With the increasing need of America for oil imports, today's decision by President Obama to delay the approval of Trans Canada's Keystone XL Oil Pipeline Project until the first quarter of 2013 (after the presidential election in 2012), along with a partnership with a stable and reliable oil supplier (with the potential to create 20,000 jobs and billions of dollars of investment to the U.S. economy) makes no sense...especially with the growing volatility in the Middle East. This approval had originally been promised by the end of this year.
Trans Canada has said that if this pipeline has to be significantly re-routed, it could kill the project. In terms of cost-effectiveness and environmental protection issues, the proposed route was the best that was presented in the study.
I wouldn't be surprised if Trans Canada looks for other markets to which it can sell its surplus oil, since stopping production or stockpiling is not an alternative. A spokesman from the Prime Minister of Canada's office said that "...our government will continue to promote Canada and the oil sands as a stable, secure, and responsible source of energy for the world."
Below are a series of charts of Oil covering four different timeframes (one-month Options Expiry period, Monthly, Weekly, and Daily). As can be seen, there is a rising channel resistance level around 100.00...however, price did break above that level early this year to reach a high of 114.83, which would mark the next level of resistance if 100.00 is broken...the next resistance level is the all-time high of 147.27 reached in July 2008.
With today's decision, it's my opinion that the price that America pays for crude oil will remain under the influence of the turmoil in the Middle East.
The Daily chartgrid of the YM, ES, NQ & TF below show that price action today closed above near-term support, which is gaining importance, and is a level to watch.
I'll continue to keep a close eye on Financials since that sector remains weak, as the XLF and banks remained in negative territory from today's open as shown on the one-minute one-day percentage comparison chart below...with BAC the weakest.
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UPCOMING (MAJOR) ECONOMIC EVENTS...
* Mon. May 29 ~ U.S. Markets closed for Memorial Day holiday
* Wed. May 31 @ 2:00 pm ET ~ Beige Book Report
* Fri. June 2 @ 8:30 am ET ~ Employment Data
* Tues. June 13 ~ 2-day FOMC Meeting Begins
* Wed. June 14 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts + @ 2:30 pm ET ~ Fed Chair Press Conference
* Wed. July 5 @ 2:00 pm ET ~ FOMC Meeting Minutes