Thin Oil Exaggerates Trade
Lower volume on the New York Mercantile exchange due to a
holiday week is causing exaggerated moves in energy prices. The market is
looking at cold weather dipping into the midsection of the country and as far
south as Alabama. Lower temperatures in regions that use heating fuels as well
as statements from OPEC officials that they will cut output by 500,000 barrels
at their next meeting in January are supporting the market.
Oil prices have
dropped precipitously in recent weeks and the OPEC benchmark oil “basket” dropped below
the critical $22 band for the first time in more than 8 months. Under the OPEC
price band, the cartel will, by agreement, cut output if the price for the OPEC
barrel of crude remains below $22 for more than 21 days. Heating oil is making
the biggest jump and is up nearly 4%.
Traders are erring on the “safe” side by
holding euro FX futures
(
ECH1 |
Quote |
Chart |
News |
PowerRating), from the Momentum-5
List rather than
March dollar index futures
(
DXH1 |
Quote |
Chart |
News |
PowerRating), from the Implosion-5 List.
ECH is trading up .00520 at .93200 and DXH is down .38 at 110.23. The slurry of negative economic reports out in the US and likelihood of rate cuts here continue to support a stronger euro vis-a-vis the dollar.
Despite a Commitment of Traders Report showing an
overbought position in soymeal
(
SMF1 |
Quote |
Chart |
News |
PowerRating), the January contract is etching a
new high and is setting up in an intraday ascending triangle, up .6 at 196.6.
SMF is on the Momentum-5
List and has been poised for a larger-than-normal move as indicated by its
standing on the
Multiple Days Low
Volatility List.Â
