Wednesday, December 9, 2009

Money Never Sleeps, but People Do - 12.09.09

Via Bloomberg:

Oil whipsawed in reaction to weekly petroleum inventory data. On the negative side for prices are a large 2.5 million barrel build in crude stocks at the WTI delivery point at Cushing, Oklahoma together with a 2.2 million barrel build in total gasoline stocks and a 1.6 million build in distillates. On the plus side is a sizable 3.8 million draw in total crude inventories to 336.1 million barrels. Oil and gasoline imports were down in the week while domestic output of gasoline and distillates were both up. Refineries operated at 81.1 percent of capacity, up from the prior week but still very low. On the demand side, demand for gasoline was steady in the week while demand for distillates dipped. Oil first fell $1 then rebounded $1 to trade at $73 following today's data. Supply in the petroleum market, despite the week's draw in crude, is still very heavy and is a threat to the oil industry should the global economic recovery stall.

If crude continues to stay in a lower range short term ($70-72) I will look to jump in via USO. Tomorrow we will get Natural Gas Inventories at 10:30.

Tommorow's Action:

The U.S. international trade gap in September widened to $36.5 billion from $30.7 billion worth of red ink in August. Exports rose 2.9 percent while imports jumped 5.8 percent. The worsening of the trade deficit was led by a wider petroleum shortfall which came in at $20.5 billion compared to $16.6 billion the previous month. The nonpetroleum gap increased to $25.9 billion from $24.3 billion in August. Looking ahead, the sneak peak indicators are mixed. First, there could be a drop in auto imports from Canada as not as many are needed with cash for clunkers having concluded. But a drop in shipments of nondefense capital goods in October could show up in lower capital goods exports. Also, higher oil prices will cut into any potential improvement in the trade gap.

Consensus is -34.6B. I don't expect this to be much of a market mover unless the gap increases significantly. Data should be flat or slightly improve. If data is week I expect a dollar sell off.

Also,Watch out for initial Jobless claims at 10:30. The combination of initial claims and trade deficit data have potential to move markets in either direction.

It will be interesting to see how dollar strength or weakness influences equity investors for the rest of the trading week.

On Friday we will get a real feel for how well the U.S. consumer is doing with retail sales and consumer sentiment reports.

The ASX 200 and Nikkei 225 are sitting on slight gains to start the trading session in Asia, up .25% and .06% respectively. Futures are negative in the Eurozone and U.S. equity markets are poised to open slightly to the upside.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

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