Oil Slides on Economic Data, Dragging Stocks Along for the Ride

Posted by Kelly Burke on Aug 3, 2015 3:02:00 PM

Man grasping his head looking at computer screens

This morning Brent Crude dropped under $50 for the first time in 6 months, and WTI fell below $45/bbl to within $2 of a 6 year low. Shortly after noon, the NYMEX showed ULSD down .0452 cents, and gas down almost 9 (-.0882).

What's going on?

Lackluster economic data out of both China and the US seems to indicate that overall oil demand is unlikely to spike to levels able to compensate for the immense glut of oil we're seeing now. As we've discussed, OPEC and others have kept production at record levels to both retain market share, and attempt to slow production (and therefore competition for market share) by higher cost-of-production nations, most notably, the U.S.

Domestically, S&P Energy stocks dragged that index down in response to falling oil prices. US stock indexes trended downward today across the board on other non-thrilling economic data as well as some major single stock tumbles (Apple, Tyson, Lowe's, etc).Overall data showed consumer spending gains were anemic, labor costs increased, and now we all wait with baited breath for the jobs report due out on Friday. 

Across the pond, the Greek stock market re-opened today and promptly tumbled almost 30%, essentially reigniting concerns about the stability of the Eurozone and the odds that the Greek debt deals in their current iterations will solve the ongoing debt crisis. (They ended up rebounding to cap out about a 16% loss on the day)

The data from China this morning was arguably the main catalyst for the drop today, as all eyes were focused on their manufacturing reporting to show a gain, but it instead showed a major slow down. Chinese economic growth had been essentially the last hope for demand ramping up and stemming the price sliding. Traders and Investors have been looking for signs to confirm their hopes of a positive second half of the year in terms of growth, and today's data essentially put those hopes to rest.

At the close, September ULSD dropped -.0584 to 1.5305, RBOB dropped -.0975 to 1.6745. WTI closed out at $45.17. Last prints for Brent are 49.54-50.17 range. 

Stay Tuned!

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Topics: Greece, Brent Crude, OPEC, NYMEX, Chinese Industrial Output, wti

Greece Nears Default, Sends Global Stocks & Commodity Prices Reeling

Posted by Kelly Burke on Jun 29, 2015 2:52:50 PM

Sillouettes of people infront of charts showing Greek Debt

Stock Markets across the Globe dropped sharply on worries over Greece's potential (and frankly, very likely) default. Greece owes the IMF  a 1.8 billion dollar payment tommorow, but their Prime Minister has pushed voting on whether to accept referendums to July 5th, making it pretty clear Greece is unwilling and unable to make their required payments. 

European stocks dropped on fear that Greece will vote to leave the European Union rather than work with creditors and the European Central Bank to structure repayment obligations. If Greece leaves the union it could impact the Euro currency and that uncertainty will probably continue to impact the market on some level until we see how it all plays out. 

Greek banks and markets are closed this week, after a rush on banks and ATMs nationwide sparked fears of the system collapsing under the weight of citizens pulling all their money out simultaneously. This morning the Greek stock market was down over 15% despite not even being open. 

Closer to home, the Governor of Puerto Rico has announced it is "simply not possible" for the province to pay its required obligations. They owe 94 million by July 15, with another 140 million due by August 1 on bond principal. 

This weekend also saw three seperate terrorist attacks in 3 seperate countries, all of which ISIS claimed responsibility for. 

Needless to say, things are not looking good globally, both in terms of safety and economics. 

In terms of commodities, Greece seems to be the focus, while terrorism attacks are being ignored as evidenced by the across the board drops we are seeing. WTI and Brent Crude were both down over 2% in this mornings trading. ULSD and RBOB front month are both trending down today, with ULSD closing out at 1.8366 (-.0262) and RBOB settling at 2.0303 (-.0182) 

Stay Tuned!

 

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Topics: Greece, Euro Debt Zone, ISIS, IMF

Wild Week on Wall Street & The NYMEX; Everything Keeps on Tumbling!

