The Energy Report

The Energy Report(8)

Kevin Rosenberg — 2012-07-09T14:54:00Z

By Kevin Rosenberg,

PFGBEST

(800) 487-3581

krosenberg@pfgbest.com

Crude Oil:

Friday 7/6/12: With hopes dashed that the Norwegian oil strike was near its end and unexpectedly poor jobs data, August delivery for crude oil fell $2.77 points on Friday. Much of the break occurred in the short time following the US labor department’s report that nonfarm payrolls for June grew by just 80,000, well below analyst expectations of 100,000. Oil demand depends largely on global economic growth, and a poor jobs number only bolsters the fact that a full economic recovery is still in its infancy. Nearly two weeks into Norway’s oil and gas worker’s strike, the two sides continued to stand at an impasse. The Government continues to urge oil companies and their unions to continue talks before a potential lockout takes place this week. In effect, a lockout would affect all the companies with gas operations on the Norwegian continental shelf. Norway produces some 3.8 million barrels of crude oil per day, representing nearly 2 ½ percent of the world’s daily oil production. Failed negotiations would serve to fuel oil prices.

Monday 7/9/12: Overnight trade saw August crude oil trend higher on news that Norway’s ongoing negotiations over an oil and gas worker’s strike made little progress over the weekend. The strike has served to limit the region’s overall production, but the threat of a full shutdown looms much larger. The oil industry association has threatened to impose a full lockdown at midnight on Tuesday should the Norwegian government not intervene and put a stop to the strike. The labor dispute centers on offshore workers’ demands that they receive a full pension and retirement at the age of 62 instead of 65. The oil and gas industry pins its hopes on the fact that a much larger national interest is at stake with the strike being left unchecked.

Technicals: Strong volume and stochastics this morning along with an RSI reading of 49.55 all lend support to August Crude futures. We remain above the 9-day moving average as well as the middle Bollinger Band. A close below our last pivot of 87.57 can be seen as bearish, but fundamentals power the market this morning. Look for opportunities to buy the weakness of the strength along support today.

CLQ2 (7/6/12)

R2- $87.07

R1- $86.73

Pivot- $85.26

S1- $83.80

S2 - $83.45

Reports (All Central time):

7/10 @ 03:30: API Energy Stocks

7/11 @ 09:30: EIA Gas Storage

7/12 @ 09:30: EIA Gas Storage

Kevin Rosenberg

PFGBEST Research Team

800.487.3581

krosenberg@pfgbest.com

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.

The Energy Report(7)

Kevin Rosenberg — 2012-07-06T14:54:00Z

By Kevin Rosenberg,

PFGBEST

(800) 487-3581

krosenberg@pfgbest.com

Crude Oil:

Global Economic growth has dominated the energy markets this week, driving the market wildly in either direction. Negative data and the general fear of struggling economies drives prices lower, but only until government stimuli becomes a real possibility. With a stronger US dollar and hopes for aggressive government stimulus fading, August crude futures traded $0.44 lower on Thursday closing at $87.22 per barrel. Yesterday’s US Energy Information Administration report showed a draw of 4.3 million barrels in oil stocks for the week ending 6/29, in stark comparison to analyst expectations of 1.4 million barrels. The EIA report also showed a rise of 151,000 barrels in gasoline stockpiles compared to an estimate of 500,000 barrels and a draw on distillates of 1.051 million barrels. The ensuing rally was short lived as most attributed the data to Tropical Storm Debby’s impact on Gulf production.

The story is much the same today. Crude oil futures fell overnight reflecting concerns over struggling world economies and interest rate cuts by China and European Central Bank. A drop in overseas interest rates closes the gap between their own rates and those offered by the US, which in turn attracts investors to the US dollar and makes crude oil more costly to those using foreign currency.

Investors this morning were focused on June’s non-farm payroll report as well as unemployment. Typically, lower unemployment means more people driving to work, more demand for crude oil and higher prices. Lower unemployment and an improving economic environment lessen the chance for government intervention, which has the effect of driving crude prices higher. Reflecting the conundrum stated earlier, poor economic data can have a dual effect on the market, driving prices lower until the possibility of stimulus surfaces. Entering the report August crude oil was down $1.70 trading in the $85.70 area. Analyst estimates of the reports were positive with a whisper number even more enthusiastic. Poor job data and unemployment at 8.2% quickly broke prices toward the $85.00 mark. At the time of this writing, 8:00AM Central time, we have pierced through the $84.50 level. Positive analyst expectations coupled with unexpectedly negative data has resulted in strong downside pressure this morning.

