Before The Bell: Government Sees High Oil Prices; UPS Hit With Double Trouble
A slowing U.S. economy and high fuel costs are taking a toll on UPS.
According to the WSJ, the U.S. Energy Information Administration increased its forecast for crude oil to average $101 per barrel this year. Among the factors that continue to drive prices upward, demand continues to grow briskly in the emerging markets, mainly China, India, and Russia where fuel prices are heavily subsidized. Further, demand in the Middle East continues to grow due to shortfalls in natural-gas supplies. The EIA predicts that world-wide usage could jump to 1.2 mln barrels a day this year even with consumption in the U.S. slowing. For another perspective, read Professor Ryan Krueger's column Longer-Term Bet on Lower-Cost Oil.
From the Bull Pen: Energy bulls can play the upside with Halliburton (HAL); sell-stops can be set below yesterday's low near $41.
From the Bear Cave: Those bearish can play the downside in Schlumberger (SLB); buy-stops above the 200 DMA ($92).
UPS Hit with Double Trouble
Bloomberg reports United Parcel Service (UPS) cut its first quarter estimate due to slowing demand as the U.S. economy weakens. 1Q profits will come in the range of $0.86-0.87 per share down from its previous estimate of $0.94-0.98 per share. Analysts had expected the company to report $0.94 per share. As reasons for the cut the world's largest package-delivery company cited soaring fuel costs and slumping sales of premium products. The company will report 1Q results on April 23rd. For more context on the U.S. economy, read Professor Prieur du Plessis' Prieur Perspective: Market Shrugs Off Gloomy Data.
From the Bull Pen: Those believing the downside is limited in UPS can use this morning's weakness as a buying opportunity. Entry near $70; sell-stops can be set below $68.
From the Bear Cave: Bears can play the downside in FedEx (FDX); buy-stops above $99.
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed with the Hang Seng -1.35%, Nikkei -1.05%, Sensex +1.30%, Taiwan -0.06% and Shanghai -5.50%.
A quick look towards Europe finds the CAC +0.13%, DAX -0.21%, FTSE +0.18%
As of 8:40 AM EST, S&P futures are lower -3.5 points to 1367, and Nasdaq futures are up +1 point to 1856.
A Look At Commodities
Commodities are lower. Crude oil is down -0.31 to 108.20. Gold is lower -7.90 to 906.10. Silver is down -0.108 to 17.600, and copper is up +2.10 to 393.00.
The dollar index is higher +0.007 to 72.241.
On the Radar
MBA Mortgage Applications: 5.4% vs. -28.7% prior
10:00 Wholesale Inventories: 0.5% cons
Click here for the full trading radar.
Good luck today!
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