Monday, June 8, 2009

Energy Market Update - Crude Oil & Natural Gas

The Gold/Crude Oil ratio above shows how many contracts of crude oil it takes to buy one contract of gold. Notice after it reached resistance levels from 1989; back on 03/06/09 the ratio neared 22. Then, it took 21.8 contracts of crude oil to buy one contract of gold. This brought the question, "Would we see gold move lower or crude move higher, or neitheir?" So far, we have seen gold move from the close of 942.7 on 03/06/09 to a high of 962.6 on June 5th, 2009, a 2.1% gain, and crude oil move from the close of 45.52 on 03/06/09 to a high of 68.44 June 5th, 2009, a 50.3% gain. Clearly, the move in crude oil has been stronger and oil moved higher to gain ground against gold, pulling the ratio down to 14.1.

Now that the ratio is trading back under 15, the question will be, "Will we see crude oil continue to move in this direction?" (more)

Trend setter for Tuesday June 9, 2009

Stepping on the Commodities Gas Pedal, Mogambu Guru

06/08/09 Tampa Bay, Florida Oil has, finally, started to rise again, having been down below the breakeven point of pumping it, as they, too, have all kinds of rising costs like everybody else, as well as pension programs and myriad, large governmental entitlement programs to pay for.

And what is this “breakeven point” for oil? The last I heard, a couple of years ago, is that oil needed to be higher than $70 a barrel to make their relevant governments’ budgets balance, taxes and duties being what they were. (more)

The End of I.O.U.S.A.?

By Ian Mathias

06/08/09 Baltimore, Maryland For the first time since at least the Second World War, Americans are acting like…well…everyone else.

Americans are spending less this year than they did in 2008. Believe it or not, that’s a first since World War II. What’s more, we’re saving at a historic clip… the personal savings rate (updated Friday) jumped from near 0% last year to 5.7%, a 14-year high and the fastest growth rate since at least 1950, when the government started keeping track. (more)

the commercial real estate bubble is about to burst

The Biggest Victim of the Debt Crisis

Just as we’ve been warning, the United States Treasury is the next and largest victim of this great debt crisis.

Right now, the Treasury’s finances are collapsing … its bond prices plunging … its interest rates surging.

Indeed, the Treasury’s financial crisis looms so large, it could wreck more havoc on the economy and deliver more pain to average Americans than the subprime mortgage disaster, the housing bust, the banking crisis, and the collapse of General Motors put together …

It could create a rising tide of interest rates that wipes out the effects of any stimulus, undermines any recovery, and sabotages any new bailouts … (more)

California Budget Recalled: The $24.3 Billion Budget Deficit

There are many reasons why California finds itself at the financial edge. We are a state that heavily depends on personal income and sales taxes that fluctuate wildly during good and bad times. California also finds itself grappling with the reality that there may be no other bubble to save itself from the current harsh reality. During the 1990s, we had massive wealth gains with the technology bubble with areas such as Silicon Valley. After the bust, state revenues dropped quickly but without skipping a beat, we had the real estate bubble to pick up right where it had left off. Two decades of massive bubbles. There may be no other big bubble in the near future to get us out of this mess easily. (more)

Interview with Future Prediction Expert Gerald Celente

It’s the end of the world as the Greater Depression hits after 2010’s failed “W-recovery”

Human Events had the opportunity to interview forecaster extraordinaire Gerald Celente, President of Trends Research Institute, several days ago -- and the future he predicts looks bleak indeed. In fact, as Mr. Celente sees it, the Great Depression will seem like a mild recession as what waits for us in 2011 hits with the force of a Katrina financial hurricane.

In case you’re wondering who Mr. Celente is (if this is still possible), he’s appeared -- along with his predictions -- on Oprah, CNBC, Reuters, NBC, PBS, BBC, the Glenn Beck Show -- the list goes on an on. His Trends Report has been successfully predicting the major future trends impacting our lives for 3 decades, including calling the dot com crash back in the 1990's. (more)

Despite Some Positive Indicators, Economy Remains on Shaky Ground

Based on four measures of risk -- the CBOE volatility index (VIX), the price of gold relative to silver, the 3-month Eurodollar rate less the 3-month Treasury bill rate (TED spread), and Bloomberg’s U.S. Financial Conditions Index, which “combines yield spreads and indices from the money markets, equity markets, and bond markets into a normalized index” -- things are apparently back to where the were before Lehman Brothers went belly up back in September. (more)

Offshore Oil Storage Trade Just Got Less Profitable

The implications of extra crude coming onto the market after last week’s oil energy report showed a rise in crude oil and Friday’s stronger than expected employment report boosting the dollar has to leave one wondering about the market direction for the price of crude oil. Below is an excerpt from Bloomberg that covers the story.

A fifth of supertankers being used to store oil are scheduled to deliver their cargoes, according to ICAP Shipping, a unit of ICAP Plc (IAPLY.PK), the world’s biggest broker of deals between banks.

A so-called notice of redelivery was issued for seven of 33 supertankers storing crude, Simon Chattrabhuti, a London-based analyst at ICAP, said by e-mail today. There “may well be others storing or that have given notice,” he said. Two new carriers were hired to store oil, the analyst said. (more)

Crude Oil Imminent Trend Reversal

Oil has staged the relief rally predicted in the last Oil Market update posted early in March. Our original target was the $70 - $80 area, but due to the time it has taken to get to the current level, the target is now lowered to the current level or a shade higher. The reason for this is that the slower rate of ascent than expected has allowed the 200-day moving average to drop down further, so that it is now in the low $60`s and still dropping quite steeply and it is rare for the price of anything to push far past a falling 200-day moving average before it reacts back again. (more)