Technicals: Healthy volume, strong stochastics and an RSI reading of 49.93 all lend support to August Crude futures. A close above our last pivot also implies strength.

CLQ2 (7/5/12)

R2- $89.10

R1- $88.81

Pivot- $87.57

S1- $86.33

S2 - $86.03

Reports (All Central time):

7/6 @ 07:30: Unemployment

7/6 @ 09:30: EIA Gas Storage

Kevin Rosenberg

PFGBEST Research Team

800.487.3581

krosenberg@pfgbest.com

The Energy Report(6)

Kevin Rosenberg — 2012-07-05T14:54:00Z

By Kevin Rosenberg,

PFGBEST

(800) 487-3581

krosenberg@pfgbest.com

Crude Oil:

Another large rally ensued prior to the Independence Day holiday amidst widely held beliefs that poor economic growth in Europe will soon spur government intervention. A short term bottom may have been put in place with mounting tensions in Iran, supply disruptions in the North Sea and the ongoing Norwegian offshore oil and gas worker’s strike. Negotiations in Norway broke down on Wednesday over pension terms. Norwegian crude output has been lowered by an estimated 15% in the wake of the strike.

With a firm US Dollar and mounting losses in Equities markets, overnight trading saw August crude drop $0.75 cents to $86.91 a barrel. Investors await policy statements from the European Central Bank and the Bank of England that are largely thought to yield policies that will boost economic growth, most notably an interest rate cut of 25 basis points that would represent a record low. It’s also been said that China may make moves to allow its central bank to make loans easier for companies. The fate of the market will rest heavily on the results of this week’s nonfarm payroll release, EIA energy stocks and gas storage reports as well as unemployment on Friday. Analysts estimate the results of today’s EIA inventory report will show a draw of 1.75 to 2.0 million barrels.

Technicals: Healthy volume, strong stochastics and an RSI reading of 55.17 all lend support to August Crude futures. A close above our last pivot also implies strength. Buy along support today.

CLQ2 (7/3/12)

R2- $89.25

R1- $88.70

Pivot- $86.34

S1- $83.99

S2 - $83.43

Reports (All Central time):

7/5 @ 07:30: Initial Jobless Claims

7/5 @ 10:00: EIA Energy Stocks

7/6 @ 07:30: Unemployment

7/6 @ 09:30: EIA Gas Storage

Kevin Rosenberg

PFGBEST Research Team

800.487.3581

krosenberg@pfgbest.com

The Energy Report(5)

Kevin Rosenberg — 2012-07-03T14:54:00Z

By Kevin Rosenberg,

PFGBEST

(800) 487-3581

krosenberg@pfgbest.com

Crude Oil:

As is the story with most markets these days, the price of crude oil has relied heavily on economic data to determine its fate. Interestingly, the same negative data that served to temper optimism surrounding a productive EU summit late last week has now begun to do just the opposite. Yesterday’s slide in the price of oil surrounded weaker than expected economic data out of China. In the US, the manufacturing sector showed contraction for the first time since July 2009 to a level of 49.7 in June from 53.5 in May. The US is not alone in its manufacturing struggles. Euro-zone manufacturing in June contracted at an alarming rate, unemployment remains at an all time high. The same factors that drove the market lower early in the week, now lend support with a consensus that further economic stimulus is on its way.

More support comes from analyst estimates that Thursday’s Energy Information Administration report will show a decrease in crude oil inventories for the week ending June 29. Keep an eye out for an American Petroleum Institute report later today. In the Middle East, Iran has drafted a bill to block the Strait of Hormuz to European and US tankers. In response, the US plans to increase military presence in the area. Discussion at last month’s bi annual OPEC meeting surrounded a swift decline in prices. Several leading countries warned of a private meeting to discuss reducing its production ceiling. The expectation that supply will continue to tighten for the near term has analysts predicting that a three month slide in the price of crude oil is nearing its end.

Technicals: Today’s pivot is 83.63 with resistance 1 and 2 coming in at 85.11 and 85.46 respectively. Support 1 lies at 82.16 with support 2 at 81.81. Stochastics remain strong as does an RSI reading of 54.33. A close above yesterdays pivot point of 82.86 lends support. Be aware of a shortened trading day and tomorrow’s market closure in observance of the 4^th of July.

