Crude Oil Bulls Lose Ground on Key Reversal Down Day

Crude oil posted a key reversal down on Thursday and below the 62% retracement level of the May-October decline crossing at 100.08 as it consolidated some of the rally off October's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If December extends the rally off this month's low, the 75% retracement level of the May-October decline crossing at 105.42 is the next upside target. Closes below the 20 day moving average crossing at 94.97 are needed to confirm that a short term top has been posted. First resistance is the 75% retracement level of the May-October decline crossing at 105.42. Second resistance is the 87% retracement level of the May-October decline crossing at 110.46. First support is the 10 day moving average crossing at 97.83. Second support is the 20 day moving average crossing at 94.97.

Natural gas closed higher due to short covering on Thursday as it consolidated some of this year's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.695 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.573. Second resistance is the 20 day moving average crossing at 3.695. First support is Wednesday's low crossing at 3.326. Second support is monthly support crossing at 3.225.

Gold closed lower on Thursday and below the 20 day moving average crossing at 1743.90 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. If December extends today's decline, the reaction low crossing at 1681.20 is the next downside target. Closes above Monday's high crossing at 1797.60 are needed to confirm that a short term top has been posted. First resistance is Monday's high crossing at 1797.60. Second resistance is the 75% retracement level of the 2008-2011 rally crossing at 1826.50. First support is today's low crossing at 1711.00. Second support is the reaction low crossing at 1681.20.


How to Trade Oil ETFs When $100 Per Barrel is Reached

Nymex Crude Tips Back Below $100 Per Barrel

U.S. oil futures slid back below $100 a barrel Thursday, reversing the previous day's gains, as doubts surfaced about the economy's ability to stomach high oil prices.

Light, sweet crude for December delivery settled down $3.77, or 3.7%, to $98.82 a barrel on the New York Mercantile Exchange. The December contract is set to expire at the end of trading Friday. The more heavily traded January contract settled down $3.67, or 3.6%, to $98.93 a barrel.

Brent crude on the ICE Futures Europe exchange recently traded down $2.89, or 2.6%, to $108 a barrel.

Nymex futures pushed lower on a wave of selling, as traders thought twice about whether $100 crude was sustainable given the cracks in the global economy. A sinking stock market in the U.S., combined with intensifying worries about Europe's sovereign debt crisis, took the wind out of a price rally that had dominated the oil market for the last several weeks.....Read the entire Rigzonearticle.


How to Trade Oil ETFs When $100 Per Barrel is Reached

Pipeline Reversal Of Fortune

Don't think of it as crude oil prices rallying, think of it as Brent crude prices falling. Oil prices surge above $100 a barrel for the first time since last July as the "broken" global oil market gets fixed in a big way. Conoco Phillips had a big payday by selling its interest in Gulf Coast Seaway pipeline in Cushing, Oklahoma to Enbridge Corporation which will reverse the flow of oil out of instead of into the NYMEX delivery point in Cushing, Oklahoma. This is a big step to ending the bottleneck in Cushing and allow the bonanza of Canadian oil sands crude and shale crude to be sent to Gulf Coast refiners that have too often had to rely on foreign imports of crude.

Followers of crude imports realize the cost of imported crude was rising as evidenced by what became a record differential between the Brent Crude versus West Texas Intermediate spread. West Texas Intermediate (WTI), which historically Brent Crude traded at a premium to, reversed on a host of challenges. In Oklahoma the influx of crude exceeded refiners ability, or at least desire, to run crude at those rates that would use the influx of new sources of oil. In the Gulf Coast where supplies were tight the infrastructure did not exist to transport the oil in sufficient amount. The US pipelines remain the most popular transport option, carrying about two-thirds of U.S. oil.....Read the entire article.


