What Should Traders Focus on in 2013?
One of the most important market developments we will see in 2013 is the market impact of the United States becoming more energy independent.
America is on pace to reduce its reliance on Middle Eastern oil by 50% by the end of the decade.
By 2030, we may not even need Middle Eastern oil at all.
We should see this have implications for both crude contracts and grain contracts in the coming year.
Originally, the estimates of crude oil stores in Montana and North Dakota were promising but they have turned out to be much better than expected.
The current oil boom in both Montana and North Dakota will continue to deflate current oil prices on the commodity market.
No one expected that the Midwest region would store so much crude oil.
Clearly, this isn't the crude bull market that lets you buy oil and ride it up forever.
This new crude oil is changing the face of gasoline prices, but it is also letting American consumers know that not all commodity prices will rise indefinitely.
On the other hand, this oil boom is creating environmental issues.
In order to produce one barrel of crude, four barrels of water are required.
This water is not recoverable -- it's trucked in from outside sources and it takes away water from farming.
If farmers don't get enough water, obviously, the supply will wane and grain prices could skyrocket especially if the Midwest experiences another dry spring and summer.
Crude prices are going to be affected by water scarcity issues in the Midwest.
Watch for opportunities to present themselves in crude oil.
Look for opportunities to buy and short crude, but don't even think about buying crude and waiting to sell the contract at the last minute.
Watch for reports on how much water is available in the Midwest, whether drought conditions exist and if the cost of trucking in water grows over time.
These issues should let you know that crude prices will go up.
But, oil isn't going up indefinitely -- the supply is increasing and the demand for it is dropping as well.
Look to prices in grains to increase this year, especially if farmers do not get enough rain and especially if water becomes scarce in the Midwest.
The supply of grains is likely to decrease, the demand will be up and the price will most definitely increase because of the water shortage issues.
America is on pace to reduce its reliance on Middle Eastern oil by 50% by the end of the decade.
By 2030, we may not even need Middle Eastern oil at all.
We should see this have implications for both crude contracts and grain contracts in the coming year.
Originally, the estimates of crude oil stores in Montana and North Dakota were promising but they have turned out to be much better than expected.
The current oil boom in both Montana and North Dakota will continue to deflate current oil prices on the commodity market.
No one expected that the Midwest region would store so much crude oil.
Clearly, this isn't the crude bull market that lets you buy oil and ride it up forever.
This new crude oil is changing the face of gasoline prices, but it is also letting American consumers know that not all commodity prices will rise indefinitely.
On the other hand, this oil boom is creating environmental issues.
In order to produce one barrel of crude, four barrels of water are required.
This water is not recoverable -- it's trucked in from outside sources and it takes away water from farming.
If farmers don't get enough water, obviously, the supply will wane and grain prices could skyrocket especially if the Midwest experiences another dry spring and summer.
Crude prices are going to be affected by water scarcity issues in the Midwest.
Watch for opportunities to present themselves in crude oil.
Look for opportunities to buy and short crude, but don't even think about buying crude and waiting to sell the contract at the last minute.
Watch for reports on how much water is available in the Midwest, whether drought conditions exist and if the cost of trucking in water grows over time.
These issues should let you know that crude prices will go up.
But, oil isn't going up indefinitely -- the supply is increasing and the demand for it is dropping as well.
Look to prices in grains to increase this year, especially if farmers do not get enough rain and especially if water becomes scarce in the Midwest.
The supply of grains is likely to decrease, the demand will be up and the price will most definitely increase because of the water shortage issues.