Reports (All Central time):

7/3 @ 03:30: API Energy Stocks

7/4: Independence Day

7/5 @ 07:30: Initial Jobless Claims

7/5 @ 10:00 EIA Energy Stocks

7/6 @ 09:30 EIA Gas Storage

Kevin Rosenberg

PFGBEST Research Team

800.487.3581

krosenberg@pfgbest.com

The Energy Report(4)

Kevin Rosenberg — 2012-07-02T14:54:00Z

Crude Oil:

Crude oil futures jumped $7.27 during Friday’s session in response to the EU decision to use bailout funds in an effort to aid Spain and Italy’s banks. An enormous rally on the back of otherwise poor fundamentals sent the bears running for the short term, but presents great selling opportunity to those with a longer term outlook. A rally larger than any in over 3 years, more than 9%, only puts crude prices at a level we saw just two weeks ago.

Short term optimists have already met reality this morning. Crude oil prices edged lower in overnight trading with concerns about economic growth in China. Manufacturing in China grew at its slowest pace since November, manufacturing PMI dropped to 48.2 from 48.4. The world’s second largest economic power is showing signs of continued struggle. As of 7:45 Central Time, August crude oil is trading at 83.70, down $1.25. Downside pressure could be limited in the near term as Friday’s EU summit has injected hope and a long planned EU embargo on Iranian oil took effect over the weekend. The ongoing Norwegian oil workers strike should also help lend support. Be aware of any positive economic reports that could support newfound positive sentiment.

Technicals: Today’s pivot is 82.86 with resistance 1 and 2 coming in at 86.40 and 87.23 respectively. Support 1 lies at 79.33 with support 2 at 78.49. Stochastics remain strong as does an RSI reading of 48.4. Aggressive bulls could buy breaks this morning above our middle Bollinger Band at 82.33, while the longer term trader might consider initiating short positions on rallies. Be aware of a shortened trading week with the 4^th of July observance.

Reports (All Central time):

7/2 @ 09:00: Construction Spending

7/2 @ 09:00: ISM Manufacturing Index

7/3 @ 03:30: API Energy Stocks

7/4: Independence Day

7/5 @ 07:30: Initial Jobless Claims

7/5 @ 10:00 EIA Energy Stocks

7/6 @ 09:30 EIA Gas Storage

Kevin Rosenberg

PFGBEST Research Team

800.487.3581

krosenberg@pfgbest.com

The Energy Report(3)

Kevin Rosenberg — 2012-06-29T14:54:00Z

Crude Oil:

The big story today surrounds an unexpectedly productive EU summit. While investors feared the worst, European leaders emerged with a plan to assign a single financial supervisor to the region to help their swelling financial crisis. A proposed $149 million package aimed at lifting the global economy and demand for fuel could be put in place. Spain and Italy have yet to sign off in an effort to re-center the focus on bringing down their borrowing costs, putting somewhat of a cap on gains overnight. After August crude traded to its lowest levels since May 2010, a $1.64 rally in overnight trade has brought the bulls back and sent shorts running. US oil consumption has fallen off for months and April was even weaker than expected. There are now signs that trend may be leveling off. Markets are up across the board, equities markets have responded in kind. The US dollar is down $1.28 to $81.72, its lowest levels in more than a week.

All this comes in the wake of very poor investor outlook and otherwise poor fundamentals. Norwegian production losses continue to mount in the wake of their labor strike. Modest growth in the third quarter is further proof of a struggling economy. Jobless claims remain high. This rally in crude oil could represent more of a flash in the pan rather than a fundamental shift.

Technicals: Today’s pivot is 78.60 with resistance one coming in at 80.38, followed by resistance two 80.80. Support one comes in at 76.82 and 76.40 below that. Stochastics have turned positive and RSI has gained significant strength. Healthy volume indicates short covering and the re-entry of willing buyers. August crude finally broke through the 9 day moving average, but remains below our middle Bollinger Band.

Natural Gas:

After failing to take out the $3.00 mark on 6/27, natural gas had attempted to break through our 9 day moving average of 2.691, but has since leveled of with a last print 2.746. High volume during its retreat indicates to long covering. Although gas stocks have seen lower injections compared to this time last year, storage remains healthy.

