In Today’s Post:

1. Holdings Watch
2. Commodity Watch
3. EIA Oil Inventory Report Preview (11 EST release time today)
4. Stuff We Care About Today - Viewer mailbag, HK, NE, SLB
5. Odds & Ends

Holdings Watch: No changes yesterday. I was looking for a rally, mission accomplished but we need to retake the 850 level on the S&P500 (as several of you have pointed out) and we need to get the oil numbers safely out of the way before I’ll comfortable getting more long the energy names. Otherwise, puts on the OIH and / or SLB and puts on the independent refiners (sorry but it will likely be TSO) may be in the offing.

Commodity Watch

Crude oil rose $2.71 to close the day at $43.55 yesterday, buoyed by the equity market rally and a friendlier dollar . This morning crude is trading off slightly after a overnight run above $44.

• China Watch. China GDP expected to be 7% came in at 6.8% for the fourth quarter.That’s down from 9% in the 3Q period and some expect the deceleration to take China all the way to 3 or 4% growth this quarter before a number of stimulus packages, rate cuts, and potentially a hacking back of the yuan (which will be a real test for the new U.S. administration) reaccelerate the Chinese ecnomy where the target growth rate is 8%.This slower growth has been weighing on crude prices and will continue to do so until China pulls out of their steep dive just above ground level. 

• Declining Contango Watch: Flatter contango by far from a week ago. Front months have come up while the out months are flat to down in the last five days. The impetus to tanker loads of crude for later delivery at a higher price just went way down. As the 12 month contage was $20 just last week this could mean that more production will be headed back to the traditional market and that front month prices may not be able to sustain the current rally for long as that production arrives.

Natural gas rose $0.14 to $4.78 yesterday with strong oil. The Street is looking for a withdrawal from storage of about 170 Bcf. If we don’t get that look out below.