Fridays Thoughts and Twitter from Rich Olney

From guest blogger Rich Olney

Twitter has been attacked by hackers. Which made posting impossible. Hopefully it is fixed by Monday. Anyways I was tweeting away on Friday as I believe we are at a turning point in crude. I am looking for a hard correction in the next few weeks and maybe early as Monday. I have some stuff I will post this weekend that shows why.

My reasoning is that the FED givith and the FED taketh. The BDI index rolled over this week. The Chinese are done buying commodities at least thats what the BDI says. 2nd I believe this rally in the dollar is for real and will last more than 1 or 2 sessions. Crude Oil traded sideways all week and there are cracks in the limestone foundation. Last we get the FED this week and I think the dollar rallies as the US will be the first to exit QE as may be hinted at the FED mtg. I think the correction started this afternoon target 870.



For commodities, I believe right now the story is the central banks, their respective currencies and their monetary policies. The US, weakened the US dollar which makes sense since that is a form a protectionism as it has the same effect as it encourages the buy American goods theme as foreign goods become more expensive. Now the foreign currencies are getting at the top of their trading ranges against the dollar the other central banks are taking notice. The most recent example is when the BOE surprise markets this past week by extending their QE by 50B billions, triggering a strong fall in Gbp. US demand for foreign goods is not going to improve if their currencies are to strong.

Foreign central banks don't want overly strong currencies as that is a drag on their economic recoveries. Now that China is cutting back on commodity importing (as reflected in the BDI), this is not supportive for the AUD. The play on a rolling over BDI, short the AUD!!! The Euro ie the anti dollar can do nothing to tighten and in fact may loosen as they have the weak eastern europe dragging them down. The Canadians are talking up prospects of QE to take some wind out of the Looney. Canadians are not interested in currency parity as that would not help exports to their #1 trading partner the US.....Click here for the complete story and charts.

Visit Rich Olney's site Crude Oil Trading Small Specs. for some of the best crude oil trading analyst available.

Chinese Refining Price Increases, California Says No To New Drilling

"Crude Oil Rises as Chinese Refineries Increase Processing Rates"
Crude oil rose after a report showed that Chinese refineries bolstered processing rates for the first time in five months, signaling the government’s economic stimulus measures improved fuel demand. China refined 29.4 million metric tons of crude, or about 6.92 million barrels a day, in March, the China Mainland Marketing Research Co. said in a statement today. That’s up 0.7 percent from a year earlier. U.S. stocks drifted between gains and losses....Complete Story

"California Officials Say No to New Offshore Drilling"
California officials expressed unanimous opposition Thursday to new offshore oil and gas drilling in a meeting U.S. Interior Secretary Ken Salazar held to gauge public sentiment on the issue. Opening the California coast to drilling for oil and natural gas would be an environmental and economic disaster for the state, said Sen. Barbara Boxer, D-Calif. The most populous U.S. state relies on tourism, recreation and other coastal industries....Complete Story

"Norway Oil Industry Seen At Risk If New Areas Not Opened"
Norway's oil and gas production and industry risk going into serious decline by the mid-2020s if a ban on exploration in unexplored offshore areas in the North isn't lifted quickly, oil chiefs say. Combined oil and gas production from Norway, the second-biggest gas exporter to Europe after Russia, and the world's fifth-largest oil exporter, is at a peak that operators hope to sustain until at least 2015, while stemming the decline beyond that....Complete Story


-