This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Crude Oil 2013 Outlook

TheStreet Premium Services

A complimentary preview
of Options-Profits Previews

WEBINAR: Volatility World Tour 01/10 at 6pm ET CLICK HERE FOR INVITE AND TO REGISTER

2013 Outlook

The Economy

November 6th brought the U.S. election and a glimpse into the effect that Washington will have on the energy markets. It may offer a negative impact as opposed to China which picked new leadership on November 8th, and Europe which worked out a framework for common banking regulation on December 13th. The U.S. should be bogged down with headwinds caused by continued slow-growth conditions, quantitative ease, uncertainty about taxes, the debt ceiling, and ongoing Washington partisanship. Economic growth is expected to improve slightly from 2012's 2.1% average. The fiscal cliff negotiations and the lack of progress in them in late-2012 showed that lawmakers are still unable to reach across the aisle. Corporate spending decisions are being delayed due to uncertainty about tax rates, and could be duplicated in late-February when the debt ceiling will need to be raised. The last battle in July-August 2011 resulted in S&P cutting the U.S.'s AAA credit rating and oil prices falling 25% in just a few weeks.

The composition of the Fed may become more dovish, as the hawkish loyal dissenter Jeffrey Lacker won't hold a vote. Fed Presidents Evans and Rosengren will vote this year and are both considered doves. Both argued for the 6.5% unemployment threshold adopted by the Fed at its December 12th meeting. KC's George will replace the hawkish President Hoenig, but she's been less critical of easy Fed policy than Hoenig has. President Bullard could be hawkish too, but he did not dissent at any time during his previous votes in 2010. A dovish Fed hasn't necessarily been good for oil prices like it has for markets like gold and equities (chart below). Oil may focus more on the Fed's adverse economic outlooks such as promises to keep rates low through 2015 than where easy money will be invested.

 



Europe is improving, with leaders there showing commitment to debt problems in Greece and Spain. Their resolve is unlikely to waiver, and the euro now appears likely to make it through this crisis without breaking up. China is a bright spot as well, and is showing improvement from a slowdown in FH '12. On May 24th, it said that banks would not meet their 2012 lending goals due to the slow economy.

Manufacturing PMI data reached a bottom in November 2011, but stagnated until a second bottom made in August 2012. Several injections of cash were made into the economy over the summer, and a $150B infrastructure project was announced on September 7th. The official measure of PMI has increased 1.4 points since its August low, while the HSBC measure has gained 3.3 points. Oil demand correlates to the HSBC measure as seen in 2009 when demand recovered as manufacturing activity bounced back (chart).



Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV

Partners Compare Online Brokers

Top Rated Stocks Top Rated Funds Top Rated ETFs