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Traders Continue To Pound Oil
New York, May 15th (TradersHuddle.com) - There is seemingly no relief in sight for oil thanks to Europe's sovereign debt crisis as sour headlines from across the Atlantic once again sent traders rushing into the arms of the U.S. dollar and away from riskier assets. NYMEX-traded cruded for June delivery fell 80 cents, or 0.8%, to settle at $93.98 a barrel. Despite a fair GDP number out of Germany early Tuesday morning, U.S. oil future traded as low as $93.62 on the day.
In a clear sign of strength, the PowerShares DB US Dollar Index Bullish (NYSE: UUP) surged three-quarters of a percent on volume that was better than triple the daily average. The ETF, which is essentially a tradeable version of the U.S. Dollar Index, reached its highest closing price since January.
In economic news, the Commerce Department said retail sales rose just 0.1% last month compared with a 0.7% increase in March. The rise matched economists' expectations. The Labor Department said the Consumer Price Index was unchanged in April following a 0.3% increase in March. Excluding volatile food and energy prices, the core index rose 0.2%. The April reading matched economists' expectations. The National Association of Home Builders/Wells Fargo Index jumped to 29 in May, which was its highest reading since May 2007, topping the reading of 26 economists expected.
The first two data points were a mixed bag, but the homebuilders' data should have been a point in the favor of oil bulls. Alas, that was not the case, as traders seemed more concerned with the fact that the lack of coalition government in Greece will prompt another round of contentious elections there. Bottom line: Most traders now know that Greece is on its way out of the Euro Zone and the departure is likely to happen before the end of 2012.
Looking at oil equities, another down day for U.S. stocks led to another round of negative closes for Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX). The latter has given up its 200-day moving average while the former is getting close to testing its own 200-day line as support.
Shares of Chesapeake Energy (NYSE: CHK), the second-largest U.S. natural gas producer, got back to doing what they do best and that is tumbling. The stock lost 5% today on volume that was roughly 2.5 times the daily average after Standard & Poor's cut the company's credit rating to BB- from BB. That's junk territory and every rating cut means higher borrowing costs for the embattled energy firm.
Petrobras (NYSE: PBR) set a new 52-week low, as shares tumbled another 3%. Oil services are no better than their E&P counterparts these days as the Market Vectors Oil Services ETF (NYSE: OIH) is off almost 6% in the past week and is looking poised to touch its own 52-week low.
In economic news, the Commerce Department said retail sales rose just 0.1% last month compared with a 0.7% increase in March. The rise matched economists' expectations. The Labor Department said the Consumer Price Index was unchanged in April following a 0.3% increase in March. Excluding volatile food and energy prices, the core index rose 0.2%. The April reading matched economists' expectations. The National Association of Home Builders/Wells Fargo Index jumped to 29 in May, which was its highest reading since May 2007, topping the reading of 26 economists expected.
The first two data points were a mixed bag, but the homebuilders' data should have been a point in the favor of oil bulls. Alas, that was not the case, as traders seemed more concerned with the fact that the lack of coalition government in Greece will prompt another round of contentious elections there. Bottom line: Most traders now know that Greece is on its way out of the Euro Zone and the departure is likely to happen before the end of 2012.
Shares of Chesapeake Energy (NYSE: CHK), the second-largest U.S. natural gas producer, got back to doing what they do best and that is tumbling. The stock lost 5% today on volume that was roughly 2.5 times the daily average after Standard & Poor's cut the company's credit rating to BB- from BB. That's junk territory and every rating cut means higher borrowing costs for the embattled energy firm.
Petrobras (NYSE: PBR) set a new 52-week low, as shares tumbled another 3%. Oil services are no better than their E&P counterparts these days as the Market Vectors Oil Services ETF (NYSE: OIH) is off almost 6% in the past week and is looking poised to touch its own 52-week low.
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