In the news, Federal Judge Martin L.C. Feldman issued an injunction against the Obama administration lifting its drilling moratorium saying the government never justified the ban and appeared to mislead the public.
MARKET REACTION
Oil prices fell back across the curve falling 15-30 cents a barrel right after the announcement. Judge Martin L.C. Feldman, according to the Washington Times, issued an injunction saying that the moratorium will hurt drilling-rig operators and suppliers and that the government has not proved an outright ban is needed, rather than a more limited moratorium.
He also said the Interior Department also misstated the opinion of the experts it consulted. (Misstated?)
LACK OF SUPPORT FOR THE BAN
In fact, the truth is that those experts from the National Academy of Engineering have said they don't support the blanket ban.
"Much to the government's discomfort and this Court's uneasiness, the summary also states that 'the recommendations contained in this report have been peer-reviewed by seven experts identified by the National Academy of Engineering.' As the plaintiffs, and the experts themselves, pointedly observe, this statement was misleading," Judge Feldman said in his 22-page ruling.
POLITICAL TAKE
It is clear that the Obama administration is playing fast and loose with the facts in an effort to placate its angry environmental base and to cover up for their mismanagement of the situation in the Gulf.
In the meantime he is putting people out of work using false information and instead of creating jobs he is destroying them. Yet the market did not break more because the Obama administration is going to appeal the ruling and the market know that they will not give up early especially when their political backside is on the line.
FRESH NEWS
The AP is reporting that Interior Secretary Ken Salazar will issue a new order imposing a moratorium on deepwater drilling.
Salazar said that the new order will contain additional information making clear why the six-month drilling pause was necessary in the wake of the Gulf oil spill. Salazar says he will point to indications of inadequate safety precautions by industry on deepwater wells. He said he would issue a new order in the coming days showing that a moratorium is needed.
But, first he has to find a new set of experts. You know the type, the ones that agree with him.
ELSEWHERE
Good thing it is not winter because if it were then we may see oil flying on the latest gas dispute between Russia and Belarus.
Bloomberg News reported that "Belarus President Aleksandr Lukashenko threatened to halt gas transit to Europe and accused OAO Gazprom of starting a 'gas war,' after the Russian export monopoly for the fuel cut supplies to the country by 30 percent."
In the past these disputes drove oil substantially higher, yet because it is summer and there is an excess supply of oil in the world the news only gave oil a momentary boost.
FOCUS TODAY
The market focus today will be the Fed and the Energy Information Agency supply report.
LATEST DATA
Last night the American Petroleum Institute (API) gave us a bearish report by reporting an increase of crude stocks to the tune of 3.7 million barrels. The API also showed that distillate stocks increased by 1.1 million barrels and that gas stocks were up by 1.3 million barrels.
On the demand side the MasterCard Spending Pulse report showed that gasoline demand rose for a second consecutive week as prices at the pump remained at a 14-week low.
TRAILING EQUITIES
The energy complex is still following the U.S. equity market. The Fed is not expected to do much of anything so oil will still stay in this recent trading range.
WEATHER WATCH
One thing that could knock us out of that range would be a hurricane. Today's tropical wave watch reveals the likelihood that the recent storm in the Atlantic will become a cyclone has fallen to 20 percent. It looks like we dodged another bullet but the Atlantic weather watch will go on.