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Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

[Bryan Sims, Reuters]

Oil prices dipped for a second straight day on Tuesday, driven by ongoing evidence of rising U.S. crude output, while wary investors sold off stocks, bonds and commodities.

Brent crude futures for March delivery settled down 44 cents, or 0.6 per cent, at $69.02 a barrel after touching a session low of $68.40.

U.S. West Texas Intermediate futures fell $1.06, or 1.6 per cent, to close at $64.50 a barrel.

 Futures traded weaker in post-settlement trading after weekly inventory figures from industry group the American Petroleum Institute showed a 3.2 million-barrel increase in crude oil stocks for last week.

If the U.S. Energy Department data on Wednesday also shows an increase in inventories, it would break an 11-week streak of drawdowns. Analysts polled by Reuters forecast an average 100,000-barrel build in crude stocks.

 “We certainly will get some post-settlement weakness carrying into tomorrow’s EIA data,” said Mike Sabo, senior market strategist at RJO Futures in Chicago.

“We’ve seen a substantial rise of $10 for WTI move in the last 60 days. This could be the beginning of a possible correction,” he added.

U.S. blue-chip stocks opened under pressure, weighed down by a jump in government bond yields and an earlier rise in the dollar.

U.S. stocks fell for a second straight day, with the Dow Jones Industrial Average down 362.59 points, or 1.37 per cent. It was the biggest daily percentage decline since May 2017 and the second-biggest single-day drop since the election of Donald Trump, ahead of his first State of the Union speech on Tuesday.

“There are some concerns that when you get a pull-back in the stock market it may be killing the bullish argument that the economy is strong,” said Phil Flynn, analyst at Price Futures Group in Chicago.

With oil’s negative correlation to the dollar reaching its strongest in a month, even continued signs of robust demand for crude were not enough to ward off profit taking following last week’s rise to three-year highs.

Oil’s inverse relationship to the dollar, whereby a stronger currency makes it more expensive for non-U.S. investors to buy dollar-denominated assets, has reasserted itself this week.

U.S. production is already on par with that of Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries (OPEC). Only Russia produces more, averaging 10.98 million barrels per day (bpd) in 2017.

https://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oil-buckles-as-stronger-dollar-bites-into-risk-linked-assets/article37785339/

Questions? Ask Phil Flynn today at 312-264-4364         A Subsidiary of Price Holdings, Inc. – a Diversified Financial Services Firm. Member NIBA, NFA 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. ©2018
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