Refiners In China At Risk As The Government May Delay Price Hike

Crude oil price rebounds to 70.2 in European morning as strong China PMI eases demand worries. Trading will likely remain thin before NY session opens. The US government will report ISM manufacturing data today. After market close, the American Petroleum Institute will report its estimates on oil inventory last week and this will act a guideline in forecasting the figures by the US Energy Department. Stock markets in Europe drop. UK's FTSE 100 Index slides -1.4% to 4843 while Germany's DAX and France's CAC 40 lose -1.6% and -1% respectively. UK's manufacturing PMI slipped to 49.7 in August after rising to 50.2 in the prior month. This disappointed the market as consensus forecast was a further gain to 51.5. In the Eurozone, unemployment rate rose to 9.5% in August from 9.4% a month ago. Although the reading came out as expected, it's indeed the highest level in 10 years, suggesting the 16 nation region' s job market remained weak.....Complete Story

UNG Just Get's More and More Interesting

I have received some "entertaining" emails and comments from fellow traders about the fact that even with all of the negative and controversial news surrounding UNG I do maintain a small swing position in UNG. After 20 years of this I have just developed a habit for making sure I am in the most "news worthy" trades, some how, good or bad.

I just found this in my in box from Phil's Stock World.....

Shares of the natural gas exchange traded fund have slipped 4.4% lower today to reach a 5 year low of $10.64. Despite the present weakness in UNG, one investor was seen making far term bullish bets on the fund by targeting the April 2010 contract. It appears that the trader established a bullish reversal play by shedding 3,000 puts at the April 10 strike for 1.85 apiece in order to purchase 3,000 calls at the higher April 11 strike for 1.82 each. The trader receives a net credit of 3 pennies per contract and has positioned himself to add to his gains if shares rally higher than $11.00 by expiration. The short put position indicates that the investor is happy to have shares put to him at an effective price of $8.15 in the event that the put options land in the money by expiration. Shares need only remain higher than $10.00 for this individual to retain the 3 cent credit indefinitely.

This will be an amazing trade, for someone, somehow, someway.

Crude Oil Falls the Most in a Month as Global Equities Slump

Crude oil prices fell the most in a month as Chinese equities led a global slump on concern a slowdown in lending may derail an economic recovery in the world’s second largest energy consuming country. Oil futures declined for the first time in three days after the Shanghai Composite Index, China’s benchmark, tumbled 6.7 percent on a report that the nation’s banks cut lending. U.S., Asian and European stocks followed the Chinese market lower. “All of what we are seeing today can be blamed on the Chinese stock-market selloff,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “The Chinese markets have helped support commodities. Price rises have been based on expectations of increased economic growth and demand in China”.....Read Complete Article

Oil Drops as Stockpile Concerns Cap Gains on Economic Optimism

Crude oil fell for the first day in three in New York as concern over above-average distillate fuel stockpiles capped a rally built on speculation that demand will increase as the global economy recovers. U.S. distillate inventories, which include diesel and heating oil, rose to a four week high of 162.4 million barrels last week, the Energy Department said Aug. 26. That’s near the highest level since 1983. Separately, the United Arab Emirates’ state owned company eased cuts on crude oil supply for the first time in seven months, a sign OPEC members may be overshooting their output targets. “As we get into the autumn season we’ll focus on distillate fuels and right now inventories are at very high levels and then we have the floating storage off Europe”.....Complete article

Crude Oil Will Be Bounded Between 65-75 In Coming Months

Early last week, worries on credit tightening by the Chinese Government triggered selloffs in risky assets. In the commodity universe, the base metal complex got the biggest hit as the government's massive stimulus plan has encouraged expansion in various industries. Should the government tighten lending, many projects may have to be postponed or cancelled.However, later in the week, strong macro economic data boosted sentiment again and improved market sentiment helped commodities pared some of the losses made earlier. However, the Jefferies/Reuters CRB Index still lost -0.6% over the week. Crude oil price rose for the second consecutive day last Friday as encouraging economic data.....Read Complete Article