Posted by Kelly Burke on Dec 10, 2014 5:43:25 PM

Stock market numbers on a digital board

Today was another wild day on the market, with ULSD closing down another .0376 to 2.0464, and RBOB closing out down a whopping .0818 to 1.6418. Analysts are crediting this with an "unexpected" increase in Crude stockpiles. WTI fell -2.60/bbl to 60.94, well below the previous 5 year low.

Monday was down as well, closing out -.0529 on ULSD and -.0668 on RBOB gasoline.

We saw a small jump up yesterday (ULSD +.0291 and RBOB +.0170) - likely just a bump-in-the-road overcorrection to stocks tanking on some bad news from Greece and China. This week saw Greek markets tank worse than they did before the crash a few years ago - obviously not good news for the European economy. 

OPEC also became a factor again with Iran railing against falling oil prices as a "conspiracy" and OPEC cutting its output estimate for 2015 to 2.89 million barrels per day, 300K lower than they originally forecast. However, despite the announcement Crude keeps right on plummeting. 

Wall Street Traders have been shouting about the Dow's inevitable march to 18,000, but today saw it close down for the third day in a row. Continuing pressure on stocks given that Fed rate hikes look like they may happen within the 6 month period doesnt bode well for the 18K mark, especially when you factor the weakness in foreign markets into the equation.

The S&P slumped on energy stocks as well, as some companies came out with plans to move on layoffs, restructuring, or selling shale plays. Despite a few plays going up for sale though, production domestically doesnt seem to be slowing down. However, a slow down in production in countries that have a high production cost is probably inevitable if the price hits a certain level - that includes the US and Venezuela. 

So it was a tough week for Wall Street, but the bright spot was for the average consumers as downward pressure keeps pushing down the price of gasoline. The Energy Department dropped its price forecast for retail gasoline to for next year at this time to $2.60/gallon, the second time its been revised down by over 30 cents a gallon since oil began its slide. Another bright spot domestically was an unexpectedly good jobs report on Friday, which is a good signal for the overall economy. 

 

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Topics: Greece, RBOB tumbles, OPEC, NYMEX, Wall Street

European Zone Crisis pushes Futures Lower

Posted by Mark Pszeniczny on May 17, 2012 3:44:00 PM

For the last several days NYMEX values have been on the losing end of good Ol' fashion Donny Brook coming at the hands of the ongoing European debt crisis. With new Leadership installed in several countries, investors are not taking any chances and removing cash as quickly as possible. The latest round today had the European Central Bank preparing for Greece's exit from the Euro sending the currency to a four month low versus the US dollar. Commodities again were the collateral damage as money continues to exit the pits. Japans signs of economic recovery from their recent natural disasters, reports showed a 1% increase in their economy, along with an anemic Jobless claim report ( statically flat) could not stop the bleeding in the pits today. When prompt Heat was at 3.30,we noted the major support level to be at 2.75 with a few stop along the way and a key being 2.95. As those levels have been broken, it will be interesting to see where we stop. Interesting to note the seaway pipeline that runs Crude north to Cushing, OK has just finished a flow reversal that will allow product to move south from Cushing to the Gulf region for refining. Product is expected to flow this weekend, alleviating the glut of WTI in the US, should also play a role in reducing the Brent - WTI spread. At the close Crude lost .25 to $92.56, HEAT fell .0486 to $2.8490 and RBOB lost .0427 to settle at $2.8782.

 

Daily Heating Oil Chart

daily heat map

RBOB CLOSE
CLOSE CHANGE
 
JUN 28782 -.0427
JUL 28174 -.0477
AUG 27737 -.0494
SEPT 27354 -.0497
OCT 25962 -.0482
NOV 25643 -.0477
HEAT CLOSE
CLOSE CHANGE
JUN 28490 -.0486
JUL 28556 -.0483
AUG 28641 -.0478
SEPT 28723 -.0474
OCT 28804 -.0467
NOV 28889 -.0462
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Topics: European Economy, Greece, Brent Crude, Brent vs WTI, Euro Debt Zone

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