It is a full moon tomorrow and this always affects the market. The Bond Market will close at 2 p.m. tomorrow and we will not offer any new trade, as we see volume at a minimum before the Memorial Day weekend.
We saw what happened yesterday. The market moved up, the market moved down, and would not hold above 10,000. Gold continued to climb. Oil still destroys our country, and the EU union may be in default.
And, Tea Partiers, Obama might not be an American citizen. Just to think, this rhetoric is more important than what is important. Do we know?
We recommend holding no open OEX positions over the holiday weekend, and will have our alerts out next Monday evening. You will receive a trade alert tomorrow, but it is meant to close any open positions.
Happy Holiday!
Blue Chip commentary this weekend to our subscribers at www.bluechiptopions.com will emphasize the corporatization of the world, where those who have the real cash assets, and those holding precious metals will benefit short term from how the stock market is going to change.
For those of you happy about the lower oil prices, open your eyes:
Rising Drilling Costs Mean $90 Crude in 2018: Energy Markets
By Grant Smith
May 26 (Bloomberg) -- The rising costs of extracting oil are propping up New York futures for the years ahead, even as prices sink for crude that will be delivered over the rest of this year.
The futures contract closest to delivery on the New York Mercantile Exchange tumbled 13 percent in the past three months to below $70 a barrel as investors fled riskier assets and the December 2015 contract lost 5 percent. At the same time December 2018 futures remain above $90 a barrel, suggesting analysts are less pessimistic about the long term. The U.S. Labor Department’s index for oil- and gas-field machinery costs rose in April for the first time in six months.
“The price is holding at decent levels” for delivery in later years, said Paul Tossetti, an analyst in Dallas with consultants PFC Energy. “You need a certain level for all these high-priced resources that are coming on-stream, deepwater Gulf of Mexico, deepwater Brazil and the Canadian oil sands. That’s the dynamic part of the non-OPEC oil supply.”
The oil contract closest to delivery slumped to $64.24 a barrel on May 20, the lowest intra-day price since July 2009, on concern that Europe’s sovereign debt crisis will derail the economic recovery. Oil for July delivery was trading on Nymex at $69.38, up 0.6 percent, at 10:16 a.m. in Singapore.
Bank of America Merrill Lynch maintained on May 24 its 2011 price forecast, even as it sliced its projection for the second half of this year by 18 percent. The U.S.Energy Information Administration said yesterday that oil prices will rise to $108 a barrel by 2020 as the global economy rebounds.
Non-OPEC Growth
Merrill estimated supply from outside the Organization of Petroleum Exporting Countries will increase 1.1 percent, to 52.1 million barrels a day this year. That follows 700,000 barrels a day last year, the biggest jump in five years. Non-OPEC countries produce about 60 percent of global output.
“The costs related to the oil industry, materials, equipment, actually increased,” said Andy Sommer, senior analyst at EGL AG in Dietikon, Switzerland. “The back-end of the curve is supported by that.”
The Labor Department’s Index for U.S. oil and gas producers’ machinery costs rose 0.5 percent to 200.30 last month, its first increase since October.
“We also expect the market to remain relatively tight on solid emerging market fundamentals in 2011 and beyond, particularly in Asia,” Merrill’s head of commodities research Francisco Blanch said in the report. The bank said crude prices will average $85 a barrel next year.
Contango Persists
Oil futures for later delivery have been more expensive than immediate supplies since October 2008, a price structure known as contango that can indicate expectations for tighter supplies in future. The International Energy Agency forecast in a Nov. 10 report that global oil demand will grow 1 percent a year to reach 105 million barrels a day by 2030.
“Concerns over a Eurozone-centered debt crisis, and the Chinese economy, and U.S. financial regulations, have no impact on full-cycle production costs or on the medium-term view,” said Mike Wittner, head of oil market research at Societe Generale SA in London. “And the medium-term view is one of global oil demand growth bumping into a mature supply base.”
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