Energy Market Updates

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CRUDE (4)

Inventories and Saudi Market Moves Continue to Push Oil Prices Down

Oil continued downward today on the back of the EIA inventory report for last week that indicated Crude stockpiles were up 9mmbl to a record high of about 407mmbbls. At the close, Crude dropped below $45/bbl, -1.78 to 44.45. ULSD and RBOB closed lower as well, ULSD settling down .0310 to 1.6318, and RBOB settled down .0051 to 1.345.

In addition to the inventory report, as we mentioned, the new Saudi leader has indicated the largest OPEC producer will continue on its track to hit production goals set. Both of these factors mean traders are still concerned with longterm over supply, which is continuing to drive down prices.

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OPEC Decision Puts NYMEX into Free Fall - Gas Closes Under $2!

The market is tanking across the board (and dragging the S&P with it) on the results of the OPEC meeting for November on Wednesday. The meeting officially cemented the long suspected decision by the cartel to keep oil production and output at current levels, despite the crashing prices and global glut of Crude oil. 

Saudi Arabia determined production would remain at current levels - as the largest producer in the group, they essentially set the policy. Several smaller members reportedly wanted to curb supply to raise prices, largely because a huge part of their country's economy runs off of the money generated from oil sales. 

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Stocks Rebound on Election, Energy Shares Continue to Falter on Cheap Crude

The Dow & Nasdaq were up in pre-market trading on news of a Republican sweep last night, and stocks are continuing to rebound this morning after Tuesdays drop off. The exception to this rule being energy shares, which are pulling the S&P down on the back of plummeting Crude prices. 

The ADP report on October job creation came in at 230K, 10K above the projected number. Strong payroll numbers for October and September, continually falling initial jobless claims and a surprisingly good Q3 growth number (3.5%) are all good signs for the overall economy.

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OPEC Chatter Drives up BRENT, Friday Trading Reverses CRUDE Rally

Thursday saw prices tick up after it was reported that the Saudi's output dropped from 9.69 million barrels to 9.36 million barrels. There has been some chatter and concern around the scheduled OPEC meeting in November. The concern being that OPEC will push curbing supply to stop the price declines we've seen in recent months. Brent Crude was up 3% on the news, the highest its been in 4 months.

However, despite the OPEC chatter, the Saudi's have said they will keep output at scheduled high levels even with lower pricing to maintain market share. Additionally, reportedly only a small number of members have suggested supply curbing.

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OPEC Tensions and "Break Even" Testing Pause NYMEX Dropoff

Thursday we saw ULSD settle out to erase most of Wednesdays drop - Wednesday it closed down -.0136 to 2.4586, and Thursday settled out at 2.4703 (+.0117). Gas not only erased Wednesday's 3 cent drop, but rebounded up +.0622 for the day to 2.2109. This morning, ULSD is trending up about a penny/penny and a half, while gas is hanging in the +.005 range, both having backed off earlier jumps.

So what's going on?

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IMF News, Germany, and the Dollar Pushing Markets Down

The International Monetary Fund (IMF) announced this morning it was downgrading its outlook for Global growth in the wake of disappointing growth in the Euro Zone and Japan. This is the third time this year the IMF has revised its outlook down (this time to 3.3% from 3.8%) and out of the last twelve forecasts in the past 3 years, they've revised 9 of the estimates down. According to Fox News, the IMF consistently has based projections off of an assumption that wealthier nations would be able to reverse their high debt, high unemployment environments a lot faster than they have been.

The IMF's gloomy outlook on the Euro Zone and bleak projections for growth potential in emerging markets has been another force behind the rally of the US dollar, as the US economy has started to stabilize versus other major nations, especially France and Germany. Germany hit a record 5 year low on industrial production, not good considering they are one of the critical economic players in the zone. 

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