SubscribeDaily Futures Commentary COMMODITIES March 19, 2009
Thursday, March 19, 2009
ENERGIES
Crude Oil traders shrugged off yesterday’s bearish inventory report and instead focused on the FOMC announcement to flood the U.S. economy with cash.
Yesterday’s move by the U.S. Federal Reserve to pump close to $1 trillion into the economy is designed to stimulate growth to help the U.S. out of its current recession.
Speculators quickly bought crude oil in anticipation of greater demand. The U.S. Dollar was also crushed on the move making crude oil an attractive hedge against inflation.
The aggressive action by the Fed is designed to loosen up credit which may lead to increased consumer and business spending. This could trigger more industrial output which would spur greater demand for energy.
It’s all speculative at this time. Everything looks good on paper. The market will still be watching the demand numbers to see if usage is up. Now that crude oil has pierced the $50 mark and has gone bid, bullish speculators will most likely try to defend this area as support.
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