VelocityShares 3x Inverse Crude Oil ETN (DWT)

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Gold Hurt By Dollar Strength As Indecision Haunts All Markets

Thursday May 12, 2016 18:23

It’s hard to label recent action in markets across the board as volatile. It is more a matter a sort of indecisive approach first by traders in equities, switching then to precious metals, then crude, then currencies, then bonds – round and round and round we go.

Different instruments, sectors and stocks have been operating independently rather than as a unified herd. Strength within groups of stocks has been rotating, as well.

Crude oil is off its settlement high of 46.70, which in turn is off its 6-month high. There is some chatter about an improvement in the demand landscape and some speculation that Venezuela, Libya and Nigeria were being forced to cut back production for various reasons peculiar to each country.

There was a 550K-barrel build in reserves at the Cushing, (Oklahoma), stockpiles facilities. This happened in spite of the Alberta fire last week when 1 million bpd were off line.

Demand? Higher gasoline prices suppress demand. And we are entering the warm months when there is virtually no demand for heavy home oils except for that used to heat water.

We remain unconvinced of a longer-term rally in crude futures. Maybe $50 or $55 per barrel is possible but at that point, all hell breaks loose as the U.S. shale sector dives back into the market with a vengeance.

Gary Wagner
Thegoldforecast.com

http://www.kitco.com/commentaries/2016-05-12/Gold-Hurt-By-Dollar-Strength-As-Indecision-Haunts-All-Markets.html