Brazil....The New Saudi Arabia?

If any of the oil reserve reports coming out of Brazil can hold up to industry scrutiny, then Brazil is sure to become the "New Saudi Arabia" in the not to distant future. But a not to unfamiliar phenomenon took place as the Brazilian government began to expand it's control of Petrobras. Investors began to flee in droves, and the stock price is proving it.

So is this a buying opportunity or is Petrobras doomed to go the way of Chinese oil companies in the eyes of western investors.




Here is some great numbers from World Market Pulse....

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Beyond Oil: The View from Hubbert's Peak

With world oil production about to peak and inexorably head toward steep decline, what fuels are available to meet rising global energy demands? That question, once thought to address a fairly remote contingency, has become ever more urgent, as a spate of books has drawn increased public attention to the imminent exhaustion of the economically vital world oil reserves. Kenneth S. Deffeyes, a geologist who was among the first to warn of the coming oil crisis, now takes the next logical step and turns his attention to the earth's supply of potential replacement fuels. In Beyond Oil, he traces out their likely production futures, with special reference to that of oil, utilizing the same analytic tools developed by his former colleague, the pioneering petroleum supply authority M. King Hubbert.


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Talisman, Statoil Buy Texas Shale in $1.3 Billion Joint Venture Deal

A Canadian-Norwegian joint venture is buying 97,000 acres of natural gas rich land in Texas' Eagle Ford play, the companies said Sunday. Calgary based Talisman Energy Inc. and Stavanger, Norway based Statoil are paying $1.325 billion for the land, which currently belongs to Enduring Resources, Talisman said. The project will be a 50-50 joint venture between the companies. Talisman will be the initial operator, but Statoil will operate at least half of the joint assets within three years.

Talisman estimated that the property contains the equivalent of 800 million barrels of oil. The property currently produces the equivalent of 5,500 barrels of oil per day, Talisman said. It said six wells are producing energy, and 20 more will have been drilled by year's end. Shale oil and gas deposits have become a key source of U.S. energy production. New techniques make it easier to reach oil and gas trapped beneath layers of rock deep underground. Both Talisman and Statoil have been expanding their shale gas operations in North America.

Courtesy of  INO.com Market and Intraday News


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Dian L. Chu: Next Major Resistance $87 a Barrel

Crude Oil hit a high of $84.09 on Thursday morning before investors sold into the rally in all commodities before the volatile jobs report on Friday morning. The shorts pushed Crude to a weekly low of $80.30 early Friday morning, which was a nice buying opportunity, as Crude Oil closed the electronic session on Friday at $82.84.

After the jobs report came in within expectations, there was substantial fund buying back in all the commodities across the board with the thought that the still weak job market mandates the Fed to start the QE2 Program in a serious manner.

So, Crude basically went from $76 a barrel to $84, as it was under subscribed by fund managers at the $76 level before the product`s inventory levels started to show declines due to lower refinery utilization rates and a pickup in demand on the Distillate side.

The pending jobs report supplied the expected pullback, and now Oil is trading at just below the $83 level. It should test $85 before Wednesday of the upcoming trading week, as the rush back into commodities after the jobs report indicates that this inflation trade still has some major support and legs by investors.

If Crude breaks $79 to the downside then obviously the risk trade is being taken off by investors.....See Dian's Crude Oil Technical Charts.



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Iraq Raises Crude Oil Reserve Estimates

Iraq raised its estimate of crude oil reserve, by +24%, to 143.1B barrels, making it the third largest reserve in the world, after Saudi Arabia and Venezuela. More impressively, its oil reserve has surpassed that of Iran. The news is important to future oil supply. Indeed, Iraq signed several contracts with multinational oil companies to raise output and 2 rounds of auctions were completed last year. The government also announced plans to hold its first auction of contracts to develop natural gas on October 20. What we should be worrying about is that the security situation, political environment and legal framework in Iraq may make exploration difficult.

Courtesy Oil N' Gold

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Oil N' Gold: Crude Oil Weekly Technical For Saturday

Crude oil rose further to as high as 84.32 last week, but formed a temporary top ahead of 161.8% projection of 70.76 to 78.04 from 72.75 at 84.53 and retreated. Initial bias is neutral this week and some sideway trading would be seen below 84.43 first. At this point, there is not sign of reversal in crude oil yet and further rise could still be seen. However, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and turn focus back to this support level.

In the bigger picture, the stronger than expected rally from 70.76 dampened the immediate bearish view and suggests that rise from 64.23 is still in progress. Nevertheless, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Hence, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.

In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Price actions from 147.27 are treated as consolidation in the larger up trend and with 90.24 fibo resistance intact, a test of 33.2 eventually is in favor. Though, decisive break of 90.24 will argue that crude oil will bring stronger rally to above 100 psychological level as a relatively powerful second wave of the consolidation continues.

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This Is What Your Trading Is Missing

Often what is missing from an unsuccessful trader's strategy has nothing to do with what trading software they are using or which technical indicators they follow, but more about their psychology as a trader. What differentiates these "super traders" from the rest of us? Well, read the questions below and if you answer 'no' to any of them, then you may be lacking important characteristics that are holding you back from trading success.

