{"id":59918,"date":"2012-05-10T10:14:03","date_gmt":"2012-05-10T00:14:03","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2012\/05\/10\/lower-oil-ahead\/"},"modified":"2012-05-10T10:14:03","modified_gmt":"2012-05-10T00:14:03","slug":"lower-oil-ahead","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2012\/05\/10\/lower-oil-ahead\/","title":{"rendered":"Lower Oil Ahead?"},"content":{"rendered":"
\n\tBy Jonathan Barratt<\/span><\/div>\n
\n\t
\n\tFrom last week's comment to today's represents a complete reversal of our ideas<\/strong>. We have seen a 8% fall in the price of oil. The interesting aspect to the fall was that it all occurred prior to the weekend and we feel it was a very large order that went through the market. However, as a result of the elections in France and Greece all the bearish news that we felt was factored into the market is now being written about, US inventories continue to grow, China’s soft landing is accelerating, and European woes continue to expand.<\/div>\n
\n

\n\t\tAs we mentioned last week Europe represents only 9.4% of the top ten consuming nations, yet the majority of news supporting the fall originated from Europe. If you cast your mind back to the beginning of the year we started with an optimistic view of the economy and demand structure for the commodity, however as the year unfolded we became more bearish as to the effects the sovereign debit crisis as it spread to other economies. We experienced a lagged effect — first the problem then later the effects. We feel it will be the same this time round; negative sentiment in Europe will translate to weak demand around the globe. The market this time round will be quicker to factor this in and as such prices should fall.<\/p>\n

\n\t\tHowever, this does have a silver lining: a 8% fall in the price of a primary input goes straight to companies bottom line; hence an additional 8% of profit.<\/strong> So if sentiment where to remain negative and prices driven lower then ultimately it would be good for an economic recovery.<\/p>\n

\n\t\tIn the US it is interesting to note that inventories remain high and builds remains strong and we suggest that this will continue. However, note that demand for products, gasoline and distillate also remain strong. This suggests that the economy is moving and momentum is picking up. The effects of a low prices will only aid demand, so given that we actually have good demand we suggest that dips we are seeing should be violent and temporary. Although we are long we have reduced our holding and may even dump the position if the European situations starts to spiral out of control.<\/p>\n

\n\t\tThe spread between WTI<\/span> and Brent remains weak and we see it coming into US10<\/span>, Perhaps this is a good level to commence a buy program.<\/p>\n

\n\t\tChart Point<\/u><\/p>\n

\n\t\tThe, move higher was short lived. It broke a solid trend line, if you placed your long stops at (WTI<\/span>) US103.70, mentioned last week you should be ok. Momentum indicators remain bearish and there is potential for it to trade to US93.50, which is major support. The velocity of the move lower caught out a lot of people. At the moment we have to be bearish.<\/p>\n

\n\t\t\"\"<\/p>\n<\/div>\n

\n\t <\/div>\n
\n\tProduced by Jonathan Barratt<\/span> direct from the trading desks of Commodity Broking Services, Barratt's Bulletin provides expert analysis of commodity markets, global indices and foreign exchange movements. Click here <\/a>to take a no obligation 21-day trial to Barratt's or to learn more visit www.barrattsbulletin.com<\/a>. Content included in this article is not by association necessarily the view of FNArena (see our disclaimer).<\/em><\/div>\n

\n\t\"\"<\/p>\n

\n\tThis report is not, and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, products, securities or investments. This report does not, and should not be construed as acting to, sponsor, advocate, endorse or promote products or any other products, securities or investments. This report does not purport to make any recommendations or provide any investment or other advice with respect to the purchase, sale or other disposition of products, securities or investments, including, without limitation, any advice to the effect that any related transaction is appropriate for any investment objective or financial situation of a prospective investor. A decision to invest in securities or investments should not be made in reliance on any of the statements in this report. Before making any investment decision, prospective investors should seek advice from their financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision.<\/i><\/p>\n

\t <\/p>\n","protected":false},"excerpt":{"rendered":"

Jonathan Barratt of Barratt’s Bulletin looks to the next level for oil as euro-fear returns.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[24],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/59918"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=59918"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/59918\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=59918"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=59918"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=59918"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}