“Dead Cat Bounce” Seems Appropriate For Oil Markets

Crude oil gave back 90 cents in the morning session as traders sold off to book profits after the price rallied on Monday and Tuesday. Crude oil is trading at 52.16. The Dow Jones Industrial Average advanced 273 points, or 1.57 per cent, with energy shares surging after Brent crude oil rose a further 3.27 per cent to 58.02 a barrel. West Texas Intermediate is up 3.29 per cent to 52.86 a barrel. Brent oil is trading at 57.53 up by 56 cents diverging from US prices in the Asian session.

Tuesday’s rally came in response to a strike at a US oil refinery, which pushed up prices for petroleum products on concerns that the refineries could shut down fuel production, according to the Wall Street Journal. Commodity currencies remained in the spotlight with crude oil up about 19 percent over the past four sessions, while copper saw its biggest one-day gain since July 2013. Oil’s recovery helped spur a global rally in risk assets.

Crude oil surged 7 percent on Tuesday, taking the commodity more than $10 per barrel above the multiyear lows hit last week. But oil expert Stephen Schork believes that the incredible plunging commodity hasn’t bottomed just yet. “I do think this is a dead cat bounce,” the editor of the widely read Schork Report said Tuesday on CNBC’s “Futures Now.” “I do expect another leg lower.”

Oil prices have been supported by the United Steelworks strike at oil and products refinery, which have the potential to tamp down American energy production, and thus is bullish for oil products.

The market term “Dead Cat Bounce” seems to be appropriate. The rally started after news on Friday that the number of U.S. oil drilling rigs fell another 94 in the week prior.

U.S. inventory numbers are growing at a pace of a million barrels a day, and there’s no sign of its slowing down. That, in turn, is causing storage space to run low and oil prices will go down to accommodate finding more expensive storage. In fact, the likelihood is “very great” that oil will hit a range in the $30s.

prices in the US are slowly rising as filling stations monitor the rise in oil prices and the strike at production facilities.  US gasoline prices tend to follow the price of North Sea Brent crude oil, an international benchmark. This week’s EIA report survey saw the first upturn in national average prices.  After dropping mightily for four months in a row, prices at the pump appear to have bottomed out—meaning you’ll probably pay more than $2 a gallon again soon, if you aren’t already. In fact, a gas price hike at the start of the year has become more or less an annual tradition lately. But this year, the late January rise ended a historic decline in fuel prices that stretched 123 consecutive days.

Natural gas is trading at 2.767 up by 6 points in the early session.  Natural gas prices ended a four-session losing streak on an afternoon rally as updated weather reports showed a blast of extreme cold coming in mid-February. The Northeast is going to be at the epicenter of a cold front with temperatures reaching around 15-degrees-Fahernheit-below normal by mid-February, according to models from AccuWeather. Several meteorologists had been predicting February cold limited to the Northeast, but WeatherBELL is showing midmonth temperatures at least five-degrees-Fahrenheit-below normal covering the country as far west as the Mississippi River. The forecasters called it “scary cold.”