Monday, November 5, 2007

Oil speculators… Can you trade on this?

From Reuters (with chart):
MasterCard SpendingPulse has been publishing weekly retail gasoline purchase data on a weekly basis since August in an effort to nail down actual American fuel consumption in a timely way.

Now it looks like the data could be used in predicting U.S. gasoline inventories as reported by the U.S. Energy Information Administration — a key headline for energy traders. The graph seems to show a negative correlation between SpendingPulse gasoline purchases and EIA gasoline inventories with two-week lag, though the relationship vanishes when U.S. refiners hit the brakes.
We've got a few more links from Reuters you might like. The next one makes a point that we've preached at Climateer, everything is connected. Sometimes the connections are rewarding, sometimes not so much but everything is connected. Not always correlated in ways they once were or will be, change happens. Look for the connections.

The oil bone is connected to the gold bone …
...Prices for commodities are increasingly rising and falling in unison. Investment funds have diversified their portfolios into commodities in recent years, looking at metals, grains and energy futures as more of a single asset class that can add balance to the traditional mix of stocks and bonds....
Taking the opposing view:
Gold and oil…not as tight as they look
...Moreover, even as the gold market gets excited about breaking the 1980 records at $850 in spot and $875 for COMEX futures, in inflation-adjusted terms gold’s value is not near a record. Crude at $100 is basically its highest price ever in absolute and real terms. But gold’s inflation adjusted record was put at $2,079 an ounce by consultants GFMS Ltd. Deutsche Bank said in a report last week that gold needs to rise another 74 percent to reach an all-time high in real terms. So it looks cheap compared to oil. Why is gold lagging? It’s a good question. Part of the answer can be found in a relatively non-scary inflation picture, that defies the record rally in energy prices and many other commodities. Also, gold is not “consumed” the way other commodities are, being more of a monetary asset (and an adornment.) So demand for raw materials to feed China’s economy is less of a factor....
Five days later:
Chicago traders eye crude oil, dollar for price direction in grains, soy
...CBOT floor traders say the soyoil market is now eyeing the all-time high of 51 cents made in the fall of 1974, especially given the strength in crude and talk of $100 crude oil that once seemed fanciful. Crude went above $95 last week....
Oil market stuck in a hamster wheel?
...Energy analysts are saying the industry is selling off huge amounts of oil in storage because of the shape of the forward price curve — oil prices get cheaper for delivery out into the future — and the market may now be in a vicious circle…. or perhaps a hampster wheel.

“We’re in a hampster wheel right now,” said Stephen Schork, editor of the Schork Report. “Given the economics of what it takes to store oil, it makes no sense to hold onto inventory right now. Storage owners are taking the economically prudent step and dumping inventories because of the backwardated market structure.”...