Technicals: Stochastics have turned negative with strong RSI. Today’s pivot is 2.742 with resistance one and two coming in at 2.835 and 2.858 respectively. Support comes in at 2.649 and 2.626.

The Energy Report(2)

Kevin Rosenberg — 2012-06-28T14:54:00Z

6/28/2012

Crude Oil:

A relatively strong showing in August Crude yesterday saw the market settle once again above the $80 mark, its highest level since June 21. Largely in response to a drawdown in US inventories and increased demand as indicated in the EIA report. Although less than expected, crude oil inventories fell 100,000 barrels compared to last week when inventories were at their highest levels since 1990. Coupled with lower inventories, the EIA showed a 2.5% increase in demand. This is all in stark contrast to previous weeks where US inventories, production and imports remained high and a weakened economy curbed demand. Oil workers’ strike in Norway affecting four offshore rigs curbs up to 15% of the countries production and helps to support prices. The impending Iranian Embargo could serve to do the same. This all seems a bit of a mirage as alternative fuel, decreased Western demand, and healthy supply could keep a lid on this market for the unforeseen future. As of 8:51AM Central, August crude oil futures are down 38 points, last print 79.83.

Technicals: Stochastics remain oversold, while an RSI of 31 shows weakness. Crude failed at the 9 day moving average during this morning’s session. 81.06 provides for our first resistance level, followed by 81.32. Support one and two lie at 78.82 and 78.55 respectively.

Gasoline / Heating Oil:

In stark contrast to analyst expectations gasoline inventories rose 2.1 million barrels, distillates fell 2.3 million barrels and refinery utilization rose 0.7% (92.6% of capacity). Analyst expectations were for a rise in gasoline stockpiles of 800,000 barrels, 900,000 barrels in distillates and a boost in refineries of 0.2%. As one would expect, August gasoline futures traded as low as 259.31, closing down 2.47 points at 262.04. Heating Oil rallied 1.72 points settling at 2.5937. Both RBOB Gas and Heating Oil trade lower in this morning’s session.

Reports (All Central time):

6/28 @ 09:30: EIA Gas Storage

The Energy Report

Robert Short — 2012-06-27T14:54:00Z

6/27/2012

Crude Oil:

A moderately choppy session yesterday saw August crude trade lower early, closing on a high note, up 15 points. Ultimately we traded near the pivot and between support and resistance all day. Overnight, electronic trading dropped 18 cents to $79.16 as investors awaited the API report. Concerns over the upcoming EU summit still loom. Edgan-Jones downgraded Germany’s sovereign rating with expectations that they will have overly exposed themselves to the Euro zone. In the Gulf, tropical storm Debby has moved over Florida and been downgraded to a tropical depression.

Analyst expectations were that crude stockpiles would rise about 1 million barrels, 300,000 for gasoline and a decline in distillate stockpiles of 1 million barrels. The official API reported that crude oil supplies rose 507,000 barrels, gasoline up 373,000, while distillates met the expected decline of 1 million barrels. As we await this morning’s EIA inventory report, sideways to moderately higher trading ensues.

Technicals: Again, note a technical formation of a triple bottom on an August crude weekly chart. Negative sentiment abound does not entirely rule out a technical rally from oversold levels. Oversold stochastics and the lower Bollinger band lend support at current levels. The same can be said of the close above the pivot. Upside resistance today is 79.79 followed by 79.95. First support lies at 78.47, second support is 78.32.

Natural Gas:

Early strength in the market puts us well above yesterday’s targeted May high of 28.81. Last trade at 8:25 central is 29.08. Forecasts of average to above average temperatures across much of the US lend strong support. Gulf operations are still cut short in the wake of Tropical Storm Debby.

Reports (All Central time):

6/27 @ 09:30: EIA Energy Stocks

6/28 @ 09:30: EIA Gas Storage

The Pain in Spain

Phil Flynn — 2012-05-30T14:54:00Z

Energy Market Comments

by Phil Flynn, PFGBEST

1-800-935-6487

pflynn@PFGBEST.com

Wednesday, May 30, 2012 at 8:00 AM

The Energy Report

The pain is Spain drives down the grains. Not to mention oil, gold and silver. A Spanish downgrade and a vote of no confidence by the Belgium National Bank put the market into deflationary mode as the euro sank to a two-year low sending oil to perhaps its biggest monthly loss in almost three years. Eagan-Jones downgraded Spain’s debt to bb- from b and left the country on a negative outlook. This comes right after the National Bank of Belgium reduced its exposure to sovereign debt from the euro-zone periphery countries like Spain, Greece, Italy, Portugal and Ireland by not renewing expiring securities, and instead using about 1.1 billion dollars to buy back its own government paper. So if Belgium wants no part of the PIIGS debt, why then would anyone else?

