Oil Options Hit Highs as Verleger Predicts 44% Plunge

Oil traders are paying more than ever in the options market to protect against a plunge in crude prices. The gap between prices of options betting on a decline and those that would profit from a rise in oil widened to a record 10 percentage points, according to five years of data compiled by Bank of America Securities Merrill Lynch. Crude stockpiles in the U.S. are 14 percent larger than a year ago and OPEC is pumping 600,000 barrels a day more than the world needs, according to the International Energy Agency.

While the recovery from the first global recession since World War II pushed oil up 62 percent this year to $72.04 a barrel in New York, growth alone isn’t likely to erode the glut by the end of next year because production exceeds demand, data from the Paris based IEA shows. A drop in prices would penalize companies from Exxon Mobil Corp. to BP Plc and exporters.....Read entire article

Market Report: Oil Prices Set to Decline Amid Global Econ Matters

As the dollar world turns. Oil prices are heading lower ahead of a big week in global economic matters. Not only will the G-20 meet in Pittsburgh to try to assess what went wrong with the global economy and try to fix it, but also the Fed meets to decide whether or not it's time to remove some of the props that have been lifting the global markets. And the question for oil traders is whether or not the dollar can find love and happiness in a world gone mad.

Once again the dollar is the key driver moving the crude market. Traders are covering the dollar on fear that perhaps the G-20 may do something to support the dollar or that the Fed may slow down its purchases of treasuries. Of course the dollar has been oversold and it's possible that we are getting to the point where the carry trade has gotten.....Read the entire article

New Video: Two Major Technical Forces Are About to Collide in the S&P 500

The S&P 500 has seen remarkable recovery from the lows that were seen earlier this year. However, all of that may come to an end as we fast approach a strategic level for this market. There are two major technical indicators that are colliding at a crucial point and time. Unless you’re aware of these indicators, it could be very expensive.

In today’s short video, I explain both the technical indicators we are discussing and also the important time frame that we are just about to enter.

I think you will find today’s video not only interesting, but also educational.

There is no need to register for this video and of course you can watch it with my compliments. I highly recommend watching this video today, otherwise you risk missing out on what could be the move of the year.

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Bloomberg Technical Analysis: N.Y. Natural Gas Set to Decline Below $3

Natural gas futures, which jumped 28 percent last week, may revisit seven year lows after surging into an “overbought” area of resistance between $3.58 and $3.87 per million British thermal units, according to a technical analysis by Barclays Capital. Gas tumbled 82 percent from a high of $13.694 per million Btu in July 2008 to touch $2.409 on Sept. 4. Gas then surged 57 percent through Sept. 18. The futures have entered a resistance zone and the downtrend is likely to resume, MacNeil Curry, a New York based analyst at Barclays, said in an interview. “We’re around the high end of this resistance zone and things are overbought,” Curry said. “This is still an environment where bounces should be sold.....Read the entire article

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Weekly Summary From Crude Oil Trading Small Spec.

From Guest analyst Rich Olney.....

Weekly Summary for Sunday 9/20/09
Nov Crude Oil finished the week up 4% or 2.77 points to close at 72.49. Nat Gas finished the week up 21.6% closing at 3.778. The SnP cash closed the week up 2.5% closing at 1068.30. The USD lingers around support at 76 closing the week at 76.67. Gold finished the week up 4 points or up 1/2% at 1009.40. This week we get the FED MTG on Wed.

The commercials increased their net short position on crude this last week. It increased from -133,519 to -143,033 which is the second highest net short position this year. The high is 145,499 this year so we are at a yearly extreme. The Nat Gas net long position is at 40,512 which is the highest it has been since the commercials went net long last May.

For inventories crude oil imports have been decreasing and inputs into refineries have been increasing which means lower crude oil inventories. However Gasoline and Heating oil inventories are increasing. For Nat Gas current inventories are at 3458 and there are about 7 -10 more injections left before nat gas winter demand ramps up. If Nat Gas injections were to match last year then that would mean an additional 524 bcf of injections. Here are the balance of last years injections:

9/18 +54 bcf
9/25 +82 bcf
10/2 +87 bcf
10/9 +81 bcf
10/16 +71 bcf
10/23 +49 bcf
10/30 +23 bcf
11/6 +54 bcf
11/13 +23 bcf
11/20 -55 bcf

For technicals on crude support lies at 68. There is resistance at 73 which has held back crude for two weeks. If crude closes above 73 then it can make a run at the highs at 75.89 where there is strong resistance. For Natty it needs to close above the down trend line and above the rally high at 3.90. If natty can close above 3.90 two session in a row then that should confirm higher prices are in the cards. However Natty to close above the trend line first.....Read the entire post with charts!

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“As California goes, so goes the nation”....Let’s hope not!

From guest blogger Adam Hewison....

There’s a saying that most of us have heard many times before, “As California goes, so goes the nation.” The saying is/was intended to recognize Californians for consistently being on the cutting edge of new developments in science, business and innovation.

Let’s hope that the current dire unemployment picture in California doesn’t end up sweeping the rest of the nation.

—————-

This graphic courtesy of the Los Angeles Times, Full article here.

Crude's Rally Derailed from Fundamentals Again

Strength in stock markets and decline in USD were the major reasons for the rises in commodities. In the US, Dow Jones Industrial Average climbed +2.2% to settle at 9820 while S&P 500 Index surged +2.6% to 1068.3 as driven by better-than-expected housing market (housing starts), employment situation (jobless claims) and improvements in manufacturing activities (Empire State and Philly Fed Index). The dollar weakened further with every rebound being treated an opportunity to sell as investors' risk appetite increases. In the coming week, the FOMC meeting will be market's focus. While the Fed will likely announce to keep its policy rate at 0-0.25% for an extended period of time, it may talk more about plans for exiting from the current stimulus policies.

Crude Oil
Crude oil price retreated to -0.6% to settle 72.04 Friday, the second consecutive day of fall as USD recovered after substantially weakened against major currencies in the past week. On weekly basis, the October contract reached 73.16 the highest and gained +4%. Recent rally in crude oil has been determined by movements in USD and stock markets, rather than fundamentals....Read the entire article

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Crude Oil Fluctuates Amid Equity Gain, Ample U.S. Supplies

Crude oil fluctuated as equity gains indicated that the U.S. is pulling out of a recession amid ample fuel supplies in the world’s biggest energy using country. Oil is heading for a 4.6 percent increase this week, a second straight weekly advance, as the stock market climbed on data showing an expansion in U.S. housing starts and industrial capacity utilization.

The country’s supplies of crude oil, gasoline and distillate fuel are higher than average, according to the Energy Department. “This is a range bound market,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “There’s nothing at this moment that is giving it a direction”.....Read the entire article

Crude Oil Declines for a Second Day on Stronger U.S. Dollar

Crude oil fell for a second day as the dollar strengthened against the euro, dimming investors’ demand for dollar priced assets to hedge against inflation. Oil dropped as much as 1.7 percent as the U.S. currency climbed for the first time in five days. Inventories of crude oil, gasoline and distillate fuel are higher than average, according to the Energy Department.

“The rally in energy is looking a little long in the tooth,” said John Kilduff, senior vice president of energy at MF Global in New York. “There isn’t any economic data to give the market any strength. The dollar is a bit stronger today, which is weighing on things”.....Read the entire story