Oil Rises From One Month Low on Speculation Demand to Increase

Crude oil rose from a one month low on speculation demand will increase as the global economy recovers from its worst recession since World War II. A report today in the U.S., the world’s largest oil user, will probably show New York manufacturing expanded for a fourth month in October, based on the median estimate in a Bloomberg survey of economists. Oil also rose as the dollar declined, increasing the investment appeal of commodities and pushing up the price producers must seek to maintain purchasing power.

Oil “has been a trade based on the recovery story and that hasn’t changed,” said Toby Hassall, a research analyst with CWA Global Markets in Sydney. “The weakness in the U.S. dollar should remain a pretty supportive factor.” Crude oil for December delivery rose as much as 72 cents, or 0.9 percent, to $77.07 a barrel in after hours electronic trading on the New York Mercantile Exchange. It was at $77 at 8:29 a.m. in Singapore. The contract fell 59 cents to $76.35 a barrel on Nov. 13, the lowest settlement since Oct. 14, after an unexpected decline in U.S. consumer confidence. Prices fell 1.4 percent last week as U.S. jobless claims increased, fuel stockpiles rose and the nation’s refiners reduced operating rates to a 13 month low.....Read the entire article.

New Video: Has Gold Topped Out for the Year?

Yesterday the gold market took its first corrective action on the downside. The question many traders will have now is, have we hit the high end for gold this year?



In our latest video we examine that question in some of the internals that we see and feel are important in this market.

Just Click Here to watch the video and as always our videos are free to watch and there is no need to register. Please take a minute to leave a comment and let us know what you think about the direction of gold.

Ray C. Parrish
President/CEO The Crude Oil Trader

Phil Flynn: Jobless Friday!

Is it possible that our US jobless recovery might not be so jobless after all? Weekly jobless claims fell 12,000 to 502,000 giving the dollar a boost and the crude a trouncing even before the bearish Energy Information Agency weekly inventory report. Oh sure the overall jobless rate is still lousy but that puts the four week average at the best level in over a year and that gave some life the beleaguered dollar. Now with Obama on his way to China, the dollar could be poised for more short covering. We may see that happen when the Census Bureau releases the September balance, or should I say the imbalance, of trade data. The U.S. trade deficit is expected to widen to $32 billion from $30.7 billion in August. Most of that is with China.

There is growing global pressure on China to allow the Yuan to appreciate. The goal is to take some of the heat off the dollar and at the same time global commodity prices. All commodity prices have been as dependant on the dollar as the US is dependent on China buying our debt and as the Chinese are dependent on us buying their stuff. The Wall Street Journal says that the Federal Reserve's trade weighted dollar index, which measures the greenback against a broad basket of currencies including the Chinese yuan, has fallen nearly 22% since 2002. Some argue that the 63% increase in U.S. exports during that time is no coincidence.....Read the entire article.

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Weekly EIA Natural Gas Storage Report

Working gas in storage was 3,813 Bcf as of Friday, November 6, 2009, according to EIA estimates. This represents a net increase of 25 Bcf from the previous week. Stocks were 350 Bcf higher than last year at this time and 409 Bcf above the 5 year average of 3,404 Bcf. In the East Region, stocks were 118 Bcf above the 5 year average following net injections of 8 Bcf. Stocks in the Producing Region were 223 Bcf above the 5 year average of 976 Bcf after a net injection of 10 Bcf. Stocks in the West Region were 67 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,813 Bcf, total working gas is above the 5-year historical range.

Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2004 through 2008.
Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report." The dashed vertical lines indicate current and year ago weekly periods.

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Two Major Forces Collide in the Index Markets

On Wednesday, 11/11/09, the Dow Jones Industrial Index rallied to a 50% retracement level based on MarketClub’s Fibonacci measuring tool. The action today indicates that this level is very important and that it could be an important top for this market.

In our latest video we cover both the Dow and the S&P 500 and tell you what we think is going to happen to both of these markets in the near and intermediate term.

Just Click Here to watch our latest video and as always our videos are free to watch and there’s no need to register. Please take a moment to let us know what you think of the video by leaving a comment.

Ray C. Parrish
President/CEO, The Crude Oil Trader

Phil Flynn: Strange Bed Fellows

What does OPEC and the International Energy Agency have in common? Well usually not too much but there are exceptions.

OPEC represents the interests of oil producers whose club pumps about 40 percent of the of the global oil supply and the International Energy Agency (IEA) which acts as energy policy advisor to 28 oil consuming nations rarely see eye to eye to eye on many of the big energy issues of the day. Yet it seems in this era of economic stress even this odd couple may share some of the same ideas on energy without driving the other one crazy.

Well for one thing they both generally believe that the demand for oil is getting better. The IEA was the latest agency to upwardly revise its forecast for global oil demand predicting a consumption average rate of 86.2 million barrels a day up 140,000 barrels from their October report. That was the day after OPEC predicted a demand increase to 85.07 million barrels a day 50,000 barrels a day higher than their last report. Usually the IEA likes to estimate demand on the high side and OPEC on the low side yet a demand increase. Yet it is not just increasing demand that they agree on. They agree that the increasing price of crude may be a threat to the economic recovery.....Read the entire article.

