in demand for fuel for air
travel could exert longer-term pressure down on prices after prices
correct.
From the Nightly
Futures Report,
unleaded gasoline
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natural gas
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Blocks long entries. In unleaded, notice resistance occurred smack in
the middle of the “.6090 to .6110″ resistance
level suggested in the report. There is an air pocket above with resistance
levels intact at “6235 and .6330 and .6410 through .6430.”
The dollar rallied nearly $1 on sagging German business confidence, a
major British bankruptcy, and poor economic and trade data from Japan. Friday’s
Futures Setups pointed out that the
British pound
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flag/pullback from a one-month low formation,” and continued
sinking .0102 to1.4202 today as it closed lower for a fourth straight day,
gapping below its 9/11 close. A factor that could continue to plague the
pound is news from this weekend that British Nuclear Fuels, a state-run
firm, could declare bankruptcy and leave a $35 billion nuclear clean-up job
undone.
The
Japanese yen
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The clues here were its Pullback
From Lows signal (implying a continuation of the past month’s downtrend) and
the yen’s 6/100 Low Volatility
reading (an indication of a larger-than-normal move, but not direction).
Basis December yen sank to a two-month low, down .0091 to .8194.
The war
premium in metals continued to erode as investors dumped more contracts
of the safe-haven stores of value. Both
December gold
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into their pre-breakout ranges.Â
In the meats,
December lean hogs
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down out of their Pullback
From Lows setup. (They failed to trade below their opening range to trigger
their OTM short). But the contract’s failure to close the morning lap-down
is a sign of weakness. Continue to consider selling pullback from lows in
this contract.
In the softs, coffee
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From Lows List and
Implosion-5 List, made good an Off The Blocks
short.
Also from the report,
December cotton
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good on an
Off The Blocks
short, another contract highlighted in Monday’s
Setups.