The Energy Report
by Phil Flynn
Blame Game!
11/20/2009
Let’s all try to agree on someone to blame. I mean can we at least have some bi-partisan blaming?Yesterday, before the Congress Joint Economic Committee, there was some exciting and heated exchanges between Treasury Secretary Tim Geithner and some House Republicans. There were fireworks as Republican Rep. Kevin Brady of Texas blamed Geithner for a major role in creating the economic mess we are in when he was the president of the New York Federal Reserve Bank while all the problems were going on. He called on Mr. Geithner to take some responsibility. Mr. Geithner shot back, "What I can't take responsibility is for the legacy of crises you've bequeathed this country." (Wow! This is great!) Republicans going after Democrats, Democrats going after Republicans! I thought it would come to blows.
Perhaps to cool things off a bit we should agree on someone else to blame. Blame Canada! No, I mean blame China! That’s right. That's the ticket; let's just blame China! Senator Charles Schumer said it is China’s fault that we had a global economic collapse. Why? Well because they manipulate their currency! Not only that Senator Schumer says there are certainly hundreds of thousands and maybe even more Americans who are out of work because the Chinese are unfair and manipulate their currency. Senator Schumer says that’s nothing more important than this calling for tariffs on Chinese imports in retaliation. Perhaps this kind of talk is giving a boost to the dollar but more than likely it is good old fashion pre-holiday week profit taking.
For oil the major support is still $75 and resistance around $83 and it is unlikely that oil can really break out of this trading range until the end of the year. We will see light volume next week so be on guard for some goofiness but the bullish influences of economic policies are being offset by ample supply. Today is that last trading day on the December contract so we will be on guard for even more goofiness. We will be day trading January so call for levels.
Attention natural gas traders! Turkey Day is coming fast. So give thanks that the Weekly Natural Gas Storage Report will be released a day early at 12:00 PM (Eastern Time) Wednesday, November 25, 2009 due to the closure of the Federal government on Thursday, November 26. That is good news because most traders will not want to be around on Black Friday!
Start the weekend right by watching the Fox Business network where you can see me every day! PFGBest can fulfill all your trading needs! Futures Stocks and Securities and Cash Metals! Call me to find out how at 800-935-6487 or email me at
We're short January crude from apprx 8020 - power stop to 7900!
Stopped on short January RBOB from apprx at apprx 20500.
We're long January heating oil from apprx 20000 - stop 19800.
Buy January natural gas at 455 - stop 445.
Phil Flynn
PFGBEST Research Team
(800) 935-6487
pflynn@pfgbest.com
The End of Panic
11/19/2009
Have you been worried about the dramatic drop in the dollar? Are you worried that the dollar is falling because of our ballooning deficit or the fact that this country is printing money like there is no tomorrow? Well if the Fed is not worried maybe you shouldn’t be either.
Panic time is over! The President of the Philadelphia Fed, Charles Plosser, says the drop in the dollar reflects the end of panic. In fact he even says its drop in value should not be a surprise and was even expected. Well yeah if you keep printing money and keep rates below zero. Take that Nouriel Roubini! Mr. Plosser says that there is no particular reason why you wouldn't expect the dollar to go back to where it was before the panic set in. He says that the U.S. government has historically let the dollar fluctuate, and a weaker dollar in recent years can be understood as a market response to imbalances in the U.S. current account. The dollar as an instrument to tackle asset price bubbles, monetary policy alone isn't adequate, and that more research should be made on the issue of whether there's a connection between policy rates and such bubbles.
Well I can save him some time on that study. There is. We saw the dollar movement versus other global currencies scream out about the coming problems that affected the global economy. The dollar and its relationship to other currencies like the euro have a major impact on global asset prices. Of course Mr. Plosser’s statements on the dollar other than the Federal Reserve does not seem to care and are a bit unclear. Does he mean that he thinks the dollar is going to turn around and we should stop buying commodities? Or is it another sign that the Fed has no real concerns about the weak dollar and rising commodity prices so for the foreseeable future the carry trade just carries on?
Well at least now we know that Obama is worried about the size of the US debt. He told Fox News that, “it is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point people could lose confidence in the US economy in a double dip recession.” Sobering words from a President but a good thing that he is publicly acknowledging the fact.
For the crude oil market the Energy Information Agency report seemed to be supportive but you have to keep in mind the numbers were skewered by Hurricane Ida. The EIA said that U.S. commercial crude oil inventories decreased by 0.9 million barrels from the previous week. That was a much smaller drawdown then reported by the American Petroleum Institute. After the API report, that might have been a bit negative if it were not for the fact that the EIA reported motor gasoline inventories decreased by 1.7 million barrels last week. Distillates were nondescript. The report gave us a bounce but stay tuned for next week’s report.
While gold and silver continue to roar, oil is still locked in a range. One way to trade the range is day trading or there are other option strategies we can use. If you need help evaluating these strategies just call me and we can get set you up on an exciting futures option platform called Option Navigator. Just call me at 800-935-6487 or email me at
We're short January crude from apprx 8020 - stop 8230.
Sell January RBOB at 2100 stop - 2120.
Buy January heating oil at 20000 - stop 19800.
Buy January natural gas at 482 - stop 468.
Phil Flynn
PFGBEST Research Team
(800) 935-6487
pflynn@pfgbest.com
Sitting Ida By
11/18/2009
Hurricane Ida may have had more impact on the weekly American Petroleum Institute report that she will in the big energy picture. A larger drop in Gulf Coast imports led to a drop in crude oil supply and is giving people a reason other than the dollar to buy oil. The API reported that US crude supply fell 4.4 million barrels in the latest week helping to drive oil higher yet again overnight. Oh sure you have that pesky little dollar falling again as well but it still off the recent lows.
Of course while the drop in crude supply can be easily explained away by Hurricane Ida, the rest of the numbers do not so easily add up. The API reported that gas supply fell by 96,300 barrels and distillates increased by 507,000 barrels. The rest of the country, according to the API, showed that crude imports actually increased yet the drop in the Gulf Coast seemed to offset this.
Yesterday it seemed that heating oil was giving us a boost and leading energy higher. Part of it is that the weather is supposed to get a bit colder but also because of the possibility of a late harvest in the grains. Bloomberg News reported that Goldman Sachs Group Inc. said it expects U.S. demand for diesel to increase in coming weeks, reducing surplus supplies of the fuel as farmers return to harvest crops as weather conditions improve. The late harvest season is estimated to generate an additional demand of 11 million barrels of distillates at the national level according to the report and it gave heating oil buyers another reason to buy heating oil other than the dollar.
Yet again it is the dollar that is driving us higher. The market should see some impact from the Energy Information Agency report that I would expect like the API should be affected by Hurricane Ida. Oil still has a glut of supply which should limit upside gains but other than that it seems like the carry trade will continue to carry on. Precious metals and not so precious metals are surging and even grains are being buoyed on the dollar. Everyone is talking about the dollar but it seems that no one is willing to really do anything about it.
In the meantime for commodity traders it presents great opportunities everyday. If you have the risk capital this is a great time to follow the big money. If you are ready to get involved just call me at 800-935-6487 or email me at
We're short January crude fro apprx 8020 - stop 8230.
Stopped on short January RBOB from apprx 20300 - at apprx 20500.
Buy January heating oil at 20000 - stop 19800.
Buy January Natural gas at 482 - stop 468.
Phil Flynn
PFGBEST Research Team
(800) 935-6487
pflynn@pfgbest.com
About Phil Flynn »
There is a substantial risk of loss in trading futures and options.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.