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Weekly EIA Crude Oil Petroleum Status Report Highlights

U.S. crude oil refinery inputs averaged 13.8 million barrels per day during the week ending November 6, 145 thousand barrels per day below the previous week’s average. Refineries operated at 79.9 percent of their operable capacity last week. Gasoline production decreased last week, averaging 8.9 million barrels per day. Distillate fuel production increased last week, averaging 4.1 million barrels per day. U.S. crude oil imports averaged 8.7 million barrels per day last week, up 530 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 1.5 million barrels per day below the same
four week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 732 thousand barrels per day. Distillate fuel imports averaged 177 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.8 million barrels from the previous week. At 337.7 million barrels, U.S. crude oil inventories are slightly above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by
2.5 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and blending components increased last week. Distillate fuel inventories increased by 0.3 million barrels, and are above the upper boundary of the average range for this time of year. Propane/propylene inventories decreased by 1.2 million barrels last week and are in the upper half of the average range. Total commercial petroleum inventories increased by 1.0 million barrels last week, and are above the upper limit of the average range for this time of year.

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Total products supplied over the last four week period has averaged 18.7 million barrels per day, down by 4.7 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 8.9 million barrels per day, down by 1.0 percent from the same period last year. Distillate fuel demand has
averaged 3.6 million barrels per day over the last four weeks, down by 13.8 percent from the same period last year. Jet fuel demand is 4.0 percent lower over the last four weeks compared to the same four week period last year. The average world crude oil price on November 6, 2009 was $76.34 per barrel, $0.15 less than last week’s price but $17.68 above a year ago. WTI was $77.40 per barrel on November 6, 2009, $0.36 more than last week’s price and $16.34 above a year ago.

The spot price for conventional gasoline in the New York Harbor was 192.15 cents per gallon, 5.70 cents less than last week’s price but 51.75 cents above last year. The spot price for No. 2 heating oil in the New York Harbor was 195.44 cents per gallon, 1.03 cents less than last week’s price and 0.91 cent under a year ago. The national average retail regular gasoline price decreased to 266.6 cents per gallon on November 9, 2009, 2.8 cents per gallon less than last week but 44.2 cents above a year ago. The national
average retail diesel fuel price decreased to 280.1 cents per gallon, 0.7 cent per gallon less than last week and 14.3 cents below a year ago.....Read the entire report.

Crude Oil Falls on Larger Than Expected U.S. Supply Increase

Crude oil fell after a government report showed a larger than forecast gain in stockpiles as sinking demand pushed refinery operating rates to the lowest level in more than a year. Supplies of crude oil rose 1.76 million barrels to 337.7 million last week, the Energy Department report showed. Analysts surveyed by Bloomberg News forecast a 1 million barrel gain. Refinery operations declined to the lowest level since September 2008, when units were shut in the aftermath of hurricanes Gustav and Ike.

“The big problem is that demand is week, and refiners are starting to feel pain,” said Carl Larry, president of Oil Outlooks & Opinions LLC, a Houston based energy adviser. “It’s good for consumers that crude oil stocks increased, but with demand so low, refiners aren’t going to need it to make gasoline and other fuels.” Crude oil for December delivery fell $2.14, or 2.7 percent, to $77.14 a barrel at 11:59 a.m. on the New York Mercantile Exchange. Prices are up 73 percent this year. Futures traded at $77.32 before the report’s release at 11 a.m. in Washington.....Read the entire article.

USO and UNG Mid Week Trading Tips

Crude oil has a nice bull flag and we are waiting for a breakout and setup while natural gas continues to see selling pressure.

USO Fund Trading – Daily Fund Chart
The USO oil fund broke out a few weeks ago from the large pennant pattern. The price has been flagging for about 3 weeks now. It looks like we are getting close to a low risk setup so I am keeping a close eye on this fund.


UNG Fund Trading – Daily Fund Chart
Natural gas continues to under perform the rest of our commodities. This fund is starting to look like another good by point but we need a few things to fall into place before that happens. Let’s not jump the gun because this fund is still in a bear market. Waiting for a setup.


Waiting for these exchange traded funds to generate low risk setups and watching our current positions mature is the boring part of trading. It’s these slow times when traders get bored and start taking more risk by entering positions that do not have clear entry and exit points. Not having clear entry and exit points will lead to traders holding on to losing trades and not taking profits on winning trades. Be sure you enter positions which you know where you should get out if the trade goes against you and where to take some money off the table if it rallies higher.

ETF Trading Conclusion:
We continue to wait for trading opportunities to unfold. We focus on taking advantage of low risk setups and avoiding times the market when things are choppy and unclear.

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Crude Oil in New York Fluctuates as Chinese Imports Gain, Dollar Climbs

Crude oil rose as Chinese crude imports neared a record and the dollar weakened to a 15 month low, buoying demand for commodities. China’s net oil imports were almost 19 million tons, or 4.5 million barrels a day, the second highest level ever, according to data from the Beijing based customs office. Oil rose and gold surged to a record as the dollar’s slide bolstered purchases of raw materials by investors seeking alternative investments. “The Chinese numbers are obviously very supportive,” said John Kilduff, partner at Round Earth Capital, a hedge fund that focuses on food and energy commodity investments, in New York.

“The consistently high import numbers fly in the face of those who say there is nothing fundamental about the rise in oil prices.” Oil for December delivery rose 82 cents, or 1 percent, to $79.87 a barrel at 10:01 a.m. on the New York Mercantile Exchange. Futures have climbed 79 percent this year. Chinese imports increased as industrial production soared 16 percent from a year earlier, spurring fuel use. Last month’s net imports were the highest since July’s record 19.2 million barrels. China is the second largest oil consumer after the U.S.....Read the entire article.