PetroChina Profit Tops Analyst Estimates, Acquisitions Planned

PetroChina Co., the world’s most valuable company, posted profit that beat analysts’ estimates on record earnings from oil refining after the government raised fuel prices and China’s economic recovery spurred demand. Second quarter net income rose 26 percent to 31.5 billion yuan ($4.6 billion), derived by subtracting earnings for January to March from first half figures announced in Hong Kong yesterday. The Beijing based oil producer and refiner joins China Petroleum & Chemical Corp., known as Sinopec, in reporting higher profit. The gains contrast with earnings declines at Exxon Mobil Corp. and Royal Dutch Shell Plc after the global recession cut U.S. and European consumption. PetroChina, Sinopec and Cnooc Ltd., the nation’s biggest oil companies, this week pledged.....Complete Article

Is it Time to Buy Natural Gas? Let's Look at the Current Trend Chart

Smart Scan Chart Analysis for UNG confirms that a strong downtrend in natural gas is in place and that the market remains negative longer term. Trade this strong Downtrend with tight money management stops. A "Trade Triangle" indicates the presence of a very strong trend that is being driven by strong forces and insiders. As we can see the answer is obvious.

Based on a pre-defined weighted trend formula for chart analysis, UNG scored -100 on a scale from -100 (strong downtrend) to +100 (strong uptrend):

-10......Last Hour Close Below 5 hour Moving Average
-15......New 3 Day Low on Friday
-20......Last Price Below 20 Day Moving Average
-25......New 3 Week Low, Week Ending August 22nd
-30......New 3 Month Low in August
-100.....Total Score



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Industry Worries Rise As Natural Gas Sags

Despite recent cutbacks in production, natural gas prices are at a seven year low and the U.S. still faces surpluses, fueling concern the industry has yet to hit bottom. At the same time, oil and gas producers are beginning to see operational costs creep up again after pushing suppliers to lower prices for products and services in recent months, putting further pressure on margins, an industry analyst said Wednesday at the NAPE summer conference in Houston. "This is a problem for all of us at the moment," Bob Fryklund, vice president of IHS Cambridge Energy Research Associates, told a ballroom of oil and gas professionals during a panel discussion at the conference, formerly known as the North American Prospect Expo.....Complete Story

Natural Gas ETF Implosion

Natural gas seems to have fallen out of favor in 2009. Over the past year the spot price of natural gas has fallen from a high of $14 to below $3. The primary reasons for the free fall in price is the sizable natural gas inventories around the world combined with a relatively stubborn natural gas industry which refuses to slow production in the wake of a global recession and economic slowdown.

As the bifurcation between oil and natural gas began to play out this year, many looked at the widening gap in the oil to natural gas price ratio as an opportunity to long natural gas, which they thought was merely lagging the recovery in oil prices by a few weeks.....Read The Complete Article

UNG, USO Trading Alerts Newsletter From The Gold and Oil Guy

UNG Natural Gas Trading Fund – Daily Chart
Nat gas looks to be finding support at the $11.50 level. This could provide a great short term trade for those active traders looking to grab a quick 5-10% gain if the price starts to rally intraday. Overall natural gas has been trading down and sideways.




USO Crude Oil Trading Fund - Weekly Chart
Crude oil has a very nice looking chart. The bullish pennant is pointing to a much higher price. Currently the price is stuck under the June resistance level but appears to be holding up nicely. Any week now I expect to see a sharp rally or a sharp sell off. Let’s continue to watch the price unfold.



Technical Traders Conclusion:
The analysis above allows you to see that crude oil is trading in a bullish pennant. I am watching the daily charts very closely for a buy signal. Waiting for my low risk buy signal is important because it confirms momentum and bullish price action before we put our money to work. This commodity could easily roll over and sell down quickly which is why I always follow my trading strategy to help avoid getting caught on the wrong side of the trade.

Natural gas is currently over sold in my opinion and ready for a bounce. If the price starts to move higher tomorrow (above Wednesdays high) then you could go long for a 1-5 day trade. There is a good chance it will provide 5-10% return, but be sure to take profits quickly as it is just a bounce (dead cat bounce). If the price drops below Wednesdays low then I would not be holding it any longer.

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