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 settled lower on Monday as rising U.S. output, a weaker physical market and recent dollar strength added to the pressure from a widespread decline across equities and commodities markets.
Brent crude futures LCOc1 closed down 96 cents, or 1.4 percent, at $67.62 a barrel after hitting a session low of $66.98 a barrel.
U.S. West Texas Intermediate (WTI) crude CLc1 settled down $1.30, or 1.99 percent, at $64.15.
“To me this looks like a good old fashioned get-me-out trade. It is hard for me to get real bearish in crude given that the global economy is doing well,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, Missouri.
U.S. stocks plunged in highly volatile trading on Monday, with the Dow industrials .DJI and S&P 500 .SPX posting their biggest one-day percentage drop since August 2011. With Monday’s declines, the S&P 500 erased its gains for 2018 and is now down 0.9 percent this year.
The sell-off in the stock market came after a monthly U.S. jobs report on Friday that showed the fastest wage growth in nearly nine years exacerbated a broader market sell-off that was already under way as European stocks backed off record highs and a rising dollar dented commodities prices.
“There was a lot of fear in the marketplace the economy is going to be too good, which was already priced in the recent oil rally, and that trickled down in the oil market,” Phil Flynn, analyst at Price Futures Group in Chicago.
“What’s good about this correction is that it is based on bullish economic news. I think the minute we see stocks get stability I think you’ll see oil price stability as well,” he added.
Although volatility in oil is rising, it is still close to its lowest in three years. LCOATMIV
Oil, which recently hit the highest levels in nearly three years, has also been pressured by rising U.S. crude production, which could threaten the Organization of the Petroleum Exporting Countries’ effort to support prices.
U.S. government data last week showed output climbed above 10 million barrels per day in November for the first time since 1970.
Analysts expected U.S. crude supplies would post a weekly rise for the second straight week, a preliminary Reuters poll showed on Monday. Industry group American Petroleum Institute posts its data on Tuesday and the U.S. Energy Information Administration reports on Wednesday.
https://www.nasdaq.com/article/oil-closes-lower-as-stock-market-plunges-stronger-dollar-weighs-20180205-01244Questions? 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