Buzzard Field to Become Operational: Europe Moving Towards a Single Banking Authority
Long held as one of the reasons for the Brent strength relative to WTI was the lack of supply from the Buzzard Field. That is due to become operational over the weekend. In a seemingly incongruous reaction the WTI-Brent arb is weakening this morning. Technically this was the movement we looked for in our evening report. We guess we should not be surprised that the fundamentals are not working immediately. It is the supply and demand of traders’ position that determine prices for the short-term although in the long run fundamentals matter. It is expected that the Enbridge pipeline will be repaired in three days’ time.
The product market however, and especially rbob have two refinery glitches to deal with. The sorely depressed commodity has made a nearly ten-cent move higher off its low if Thursday.
The European summit accomplished something of use rather than platitudes. It will take action to advance towards a single banking supervise. This will take a year or so to implement fully. However, it will open the way for the euro zone’s rescue package to inject funds directly into the banking system.
China’s foreign direct investment in flows fell 3.8 percent in the first 3 quarters of 2012. The recent data points there look to tepid growth prospects. The same slowdown that hampered the FDI will also make growth in exports an uphill battle.
CRUDE: Hi:92.32; Low: 91.82
Dec remains plastered in a congestion pattern. The hourly chart still boasts of a head nad shoulders bottom.the neckline will need be pierced by a 5-minute settle to warrant further upside. The minor downside pivot is 91.10. The key downside pivot is 90.00. Normally we give an indication of our leaning towards the day’s trend. Friday we will be sidelined as this type of congestion pattern is usually a money taker and not a money giver. We will preserve capital until such time as the congestion ends.
BRENT: Hi: 113.08; Low: 112.26
With the Buzzard field reopening, it should be bearish for Dec. although that may be more readily seen with the Jan-Jan spread. Nevertheless the intraday chart appears to be in a bearish correction. This model will change with a break of the minor upside pivot at 113.10. The minor downside pivot is 112.30. Our model suggests that there will be a test of 111.70 to 111.50 with a break thereof. However, A drop to 110.55 will be seen if that mark fails to hold. We are a seller of the rally with a protective stop above 113.15.
RBOB: Hi: 2.7822; Low:2.7514
With both Pemex and BP Whiting having unplanned outages Thursday the heavily drubbed Nov contract has been able to recover nearly ten-cents off the low. However, the key upside pivot to the very short term chart is 2.79. It will be necessary for the bulls to remove that obstacle. Once through the hurdle Nov is likely to rise to 2.8/2 to 2.8250. The minor downside pivot is 2.75. We view this a two way market for Friday. Sell the rips; But the dips.
DIST: Hi: 3.2135; Low: 3.1954
Nov has a inverted head and shoulders with a neckline at 3.2150 on the hourly chart. It is with a break and five-minute settle above that level that Nov will signal a retrace of part of the move down from 3.2650. This will give Nov a look at 3.2350 to 3.24. The minor downside pivot to this model is 3.1950. In breaking this level Nov will slide back to the 3.150 level. We are neutral of this market.
GASOIL: Hi: 1004.50; Low:998.50
Nov will need to better the 1006.25 level to break this market higher. If this is seen, Nov will climb to 1010 to 1011. The news of the Buzzard field may put pressure on this market, but it will probably be more reflected in the Dec contract. The minor downside pivot for Nov is 995.50. The key downside pivot is 987.50.
NAT : Hi: 3.623; Low: 3.559
Nov is too close to the key upside pivot at 3.64 not to have a run through it. If successful in that regard it is likely that Nov will pop to the 3.715 to 3.74 zone. This are is likely to complete this leg to the upside. Unless there is to be a prolonged exposure to intense cold, this level will provide a point from which Nov will start a meaningful correction. Nov will have minor support at the 3.55 to 3.540. The minor downside pivot is 3.52. We are a seller of strength at the 3.715 level. With a protective stop above 3.74.
