Crude oil, heating oil, and gasoline prices staged a massive turn to the upside this week as investors stepped up bargain hunting and speculators scrambled to take profits on oil they had sold short during the past few months.
Despite record global supplies and many production facilities still pumping at hefty rates, analysts alerted opportunists and end users to grab the dirt cheap fuel (below $27 per barrel on Wednesday), hoping to beat the crowd before the market turns upwards in earnest. Crude was over $100 per barrel just 18 months ago, making the "black gold" glimmer for bullish traders.
The potential for a price explosion on fears of a major war in the Mideast between Saudi Arabia and Iran gained traction as one prominent analyst stated oil could go over $250 per barrel overnight if loading facilities are attacked. Diplomatic relations between the two nations have been worsening, though there has not been direct conflict yet.
Stock Futures Bounce Back
The buying frenzy in crude and its products, gasoline and diesel, triggered a fast rally in stock index futures as well. The equity markets had been depressed due to large losses by oil producers and fears that many could be forced into bankruptcy if energy prices dropped further.
In an effort to capture the broad market rally, traders jumped into S&P 500, Dow Jones, and NASDAQ futures, rather than shop for individual stocks and bonds.
Bearish traders dismissed the rallies as a "flash in the pan" and waited for crude prices to drop and stocks to slide as pessimism returns to the markets next week.
Pork Market Sizzling
Hog prices continued running higher this week, pushing over 64 cents per pound, the highest price since late October. Prices are bouncing back as demand from slaughterhouses is booming, especially since pork is still far cheaper than beef.
Hog bulls have also been encouraged by an early Easter this year, which will boost demand in the coming weeks from end users as they stock up on Easter hams.
After the market closed Friday, the USDA released its monthly Cold Storage Report, which gave a clearer picture of meat supplies and may cause fireworks when the market reopens on Monday.