The oil market was trying to be optimistic about Europe, it really was. They tried to find solace in the fact that the Greek austerity party is leading the polls in Greece and that European stock markets closed higher. Yet at the end of the day, it seems that confidence was shattered. They also erased an Iranian risk premium as the talks with Iran seem doomed to fail. Even word of a soft war against Iran computer infrastructure with a super virus seemed to suggest that there are ongoing plans to thwart Iran’s nuclear ambitions. Oil has come into long term support and tried to hold its gains but it became an impossible effort. German bonds started to soar and yields hit record lows as Spain retail sales tanked, raising the odds of a deepening recession.

It also did not help that China downplayed the speculation surrounding a massive quantitative easing. Reuter’s News reported that, “China does not need massive fiscal stimulus to stabilize growth and calm investors fretting that the global economy may slip back into a similar crisis as 2008-2009, top policy advisers said. Even though China's economic growth is expected to ease this year to its weakest pace in 13 years, aggressive spending now could do longer-term harm, they said.” That has dampened hopes that the stimulus will be of the shock and awe scale of 2008. Of course that does not mean that it will not be big and China wants to move the markets on its own terms when the measures will be announced.

My thanks to all of my friends at PFGBEST! And the best to all of you!

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.

Risks Are Rising

Phil Flynn — 2012-05-29T14:54:00Z

Energy Market Comments

by Phil Flynn, PFGBEST

1-800-935-6487

pflynn@PFGBEST.com

Tuesday, May 29, 2012 at 8:12 AM

As oil in recent weeks gave into the weight of overwhelming supply, it now will find support from rising risk. A massacre in Syria and the perception that Iranian nuclear talks will fail has added a risk dynamic that has been absent in recent weeks. Add to that talk China may act to stimulate its slowing economy and the pro-austerity party in Greece is leading in the polls. It seems that recent dramatic drop in oil has come to an end.

Syria’s slaughter over the weekend may mean that the hand of US retribution may not be restrained. While Israel blames Iran for the problems and Russia, unmoved by the bodies piling up, have decided to back the murderous regime, the odds of some type of a conflict continue to rise. It seems when it comes to politics Russia likes to back those that kill their own people. What cowards.

The Wall Street Journal reports that, “recent hopes that Iran's leadership might be willing to compromise with world powers on the country's nuclear program have soured in recent days after talks in Baghdad failed to bear results. Iranian officials took a harder tone this week, saying the Islamic Republic wouldn't halt enrichment of uranium or reduce it below a threshold—20%—that the West says can ultimately be ramped up to nuclear-weapons grade. Iran insists that its nuclear program is for peaceful purposes. The central demand of the international community in Baghdad during talks was for Iran to freeze enrichment of uranium, which Iran refused to do, leading to an impasse in the talks.”

The Journal says that the “new rhetoric from Iran marks a departure from weeks leading to the negotiations in Baghdad. Iranian officials had softened their remarks and even suggested an opening for a compromise whereby Iran would lower enrichment to a 5% level in exchange for easing of crippling economic sanctions that the West has imposed.”

If the market starts to focus on these risks then the conversation in the oil market will turn away from current oversupply and overproduction to global spare capacity. According to the Energy Information Agency global spare crude oil production capacity is at a paltry average of about 2.4 million barrels per day in the first quarter of 2012. That is down about 1.3 million barrels per day from the same period in 2011. That means that spare crude oil production capacity is now less than 3% of total world crude oil.

The other factor for oil is the slew of economic indicators that will be released this week including Friday's US unemployment report. This report will be critical not only to get a sense of US oil demand expectations but also because it may also give us an indication as to whether President Obama will continue to sink in the polls.

Make sure you are getting the “Power to Prosper” and me every day. Tune to the Fox Business Network! Also call me to get the latest Daily Trade Levels! Call Phil Flynn at 800-935-6487 or email me at pflynn@pfgbest.com

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.