Forget the fact that the ECB leaked 50 billion euros Wednesday, in its desire to be loved it slightly exceeded expectations by announcing Thursday an extra 10 billion euros for good measure. It is obvious that the ECB was underwhelmed with yesterday’s market reaction to their planned stimulus, so they added a bit extra so the markets would receive the measure warmly. The market is indeed giving Mario what he wants. After some indecision, the euro finally moved decidedly lower, which should help eurozone exports, as well as putting more cash in the system to ward of deflation.
The move up in the dollar that came in response to world currencies gaining value to the euro also reverses oil from higher to lower on the day that ECB head Mario Draghi added a bonus. Mr. Draghi did say that the low oil price strengthened the basis and help the economy as well as increase exports!
“Looking ahead, recent declines in oil prices have strengthened the basis for the economic recovery to gain momentum. Lower oil prices should support households’ real disposable income and corporate profitability. Domestic demand should also be further supported by our monetary policy measures, the ongoing improvements in financial conditions and the progress made in fiscal consolidation and structural reforms. Furthermore, demand for exports should benefit from the global recovery,” Draghi said.
Yet still, slack and unemployment or deflation keeps risks to the downside, and the continued fall in oil prices that he helped with his move today.
But the deciding factor for oil on whether this move will be a success will be measured in oil demand. While the short-term impact will be lower due to currency fluctuation, the big-picture one hopes that this move will increase the demand for oil. That should at some point give oil support and keep us in the recent trading range, where my $44 a barrel support point is looking more solid for a longer-term bottom.
Yet short-term oil will have to get through the Energy Information Administration inventory report. The expectations are for increases across the board, with record readings in both crude oil and gasoline.
Demand for gasoline will be key, with signals that prices could soon see a national average below $2.00 a gallon. In the meantime, with record drops in oil rig counts and massive job cuts and capital spending cuts the question becomes when will that start to impact U.S. output and supply? We should start seeing the impact by the middle of the summer, but it won’t happen fast enough to slow current production that is adding to our record supply. The American Petroleum Institute was a reminder of that fact when they reported that crude supply increased last week by 5.7 million barrels.
Checkout Price Links https://www.youtube.com/watch?v=EI1wUhBgaZ4&list=PLDq9JQANqxRxCBaHqunzBT4Frxitjw-XV&index=2. MarketWatch Says that I am a must follow in 2015 on Twitter! You can follow me on Twitter @energyphilflynn and you can also join me on Facebook. If you have any questions or if you want to get my trade levels for today call me at (888-264-5665) or Email Pflynn@pricegroup.com. If you want to start trading apply by hitting this link https://newaccount.admis.com/?office=269.
Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses.
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 futures. The Price Futures Group, its officers, directors, employees, and brokers 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. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author. Trading in futures contracts, options on futures contracts, and forward contracts is not suitable for all investors and involves substantial risks.