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 Hickey and Walters (Bespoke) submit:
While they are likely to remain above their long-term average for the rest of the year, oil inventories have been dropping like a stone in recent weeks. This week, stockpiles fell 4.8 million barrels, marking the third straight week where inventories declined by more than 3.5 million barrels. While inventories were running more than 20 million barrels above normal at the start of the quarter, current levels are now less than 6 million barrels above average. click to enlarge Complete Story »
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Hickey and Walters (Bespoke) submit:
While oil was in the midst of a 10-day losing streak over the last two weeks, its price wasn't the only thing declining. For the second straight week, the DoE announced that crude oil stockpiles declined by over 3.5 million barrels, and in both weeks the draw-down has been greater than expected. Today's news has helped to boost the price of oil by over $2. Crude oil inventories remain well above their historical average for this time of year, but they are near their lows of the year. For bulls on the Energy sector, inventories are moving in the right direction. click to enlarge Complete Story »
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Hickey and Walters (Bespoke) submit:
This morning's release of the weekly oil inventories from the Energy Information Administration (EIA) showed that crude stockpiles decreased by 3.8 mln barrels compared to expectations for an increase of 500 thousand. Even though the draw-down was much larger than expected, the price of oil as well as energy stocks are struggling today. One reason for the weakness is that current levels of oil inventories are still 13 million barrels above their long-term average for this time of year. So just to get back to average by the end of the year, we would need to see a weekly decline of more than 4 million barrels. Given that there are only six other weeks this year where inventories declined by more than four million barrels, it seems unlikely that we will see this for the next four weeks. Complete Story »
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Hickey and Walters (Bespoke) submit:
The S&P 500 is trading about 1% above its 50-day moving average, and 60% of the stocks in the index are trading above their 50-days. But the S&P 500 Energy sector is a different story. As shown in the second chart below, just 10% of S&P 500 Energy stocks are currently trading above their 50-days. Energy stocks have come under pressure in recent weeks as oil has fallen from a high in the low $80s to its current price of $72.80/barrel. Both oil and the Energy sector are now trading into oversold territory, but they are still holding their bull market up-trends. Investors that have been waiting for a pullback to get into the sector definitely have an opportunity now. click to enlarge Complete Story »
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Hickey and Walters (Bespoke) submit:
As the biggest stock in the world, Exxon Mobil's (XOM) stock performance significantly impacts the cap-weighted indices that it is in. The stock has basically been trading in a range from about $65 to $75 since May, so it hasn't been one of the names really leading the S&P 500 higher over the last six months. Exxon is currently testing the top end of its recent sideways trading range, however, and a break above the $75 level could provide a nice spark for both XOM shares and the S&P as a whole. Complete Story »
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Hickey and Walters (Bespoke) submit:
After last week's much larger than expected drawdown in oil inventories, this week's report showed a partial rebuild. While the consensus forecast was for a build of 1 million barrels, the actual increase was much greater at 1.762 million barrels. As a result crude oil prices are getting whacked with oil trading down more than $2. Heading into the coldest part of the year, oil inventories remain well above their historical average. click to enlarge Complete Story »
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Hickey and Walters (Bespoke) submit:
This week's report on Energy Inventories from the EIA showed a smaller than expected build in crude oil stocks (778K vs. 1910K forecast). Gasoline and distillate stocks, however, posted larger than expected builds. In addition, even though the build in crude oil stocks was less than expected, current levels are well above their historical averages. While oil prices were down heading into the report, prices have dipped further following the release. click to enlarge Complete Story »
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Hickey and Walters (Bespoke) submit:
Heading into today, the S&P 500 Consumer Discretionary, Technology, and Energy sectors were on 8-day winning streaks. Today only the Energy sector is trading higher, and as shown below, this would be the 9th 9-day winning streak for the sector since 1989. On day 10 following these 9-day winning streaks, the index has only been up once. Two stocks in the Dow are also on big winning streaks. Intel (INTC) is on a 10-day winning streak, and Exxon Mobil (XOM) is on a 9-day winning streak. Intel has only been up 10 days in a row 4 other times in its history, and it has gone on to post gains on day 11 50% of the time. Exxon has only been up 9 days in a row 3 other times in its history, and it has gone down on day 10 67% of the time. Complete Story »
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Hickey and Walters (Bespoke) submit:
This morning's release of the weekly energy inventory report from the Department of Energy showed that crude oil inventories increased by nearly 2.8 million barrels, which was 1.8 million barrels more than expected. With inventories up by 2.8 million barrels for the second month in a row, they remain well above their historical average. click to enlarge Complete Story »
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Hickey and Walters (Bespoke) submit:
In this morning's weekly energy inventory report from the Department of Energy, crude oil stockpiles are expected to show a decrease of 1,400 barrels of oil. In the chart below, we compare the current inventory levels with the overall average since 1984. Even though oil is up more than 60% this year, inventory levels remain well above their long-term average. Just to get back to average, we would need to see a decline of nearly 15 million barrels. click to enlarge Complete Story »
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Hickey and Walters (Bespoke) submit:
Given the strong positive correlation between oil and equities, one would expect the S&P 500 to be considerably weaker today on the heels of oil's 3.5% decline. As it stands now, however, the S&P 500 remains modestly higher. So is today's action a sign that the positive linkage between the two assets is diminishing? We wouldn't be too quick to say the relationship is dead. As shown, today is actually the eighth time this year where oil was down more than 3% and stocks were higher on the day. So while it's not neccessarily a common occurrence, it isn't completely out of the blue either. Complete Story »
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Hickey and Walters (Bespoke) submit:
Last Thursday we noted that oil was trading at a key inflection point where it would either fail at or break above resistance. As shown below, oil has broken above this inflection point in the last two days (through Monday's close), but it has hardly been a move worth getting excited over. With oil and the stock market trading so closely together in recent months, the ability for oil to forcefully break out will most likely depend on which way stocks move in the next week or so. 
Complete Story »
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Hickey and Walters (Bespoke) submit:
With oil rallying and natural gas continuing to plummet on a daily basis, the ratio of oil to natural gas is at its highest level since at least 1990 at 26.35. When the line is increasing in the chart below, oil is outperforming natural gas, and as shown, it has been doing that now since the end of 2008. Complete Story »
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Hickey and Walters (Bespoke) submit:
At $72 and change, oil is currently trading at a key inflection point. As shown below, oil recently bounced nicely off of the bottom of its uptrend channel, and it is now butting up against resistance that formed when the commodity made its highs in June and July. If oil is able to break out above these short-term highs, there isn't much in the way of resistance until the $90 mark. With oil tracking so closely with the stock market recently, it's highly likely that the breakout will occur if the rally in equities continues. 
Complete Story »
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Hickey and Walters (Bespoke) submit:
Below we provide our trading range charts for ten major commodities. The green shading represents between two standard deviations above and below the commodity's 50-day moving average. Moves at or above the green zone are considered overbought, and moves at or below the green zone are considered oversold. As shown, the energy and metal commodities are all currently at or above their trading ranges. Even natural gas, which has been in a perpetual downtrend, has moved into overbought territory over the last couple of weeks. Interestingly, gold is going up along with oil and the stock market, and the falling dollar definitely has something to do with it. Complete Story »
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