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Crude Oil Pulls Back Overnight, Bulls Maintain the Advantage

Crude oil was lower due to profit taking overnight as it consolidates some of the rally off October's low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional short term gains are possible. If December extends the rally off October's low, the 75% retracement level of the May-October decline crossing at 105.42 is the next upside target. Closes below the 20 day moving average crossing at 95.08 would confirm that a short-term top has been posted. First resistance is the 75% retracement level of the May-October decline crossing at 105.42. Second resistance is the 87% retracement level of the May-October decline crossing at 110.46. First support is the 10 day moving average crossing at 98.04. Second support is the 20 day moving average crossing at 95.08.

Natural gas was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.693 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.570. Second resistance is the 20 day moving average crossing at 3.693. First support is the overnight low crossing at 3.325. Second support is monthly support crossing at 3.225.

Gold was sharply lower due to profit taking overnight as it consolidates some of the rally off September's low. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1745.20 would confirm that a short term top has been posted while opening the door for additional weakness during November. If December renews the rally off September's low, the 75% retracement level of September's decline crossing at 1826.50 is the next upside target. First resistance is the 75% retracement level of September's decline crossing at 1826.50. Second resistance is the 87% retracement level of September's decline crossing at 1875.10. First support is the 20 day moving average crossing at 1745.20. Second support is the reaction low crossing at 1681.20.


Don't miss our recent post "How to Trade Oil ETFs When $100 Per Barrel is Reached"

Rigzone: ANWR Bill Boosts Jobs, Domestic Energy Production

Citing an increase in domestic energy production and job creation, the House Natural Resources Committee proposed legislation Friday that would open up the Arctic National Wildlife Refuge for oil and natural gas production.

Committee Chairman Doc Hastings, of Washington, and Alaska Rep. Don Young announced plans to introduce the Alaskan Energy for American Jobs Act, which is part of the energy and infrastructure jobs bill announced by Ohio Rep. John Boehner in early November.

Officials said the act would open less than 3 percent of ANWR's 19 million acres in the North Slope, which the U.S. Geological Survey estimates contains at least 10.4 billion barrels of oil and at peak production can yield nearly 1.5 million barrels of oil per day -- more than the current daily U.S. imports from Saudi Arabia. The area was specifically set aside for energy production by Congress and President Jimmy Carter.

"ANWR is a site that is easily accessible, has great potential and is one of America's most highly concentrated areas of energy resources," Hastings said. "An investment in America's energy security is an investment job creation and infrastructure projects that will benefit every American without job destroying tax increases."

The committee held an oversight hearing in September with local Alaskans vocalizing their support for the bill, saying the plan "benefits local communities, tribes, businesses, Alaska and the nation."

Young said the Highway Trust Fund is struggling "to stay in the black" and believes the Alaskan Energy for American Jobs Act will provide new sources of revenue to fund infrastructure projects.

"This is a common sense plan; the revenue generated from drilling in ANWR will help keep the Highway Trust Fund from defaulting and will create jobs at the same time," Young said.

Carey Hall, an Ice Road Truck Drive with Carlile Transportation Systems believes the plan will keep the Trans-Alaska Pipeline from shutting down, securing jobs for decades to come.

"ANWR is not a band aid for our debt and economy; it is a long term sustainable solution," Ice Hall said during the oversight hearing.

Environmentalists aren't sold on the plan though, saying the benefits are exaggerated. In an interview with the Associated Press on Nov. 11, Pamela Miller said the "legislation is dead on arrival" and it proposes a "false solution to a real crisis." Sierra Club Alaska community organizer Lindsey Hajduk told the AP the connection to jobs is "weak".

Technological advancements have improved the safety of energy production while also lessening environmental impacts of drilling, such as using one drilling platform to cover a 28,000 foot radius -- larger than the size of Washington D.C.

"ANWR would be a great opportunity for the environmental community and the oil industry to work closely together and show what American technology and ingenuity could do," Alaska District Council of Laborers (ADCL) Tim Sharp said in the oversight hearing. ADCL represents approximately 5,000 Alaskan union members.

Fenton Okomailak Rexford, Tribal Administrator for the Native Village of Katovik, said development of the North Slope will keep his community alive by sustaining a local school and continuing to provide search and rescue, police and fire protection.