- Have you learned to develop patience with your trading?
- Do you know how to come out of a loss as a better trader?
- Are you able to avoid trading panic?
- Do you love trading?

Watch today as Jack Schwager, best selling author of Market Wizards, presents "Market Wizard Insights" - a powerful guide to get you on the road to profitablity.

Visit here to watch This Is What Your Trading Is Missing now

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Natural Gas: Fundamentally Bearish but Expecting a Seasonal Rally

From guest analyst Papa Roach.....

Here we are, starting October on a good note weather-wise (at least in Houston). You couldn’t ask for a string of beautiful days like we have had. Last month’s price action indeed avoided the seasonal rally that has come to be expected like clockwork. The story has remained a bearish supply side, HBP drilling tale in shale (Hold By Production, a general lease clause).

The Atlantic tropical season is on its downhill slide, and we in fact did see a fairly active season with 14 named systems as of this writing, 7 of which were hurricanes and 5 of those majors. However, the offshore production area was unfazed this year with most activity staying away from the central gulf coast. The precautionary shut-in volumes were negligible. The big story of this summer has been extreme temperatures.

The summer of 2010 will go down in the record books as one of the hottest on record. The graph below depicts the meteorological summer (June-August) and compares quite bullishly to last summer.

The temperature regime created a spot market premium the entire summer that rivaled what you would expect to see in high winter heating demand as gas-fired power generation was humming along to meet the high CDD loads (Cooling Degree Day). These temperatures created a level of demand that masked the high level of US supplies and likely saved a few smaller E&P companies from very tough times.

However, the market’s ability to sustain prices that were high enough to keep a healthy drilling pace will likely be the unraveling for some as prices did not do their job of curtailing supply. Most drilling in shale is indeed for HBP purposes; however, there was still a moderate pace of traditional vertical wells that kept the supply side moving higher throughout the period.

Read the entire article "Natural Gas: Fundamentally Bearish but Expecting a Seasonal Rally"


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Commodity Corner: Crude Oil, Gasoline End the Week Higher

French labor troubles helped November crude oil to settle higher Friday. Crude oil for November delivery settled at $82.66 a barrel, a 99 cent gain from Thursday, as traders considered the increasing fallout from an ongoing strike at the Fos-Lavera oil and gas terminal near Marseille. The third-largest oil port in the world, Fos-Lavera is the key entry point for crude oil destined for half of France's refineries as well as other European refineries. For nearly two weeks, striking workers have prevented oil tankers from entering the port. With refinery utilization already low in a number of European refineries, a prolonged strike at Fos-Lavera could lead to refinery shutdowns.

The Fos-Lavera matter, coupled with a strong euro compared to the dollar, proved to have a greater influence on Friday's oil futures price than unimpressive September jobless figures from the U.S. Labor Department. The federal agency reported Friday that nonfarm payroll employment fell by 95,000 jobs last month and that the unemployment rate remained at 9.6 percent during that period. Oil traded from $80.30 to $83.13, and it ended the week 1.5 percent higher.

Natural gas futures, which plunged by more than six percent Thursday, regained some momentum Friday. November natural gas settled three cents higher to end the day at $3.65 per thousand cubic feet. The front month gas price, which has declined with recent mild weather forecasts, fluctuated between $3.58 and 3.68 Friday. Compared to Monday's $3.73 settlement price, gas is down 2.1 percent for the week. The price of a gallon of gasoline rose by three cents Friday, settling at $2.15. The intraday range for gasoline was $2.09 to $2.16, and the commodity ended the week up 2.9 percent.

Courtesy of Rigzone.Com


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Phil Flynn: Give Me That Old Time Inflation

..... it's good enough for me. The Federal Reserve has changed sides! Can you believe that the Federal Reserve is rooting for inflation! I mean that is like Superman rooting for the communists. The Feds' mission has always been to fight inflation, not create it. Yet that is exactly what they are doing. Of course the truth is, regular readers of my reports have known for years that the Fed joined the inflationary dark side of the force.

The Fed wants commodity prices higher to inspire economic activity as business start to fear that use it or lose it in relation to the spending power of their devalued dollars. The Fed wants inflation and they know how to create it and you cannot get in the Feds way. It is as I wrote the day after Quantitative Easing 1 March, 2009 when I said, "I fought the Fed and the Fed won. I fought the Fed and the Fed won.

Needed money so they printed some, I fought the Fed and the Fed won." I went on to say, “ do not underestimate the way this Fed can change the marketplace. The Fed's timing of this move to quantitative easing still has the market coming to grips with the shorter and longer term effects on the economy and the markets. The one thing that is for sure is that the rules of the game have changed.

And when it comes to a knife fight and Fed power, there are no rules. Someone say one, two, three, gold! In a blink of an eye the Fed, with its unlimited power to print money, can change the dollar value of a commodity or its long term trend in an instant. By creating inflation and money out of thin air they can.......Read the entire article.


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