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United States crude oil production for 2009 is on target to have its biggest one year jump since 1970, according to a Platts analysis of industry data. With U.S. oil production averaging 5.268 million barrels per day (b/d) through October, the gain in U.S. output will be the most since the country produced 9.637 million b/d in 1970, which turned out to be the peak year of U.S. crude output, according to Platts' analysis of data published by the U.S. Energy Information Administration (EIA). If that 5.268 million b/d figure holds through December, this year would show a 6.4% boost from the 4.95 million b/d average of 2008 and rank as the best U.S. oil production year since 2004, when output averaged 5.419 million b/d.
For comparison, in the 40 years since U.S. oil production peaked annual output has jumped only eight times. Seven of those increases were minimal; only in 1978 was there a jump of significant magnitude, an increase of 5.6%, to 8.7 million b/d. Last year's hurricane curtailments distorted the production numbers somewhat for the 2008 comparison, given that 183,000 b/d of Gulf of Mexico output was still offline at the end of that year. However, 2009 is still expected to post increases of 3% and 4% from the relatively storm free years of 2006 and 2007, respectively.
Projections from the U.S. Minerals Management Service (MMS) indicate that the primary driver for this year's U.S. oil production resurgence is actually just getting started. That driver is the Gulf of Mexico, where operators have begun launching a group of new fields, fulfilling what has been a decade long focus on unlocking the promise of deepwater exploration there.....Read the entire article.
Crude oil in New York fell to the lowest level in six weeks as Dubai’s attempt to reschedule its debt bolstered the dollar and prompted investors to sell commodities. Oil dropped as much as 7.1 percent as the U.S. currency climbed, dulling the appeal of raw materials as an alternative investment, and equities tumbled. Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayments, raising concern that worsening defaults may hold back the global recovery.
“The situation in Dubai revives worries about the recovery of the economy,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “The strength of the recovery has an obvious and immediate impact on both oil demand and prices.” Crude oil for January delivery declined $2.28, or 2.9 percent, to $75.68 a barrel at 12:09 p.m. on the New York Mercantile Exchange. Futures touched $72.39, the lowest since Oct. 12. On a closing basis the market is heading for the biggest drop since Nov. 12. New York oil futures didn’t settle yesterday because of the Thanksgiving holiday. Floor trading and electronic trading will end at 1:45 p.m. today, instead of the normal closures at 2:30 and 5:15 p.m......Read the entire article.
Crude oil fall sharply to as low as 72.39 today and the development is inline with our bearish view that fall fro 82.00 is still in progress. Intraday bias remains on the downside for 61.8% retracement of 65.05 to 82 at 71.52. Sustained break there will pave the way for even deeper decline to 65.05 support next. On the upside, while some recovery might be seen, upside should be limited by 75.57 support turned resistance and bring fall resumption.
In the bigger picture, we'd continue to slightly favor the bearish case as long as 80.51 resistance holds. That is, a medium term top is formed at 82.0 on bearish divergence conditions in daily MACD as whole rise from 33.2 has completed. Break of trend line support (now at 70.60) will add more credence to this case and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. However, break of 80.51 will indicate that price actions from 82.0 are merely consolidations in the medium term rise only. Further break of 82.0 will bring medium term rise resumption. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.....Here is the charts!
Nymex Natural Gas (NG)
Natural gas retreat mildly after the rise from 4.157 was limited below 5.318 resistance. With 4 hours MACD crossed below signal line, intraday bias is turned neutral again. Some more consolidations would be seen between 4.157 and 5.318. Nevertheless, note that break of 5.318 resistance will confirm that whole rally from 2.409 has resumed and should target 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next.
In the bigger picture, current development suggests that price actions from 5.318 are merely consolidations and should have completed at 4.517 already. Rise from 2.409, which is still in progress and will likely extend to 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will indicate dampen this bullish case and turn outlook mixed.....Here is the charts!
I have noticed valuations in the junior oil sector creeping up, sometimes to the point where I have to blink. But it’s not just the increase in the price of oil this year that has driven up valuations. Technology is increasing how much oil or gas companies can produce from a well in a day, and in the overall amount of oil or gas they can recover from a given formation, essentially how fast and how much they produce. Technology is giving investors more leverage to the price of oil.
This is especially true of the hot new “tight” plays that are being developed in western Canada and the US, where I have been focusing the subscriber portfolio. (“Tight” just means the oil is held in rocks like shale or sandstone, as opposed to the more conventional type of looser sands that hold hydrocarbons, and from which almost all the world’s production has come from in the last 100 years.
