Friday The 13th, The Ides Of March And Oil
WASHINGTON, March thirteen, 2015 – And we thought Thursday’s market was dangerous, up earlier than it was down earlier than it was up. Not only is as we speak Friday the Thirteenth—never an auspicious day to start with. But it’s the notorious Ides of March this coming Sunday, a day that the spirit of Julius Caesar actually recalls with remorse. This ominous one-two calendar punch can also be one traders and traders might have trigger to rue after this afternoon’s seemingly cataclysmic finish to what’s already trying like a dismal week.
As we write this across the noon hour Friday, the Dow is off almost 250 factors, with the S&P down a dismal 20 and the tech-heavy NASDAQ off a whopping forty four, little doubt attributable to Intel’s dismal forecast from yesterday, leading the pundits and blow-dries to pronounce absolutely the finish of the private computer. Again.
Making issues worse, allegedly anyway, the euro has muddled back right down to $1.05, drawing close to the dollar parity the Royal Sensible Guys have been saying we wouldn’t see until December. And oil prices have been hacked down beneath $forty six per share for West Texas Intermediate (WTI).
On associated fronts, according to Bloomberg, the “University of Michigan mentioned Friday its preliminary index of shopper sentiment decreased to 91.2, a four-month low, from ninety five.4 Coal in February. The reading was lower than probably the most pessimistic forecast in a Bloomberg survey of economists whose median projection was 95.5.” Aaaargh!
Message: We’re all going to die!
The Maven’s mods:
– Sure, we’re certainly all going to die. Some day.
– The sky just isn’t falling.
– The Ides of March will cross.
– The market is getting quick time period oversold.
However maybe more important: The latest oil price drop has been exacerbated by quite a few refineries which were hampered on account of an ongoing strike by the United Steelworkers union (USW), of which the Maven was as soon as a member again within the day. Fortune reported early in the a.m. that
“The United Steelworkers union and oil firms have reached a tentative deal to end the biggest U.S. refinery strike in 35 years, the labor group and other people acquainted with the negotiations said on Thursday.
“The new settlement for about 30,000 workers would last 4 years, a 12 months longer than previous agreements. The deal, which nonetheless needs to be ratified, could not finish strikes immediately in any respect refineries that have suffered walkouts as local union chapters may nonetheless have to work out pending issues.”
While the affected refineries, especially including these of Royal Dutch Shell (RDSA) have been reportedly being operated on a primary level by management personnel and some exterior contractors (i.e. strikebreakers) and therefore not shuttered fully, output was slowed considerably from these services. This added to the already expected lessening of capacity that’s typical throughout winter season refinery upkeep shutdowns. The outcome: even more excess oil went into storage, putting even more downward pressure on present petroleum refining methods and treatment of products 2017 costs.
With the tentative USW settlement, nonetheless, affected refineries should be able to amp up production once more, step by step helping clear the accumulated oil backlog. Ditto when those refineries undergoing upkeep petroleum refining methods and treatment of products 2017 get again on line. This won’t be enough to buttress costs short-term.
However with the summer season driving season imminent, it’ll begin to treatment the backlog and at least among the downward pricing strain. Ditto the truth that some 4 % of present U.S. manufacturing has been temporarily curtailed, with somewhat more nearly certain to observe.
What we’re driving at right here is that a bottom is being put in, though it’s painful. It’s positive hit our portfolio fairly laborious right here, forcing us to dump some of our oil patch holdings at losses simply to stem the lack of our own capital in the short time period.
But longer time period, the sun will come out, so not to worry unduly.
In the meantime, it’s greatest to stay out of the way of this supremely nasty downward juggernaut, which is taking on the look and feel of a short-term correction that will scare—and hurt—a lot of people.
No buying and selling suggestions immediately for apparent reasons. Too treacherous. And the Ides of March.
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