Look for the slow drift lower to continue in the near-term, as worries about the health of the economy and the fiscal cliff dominate. Stocks sold off yesterday on various corporate and European news items, but closed near the bottom of last week’s trading range as well as close to a new four-month low.
Daily Energy Report – The slow drift lower in oil prices should continue in the near-term, as worries grow over the fiscal cliff and the slow rate of economic growth. WTI could fall toward $80.00/bbl over the next few weeks as fiscal cliff negotiations appear likely to continue through the end of the year, U.S. production continues to grow, U.S. inventories remain elevated, and as problems in Europe remain in place
Energy Price Outlook After a sobering week last week, oil prices are expected to be under pressure again in this week’s trade and potentially fall toward $80/bbl in WTI over the next few weeks. The dominant factors should be increased prospects for slow growth in the U.S., uncertainty over the fiscal cliff, events in Europe including Sunday’s vote in Greece, and OPEC’s cut in demand estimates on Friday. The
Natural Gas traded lower settling $3.554, down $0.145 (3.8%). The curve was weaker 13/17 $0.04 lower. Hub cash was much weaker, ~$0.25 back this morning, Z-6 down $0.10 to $3.60. The 12z was in line with overnight models during the 6-10 day (warming East, cooler West).
Published Friday morning, 11/2/12 The overnight markets are easing due to the fact that FCS issued its estimates yesterday afternoon and to no surprise the bean yield was raised to 39.1 with overall production at 2.959b. The corn yield was also raised to 124 which is a bit surprising with overall production at 10.884. The markets as of 8CST are trading down 7-8 in the old crop beans while
Oil prices are a tough call this week. The market received positive news on Friday through better-than-expected jobs data, but prices fell to five-day lows in WTI because the dollar advanced and stocks dropped. We had looked for the oil market to advance in the near-term based on better claims and ADP employment data,
Today’s trade will focus on the employment report for guidance on the “risk-on, risk-off” trade, and will also keep an eye on the presidential election next Tuesday.
The oil market appears to be locked in a sideways continuation pattern, however, the timing of a potential breakout may still hinge upon the trading floors opening for normal operations. The CME said late yesterday that Nymex floor trading would resume only when the city lifts its evacuation order for Zone A.
Grains Commentary – Published Monday morning, 10/29/12 The effects of Sandy are creating havoc across the entire East Coast and could have effects for the next 72 hours if not longer, in the meantime the grain markets are open and it appears that $ flow is leaving the soy markets and shifting back to grains with corn trading +3-4, wheat has gained 4-5, while beans are down 12-14, meal
The overnight markets have continued where yesterday left off with gains being posted in nearly every market. The grain market seem to be gaining some interest again as the equity markets have lost nearly 4% in the past week, this lowers the overall bench market of returns for the year and gives some more runway to trade and place risk back on knowing that the equity benchmark is now up 11% rather than 15%.
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