As an example of valuations increasing, in August 2009 TriStar Oil and Gas merged with Petrobank’s Canadian operations, and was valued at about $109,000 per flowing barrel, which was almost double its average peer group valuation at the time. They were a 20,000+ bopd producer, and the larger the company, generally, the larger the valuation.
But now I am seeing junior producers one tenth that size, 2000 bopd or even 1000 bopd producers, get valuations in the $90,000 – $110,000 per flowing boe (barrels of oil equivalent) range. Most of these are in the 3 year old Bakken play in Saskatchewan, or the several months old Cardium play in Alberta. Several Canadian brokerage firms have issued reports saying these two oil plays have the best economics of any in Canada.....Read the entire article.
Another fantastic week for precious metals as the US dollar continues its slide lower. Energy commodities like oil and natural gas are having some difficulty finding buyers.
When commodities start to trend they become very profitable for those riding them up or down. But when a short term trend starts to virtually go straight up (parabolic) then we must be prepared for a sharp pullback. Once the price starts to slide I figure a lot of short term traders will begin locking in profits, sending gold down.
I’ve recently discovered the Money Flows table from The Wall Street Journal and I gotta say it’s awesome. My thanks to John Townsend for bringing this resource as well as hidden gem play – DFSH – to my attention.
The Money Flow table calculates whether money is moving in or out of a stock or ETF on a given day, and whether it is selling on strength or buying on weakness. It also tells you if there are more up or down ticks. Really powerful stuff in my opinion.
For example, the GLD gold fund continued its move higher today as it must follow the underlying commodity. And though the fund traded higher institutions were selling their positions in masse. For every 9 block trades bought there were 100 block trades on the sell side. This is strong evidence that institutions/large traders are moving out of GLD. Indeed, over $161 million dollars moved out of GLD today alone and a total of $251 million dollars in the two days preceding today.
The SPY fund was 12 buy orders for every 100 sell orders. Today alone over $675 million was flowing out of SPY which his CRAZY huge. Just click here to check out the table!
GLD ETF Trading – Weekly & Daily Trading Charts Gold continues to claw its way higher as trader’s trip over each other trying to buy this shiny investment. The weekly chart clearly shows a parabolic spike. Vertical spikes like this do not last for long, but the largest percentage of the move will be made riding this trend up with a tight stop.
SLV ETF Trading – Weekly & Daily Trading Charts Silver is still trending up but lagging its big sister (yellow gold). The daily chart shows a nice mini bull flag and we could get an upside pop soon.
USO Fund Trading – Weekly & Daily Charts to Trade Crude oil just does not have people participating. The dollar is dropping yet oil continues to be dormant. It has provided several intraday plays as it trades the top and bottom of the trend channel.
UNG Fund Trading – Trade the Weekly & Daily Charts Natural gas really came to life today. It looks like people started to cover their shorts and it just kept running up for the entire session. I mentioned in a previous report that the $9 level could be a bottom and today’s reversal sure makes it look good to the eye. But if this is a short coving rally, prices are still headed lower yet.
ETF Trader Conclusion: Gold continues its incredible rally and we love every minute of it. I keep moving our stops to lock in maximum gains while providing enough wiggle room for more growth.
Silver and precious metals stocks are lagging and that is a concern. The charts look solid but I think investors are not currently willing to pay higher prices for riskier plays which include silver and precious metal stocks.
Crude oil is just drifting lower in a controlled manner. The chart looks bullish but buyers just are not in a panic to buy it right now.
Natural Gas has put in a nice bounce this week. I expect a lot of this is short covering and it could rally to the $10.50 – $11.00 area if all goes well.
The broad market is starting to look and feel over bought. We could see the market continue higher Friday because of the holiday light trading volume which virtually always moves the markets, or whatever investment is HOT, higher. This is because the large traders take time off so there are not a lot of large sellers in the market. But be ready for next week because these nice lofty prices could start tumbling down.
Oil fell in New York as traders sold contracts to lock in gains ahead of the U.S. Thanksgiving holiday and after the U.S. Energy Department said crude inventories held by the world’s largest energy consumer rose. Oil also pulled back after rallying 2.6 percent yesterday, the most since Nov. 16, as the dollar retraced some of its losses against the euro. Commercially held U.S. stockpiles rose to a four week high of 337.8 million barrels in the week to Nov. 20, renewing concern over the pace of recovery in fuel demand.
“We can expect some profit taking selling after last night’s sharp gains led by gold and the euro,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “It’s possible to go as low as $76.50, that’s the level before it started rising yesterday.”
Crude oil for January delivery fell as much as 56 cents, or 0.7 percent, to $77.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $77.55 a barrel at 11:20 a.m. Singapore time. Yesterday, it rose $1.94 to $77.96 a barrel. Futures have gained 74 percent this year. Floor trading in New York will be suspended today because of Thanksgiving. The exchange will close early tomorrow, while electronic trading will continue through the holiday.....Read the entire article.
