Oil, Not China, Is The Real Destroyer Of America's Trade Balance

UBS's head of Asia-Pacific economics argues that the real global trade imbalance isn't U.S.-China, it is U.S.-oil. As shown below, current account surpluses from fuel exporting-nations have been a far larger driver of total global trade imbalances coming from emerging markets. China's current account surplus (in blue) has been large in recent years, as a percentage of the global economy, but it has been dwarfed by fuel exporters (in green):



Looking at the movements from the late 1990s through 2006, when the overall U.S. deficit worsened from 2 percent of GDP to nearly 7 percent of GDP at the trough, a full three percentage points of that adjustment came from other advanced economies and from fuel imports; only two percentage points came from China and other non-fuel emerging markets. And the recent drop in the U.S. deficit had almost nothing to do with China; again, it was oil prices and developed trade that explains the entire swing over the past 18 months.



Thus the U.S. could use a little less finger-pointing at China... and a lot less driving... if it really wants to correct its global trade imbalance.
This is a huge argument against U.S. trade protectionism since protectionism would miss the largest cause of America's trade deficit while only hurting U.S. export prospects by pissing off trade partners.


Reporter Vincent Fernando writes for The Business Insider


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Crude Oil Weekly Technical Outlook

Crude oil edged higher to 87.09 last week but failed to sustain above 61.8% projection of 69.50 to 83.16 from 78.56 at 86.92 and formed a short term top there. Consolidation from there is still in progress and deeper retreat cannot be ruled out. But downside should be contained by 61.8% retracement of 78.56 to 87.09 at 81.82 and bring rally resumption. Above 87.09 will target 90 psychological level next.

In the bigger picture, medium term rise from 33.2 is still in progress and could extend further higher. Nevertheless, there is no change in the view that it's the second wave of the whole correction that started in 2008 at 147.27. Hence, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, below 78.56 support will be the first signal of topping and will turn focus back to 69.50 support for confirmation.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Where is Crude Oil Headed Next Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets and looks at where oil is likely headed next week.




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Crude Oil and Gasoline Futures Decline on Speculation U.S. Fuel Supplies Will Climb

Crude oil fell and gasoline declined for a fourth day on speculation that U.S. stockpiles of the fuel will surge as refineries bolster processing rates. U.S. plants operated at 84.5 percent of capacity last week, the highest level since October, according to an Energy Department report on April 7. Futures climbed earlier today on signals that Greece, Europe’s most indebted nation, will get an international bailout to avert a default.

“We’re still in corrective mode,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “Gasoline has been under pressure ever since the inventory report showed the increase in refinery runs.” Crude oil for May delivery declined 64 cents, or 0.8 percent, to $84.75 a barrel at 12:07 p.m. on the New York Mercantile Exchange. Prices climbed as much as 98 cents, or 1.1 percent, earlier today. Oil has dropped 0.1 percent this week and increased 6.8 percent this year.

Gasoline for May delivery slipped 1.78 cents, or 0.8 percent, to $2.2805 a gallon in New York. Oil surged to an 18 month intraday high of $87.09 on April 6 following reports that showed growth in U.S. jobs and service industries. “Prices moved higher on expectations that economic growth will continue and demand is going to increase,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Inventory levels are still robust. If demand doesn’t pick up, oil is going to drop.”

U.S. Stockpiles

The U.S. Energy Department reported on April 7 that supplies of crude oil rose 1.98 million barrels to 356.2 million last week, leaving stockpiles 7.1 percent higher than the five year average for the period. It was the 10th consecutive gain, the longest stretch of weekly increases since late 2004.

“There’s no shortage of supply, and demand isn’t that strong,” said Paul M. Mecray III, a managing director at Tower Bridge Advisors, an investment adviser in West Conshohocken, Pennsylvania. “There are geopolitical concerns that are supporting prices. If Iran were to be attacked, oil would rise well over $100 in minutes.”

President Barack Obama vowed to maintain “consistent and steady” international pressure against Iran developing nuclear weapons capabilities. “I don’t think you’ve seen the degree of international unity that you’ve seen in this effort,” Obama said on ABC’s “Good Morning America” program, taped yesterday in Prague.

The U.S. is pushing for tougher measures in a fourth set of sanctions against Iran at the United Nations to stop what it says is an Iranian development program for a nuclear arms capability that would destabilize the Middle East. Brent crude oil for May settlement fell 38 cents, or 0.5 percent, to $84.43 a barrel on the London based ICE Futures Europe exchange.


Reporter Mark Shenk can be contacted at mshenk1@bloomberg.net


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Stephanie Link: Opportunities In Oil

Stephanie Link, director of research for Action Alerts Plus Portfolio, says they're buying oil stocks that have big upside potential and ignoring high crude prices.




