The Energy Report
by Kevin Rosenberg
The Energy Report(8)
By Kevin Rosenberg,
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.
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
PFGBEST Research Team
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