U.S. crude oil refinery inputs averaged 14.0 million barrels per day during the week ending November 20, 177 thousand barrels per day above the previous week’s average. Refineries operated at 80.3 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.2 million barrels per day. Distillate fuel production decreased last week, averaging 4.0 million barrels per day.
U.S. crude oil imports averaged 9.0 million barrels per day last week, up 371 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 1.4 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 928 thousand barrels per day. Distillate fuel imports averaged 234 thousand barrels per day last week.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.0 million barrels from the previous week. At 337.8 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.0 million barrels last week, and are slightly above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week.
Distillate fuel inventories decreased by 0.5 million barrels, and are above the upper boundary of the average range for this time of year.
Propane/propylene inventories decreased by 1.9 million barrels last week and are in the lower half of the average range.
Total commercial petroleum inventories decreased by 0.9 million barrels last week, and are above the upper limit of the average range for this time of year.
Crude oil, declining since touching a one-year high of $82 a barrel Oct. 21, is poised to test the bottom of a downtrend channel below $74, according to an analysis of price charts by Societe Generale SA. Oil, trading lower today for the fourth day in five, could extend its drop as traders pull out in the absence of profit opportunities, according to Stephanie Aymes, a London based commodity technical analyst at France’s second largest bank by market value. “We are in a range, a descending channel,” Aymes said in an e-mail. “It looks like the one in August, but that was deeper. This range is very long and the daily indicators are breaking supports.”
Crude oil has pared its gains for this year from as high as 84 percent to 70 percent amid concern weaker growth in the U.S., the world’s largest energy consumer, may slow the recovery in demand. Futures for January delivery on the New York Mercantile Exchange was at $76.01 a barrel in electronic trading, down 1 cent, at 11:57 a.m. Singapore time. Prices, which fell yesterday after the Commerce Department said the U.S. economy expanded less than estimated in the third quarter, are approaching a technical support area and may soon test its resilience, Aymes said.....Read the entire article.
Crude oil's remains soft today and is struggling around 75.57 support. As noted before, with 80.51 resistance intact, short term risks remain on the downside, below 75.57 will bring deeper decline towards 61.8% retracement of 65.05 to 82 at 71.52 next.
In the bigger picture, we'd continue to slightly favor the bearish case as long as 80.51 resistance holds. That is, a medium term top is formed at 82.0 on bearish divergence conditions in daily MACD as whole rise from 33.2 has completed. Break of trend line support (now at 70.60) will add more credence to this case and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. However, break of 80.51 will indicate that price actions from 82.0 are merely consolidations in the medium term rise only. Further break of 82.0 will bring medium term rise resumption. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.....Here is the charts!
Nymex Natural Gas (NG)
Near term outlook in natural gas is quite mixed for the moment. But after all, with 5.318 resistance, we'd slightly favor the case that it has topped out already and favor another fall. Below 4.157 will target 61.8% retracement of 2.409 to 5.318 at 3.52 first.
In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The break of 55 days EMA, even though it's brief so far, suggests that rebound from 2.409 is possibly just a corrective rise only and may have completed after failing to sustain above 55 weeks EMA. Deeper decline could now be seen for a retest of 2.409 support first. On the upside, break of 5.318 resistance is needed to revive the case that Natural gas has bottomed in medium to longer term.....Here are the charts!
Driven by a confluence of factors including the credit crunch, commodity price collapse and widespread economic malaise, the U.S. land rig count decline witnessed between August 2008 and June 2009 was by far the most devastating downturn of the last 20 years. On a percentage basis, the recent downturn was similar to the 1998-1999 downturn, it just occurred in half the time. In absolute terms, more than twice as many rigs fell out of the rig count in the 2008-2009 downturn than in each of the last two major collapses.
However, the recovery so far has been promising, and in the five months since the downturn, the rig count has recovered by 241 rigs or 29%. In absolute terms, this is more than in the first five months of either of the prior two recoveries. On a percentage basis, the current rebound is unfolding faster than the 2001-2002 recovery but not as quickly as the 1998-1999 recovery. The table below summarizes the last three downturns and the five month periods following the troughs.
Rig Count Likely Headed Higher, but Risks Abound Although a general consensus has formed that the land rig count will continue to increase during 2010, it would be wise to balance optimism with a sense of caution in the current recovery. While the recovery periods in each of the last two cycles generally exhibited an up and to the right pattern (for two and six years respectively), the present upturn is occurring in a noisy environment where multiple variables could take a course that would result in a plateauing rig count or possibly even a second bottom.....read the entire article.