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Crude Oil Daily Technical Outlook For Friday

Crude oil recovers strongly after drawing support from 4 hours 55 EMA. Nevertheless, with 87.09 resistance intact, consolidation from there might be in progress and another fall cannot be ruled out. But after all, break of 78.56 support is needed to indicate that crude oil has topped. Otherwise, outlook will remain bullish. Sustained trading above 86.92 will target 90 psychological level next.

In the bigger picture, the strong break of 83.95 high confirmed that medium term rally from 33.2 has resumed. Nevertheless, there is no change in the view that it's the second wave of the whole correction that started in 2008 at 147.27. Hence, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, below 78.56 support will be the first signal of topping and will turn focus back to 69.50 support for confirmation.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Crude Oil Is Set for a Second Weekly Gain on Economic Recovery Optimism

Crude oil is poised for a second weekly gain as concern over a Greek default subsided and stronger than estimated retail sales in the U.S., the world’s biggest energy user, bolstered optimism of an economic recovery. Oil rose for the first time in three days as March sales at 31 chain stores gained 9 percent, the largest one month increase since March 1999, the New York based International Council of Shopping Centers said yesterday. U.S. oil refineries raised operating rates to 84.5 percent of capacity last week, a six month high, the Energy Department reported on April 7.

“We saw some fairly encouraging retail sales data in the U.S. and that seemed to buoy market sentiment,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “It’s the latest in a string of encouraging macro data.” Crude oil for May delivery rose as much as 44 cents, or 0.5 percent, to $85.83 a barrel in electronic trading on the New York Mercantile Exchange. It was at $85.74 at 1:15 p.m. Singapore time. The contract is poised for a 1 percent gain this week, after climbing 6.1 percent last week. Futures have increased 8 percent this year.

Prices declined yesterday amid speculation Greece may default. The euro came within a cent of its weakest against the dollar in 11 months before erasing losses after Greece’s finance ministry said the country’s first-quarter budget deficit narrowed. European Central Bank President Jean-Claude Trichet said a default is “not an issue.”
Oil surged for six days to April 6, the longest rally in three months, following reports that showed growth in U.S. jobs and service industries.....Read the entire article.

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Where is Crude Oil Headed on Friday?

CNBC's Matt Nesto discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Market Commentary For Thursday Evening

Crude oil closed lower on Thursday as it extended Wednesday's decline. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If May extends the rally off February's low, the 50% retracement level of the 2008-2009 decline crossing at 97.31 is the next upside target. Closes below the 20 day moving average crossing at 82.77 are needed to confirm that a short term top has been posted. First resistance is Tuesday's high crossing at 87.09. Second resistance is the 50% retracement level of the 2008-2009 decline crossing at 97.31. First support is the 10 day moving average crossing at 83.87. Second support is the 20 day moving average crossing at 82.77.

Natural gas closed lower on Thursday as it extends this week's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are turning neutral signaling that sideways to lower prices are possible near term. If May renews this winter's decline, weekly support crossing at 3.502 is the next downside target. Multiple closes above Tuesday's high crossing at 4.334 are needed to confirm that a low has been posted. First resistance is Tuesday's high crossing at 4.334. Second resistance is the 25% retracement level of the October-April decline crossing at 4.405. First support is today's low crossing at 3.857. Second support is last Thursday's low crossing at 3.810.

The U.S. Dollar closed higher on Thursday as it extends the rebound off last week's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are neutral signaling that sideways to lower prices are possible near term. Closes below last week's low crossing at 80.52 are needed to confirm that a short term top has been posted. If June renews this winter's rally, the May 2009 high on the weekly continuation chart crossing at 83.34 is the next upside target. First resistance is March's high crossing at 82.52. Second resistance is the May 2009 high on the weekly continuation chart crossing at 83.34. First support is the 20 day moving average crossing at 81.18. Second support is last Thursday's low crossing at 80.52.


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Baker Hughes: U.S. Rig Count Continues to Climb

Baker Hughes reported that the international rig count for March 2010 was 1,074, up 6 from the 1,068 counted in February 2010, and up 62 from the 1,012 counted in March 2009. The international offshore rig count for March 2010 was 295, down 6 from the 301 counted in February 2010 and up 14 from the 281 counted in March 2009.

The U.S. rig count for March 2010 was 1,419, up 69 from the 1,350 counted in February 2010 and up 314 from the 1,105 counted in March 2009. The Canadian rig count for March 2010 was 386, down 178 from the 564 counted in February 2010 and up 190 from the 196 counted in March 2009.

The worldwide rig count for March 2010 was 2,879, down 103 from the 2,982 counted in February 2010 and up 566 from the 2,313 counted in March 2009.


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