Morning Energy Comments 8/10
Energy futures are off sharply ahead of the opening bell with WTI leading the pack lower. The complex has made an impressive push higher this week, however weaker than expected economic data out of China caused a healthy bout of profit-taking this AM. Chinese exports increased a mere 1% last month compared to 11.3% in June, down to a 6 month low. Chinese imports rose less than expected and industrial production growth slowed to levels not seen since 2009. While poor economic data in the recent past had been seen as a signal that another round of stimulus was more likely, it will be interesting to see if this is the case today. The USDA crop report was released this morning showing production and yields lower than analysts’ estimates for both corn and soybeans. The UN has called for an immediate suspension of the US mandate on ethanol as approximately 40% of the corn crop goes to meet that figure. Losses are starting to get trimmed at the time of this writing. It will be interesting to see if this is simply a bout of profit taking and the dips will continue to be used as a buying opportunity or if all of the bearish economic data has finally taken its toll.