VelocityShares 3x Inverse Crude Oil ETN (DWT)

[Smittle]

Strong, strong demand for gasoline in the U.S. fueled today’s rise in prices of energy. (No pun intended.)

Wednesday March 09, 2016 18:04

We experienced a classic, if small-scale, risk-on day in U.S. and European markets today. Crude oil also rebounded robustly today as well, abetting the lukewarm strength in stocks.

Asia did not share in the equities and oil optimism, falling across the three major indexes. Hong Kong was just barely down while the Nikkei and Shanghai had their bell rung loud and clear. China’s economy is still suffering from the highly negative export/import data released this week.

It is also suffering from credibility problems as more international investors are doing a gut check on the world’s second largest powerhouse. Now that there is wavering in the growth pattern, transparency is drawing closer scrutiny. No one less a personage than Ben Bernanke called for enhanced openness in China. We shall see.

Strong, strong demand for gasoline in the U.S. fueled today’s rise in prices of energy. (No pun intended.) The inventory draw on gasoline was triple what the experts had predicted: 4.5 million barrels versus the forecast 1.4 million.

The obverse of that coin is that crude stockpiles rose 3.9 million barrels, an unexpectedly high figure. We are also slipping into the crease in the year when gasoline is reformulated for and refineries close briefly to refit and retool. Additionally, gas is cheap as cheap can be, even with the recent uptick. We are also in the midst of the heavy spring driving season instigated by schools’ spring breaks. Upcoming soon, too, are various religious holidays and holy days. Thus, the draw down will continue.

Even though hope springs eternal that OPEC will pull it together with its partners outside the cartel to limit production, the move is still over the horizon. Production remains unchanged, so there is a more general downward pressure on price.

http://www.kitco.com/commentaries/2016-03-09/A-Tiny-Dose-Of-Risk-Friendliness-Douses-Fire-Under-Gold-For-Now.html