Oil futures appear to be losing momentum for investors this week in light of renewed concern about the economic recovery, both in the U.S. and overseas.
Stock markets around the world were already jittery in light of the ongoing debt situation in the European Union, where some member states are considered candidates for a sovereign debt default in the foreseeable future.
Such a scenario could result in billions of dollars in fresh losses for banks across Europe and elsewhere, and it could become closer to reality as nervous investors push bond rates higher – making borrowing more expensive in the process for these countries, most notably Greece.
Oil futures generally tend to rise and fall with the economic outlook – and with that in mind, investors were also disheartened Thursday by the release of data showing a surprising upswing in first-time unemployment claims last week. According to the Department of Labor, 471,000 workers filed for unemployment benefits last week, marking an increase of 25,000 from the previous week.
Another factor to consider with oil futures at this point is supply. The Energy Information Administration reports that as of May 14, there were about 362.6 million barrels of crude oil stocks in the U.S. market. That figure was the highest amount recorded in nearly a year.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.