"We would not favor development of the Coastal Plain unless we were confident that development can occur without jeopardizing our way of life. Responsible development of ANWR is a matter of self determination for my people," Rexford said. "Development of the Coastal Plain of ANWR is a win-win situation for the American people, particularly for those of us who call this area home."

The bill is expected to move through the House in the coming weeks. The Subcommittee on Energy and Mineral Resources is set to hear testimony Nov. 18.


Posted courtesy of Rigzone.Com

EIA: Rail Delivery of Crude Oil and Petroleum Products Rising

More U.S. crude oil is being shipped by rail, especially from North Dakota where a lack of pipelines has companies relying on tank cars to bring the state's soaring oil production to market. Pipelines remain the most popular transport option, carrying about two thirds of U.S. oil and petroleum products, but rail is on the rise.

The Association of American Railroads (AAR) tracks combined rail movements of oil and refined petroleum products. In the first ten months of 2011, nearly 300,000 tank cars transported U.S. oil and petroleum products, up 9.1% from the same period in 2010, according to AAR. The growth in petroleum by rail shipments is much stronger than the 1.8% increase for all railroad cargo combined during the same period.

While AAR does not issue separate data on crude oil and product shipments via rail, it notes that anecdotal evidence indicates most of the growth in the crude oil and petroleum products category is likely due to crude shipments. Based on different sources of rail traffic data, the trade group said shipments of crude oil and liquefied natural gas accounted for about 2% of all carloads in 2008, 3% in 2009, 7% in 2010, and about 11% so far in 2011. One carload holds 30,000 gallons of oil.

Tank cars are in strong demand in North Dakota, where oil production has soared from about 343,000 barrels per day (bbl/d) in January to a record high of about 464,000 bbl/d in September, according to North Dakota's Department of Minerals Resources (DMR), due to the increasing amount of crude oil extracted from rock in the Bakken Shale. DMR expects North Dakota will pass California during the second quarter of next year to become the third biggest oil-producing state. Burlington Northern Santa Fe (BNSF) and other railway companies are building or expanding terminals and adding tank cars to transport North Dakota's growing oil supplies to Gulf Coast refineries.

On November 7, the first crude oil unit train on the Bakken Oil Express, a newly constructed rail hub near Dickinson, North Dakota, departed via the BNSF Railway carrying its first shipment, 70,000 barrels of crude oil destined for St. James, Louisiana. The Bakken Oil Express receives Bakken-area crude oil by both truck and pipeline and has a current takeaway capacity of 100,000 bbl/d. The Bakken Oil Express is already planning a second phase of construction that would significantly expand its takeaway capacity to more than 250,000 bbl/d.

Deliveries of tank cars should total about 8,000 this year, up from only 4,839 last year, and then increase to 11,000 tank cars in 2012, according to Economic Planning Associates Inc., a consulting firm that tracks rail car assemblies. The firm does not have a breakdown of how many of the new tank cars will be devoted to carrying crude oil. Tank cars are also used for shipping ethanol, chemicals, fertilizer, and corn syrup.

Tank cars would also be useful in the major oil hub of Cushing, Oklahoma, where a glut of supply is depressing the key U.S. benchmark crude oil price. Pipelines bringing oil into Cushing from the north are nearly full and there is not enough pipeline infrastructure to move oil south out of the area to Gulf Coast refineries. The Surface Transportation Board (STB), the federal agency that resolves railroad rate and service disputes and reviews railroad mergers, told EIA that it saw little movement in recent months of crude oil out of Cushing by rail. Railway companies send the STB confidential information on their cargo shipments and where they are sending them.

Source: U.S. Energy Information Administration, based on the Association of American Railroads.
Note: Data are weekly average originations for each month, are not seasonally adjusted, and exclude U.S. operations of Canadian National Railways and Canadian Pacific Railway; one carload holds 30,000 gallons.

Crude Oil Opens at a Four Month High

Crude oil was slightly higher overnight before hitting $100 per barrel for the first time in nearly four months as it extends the rally off Octobers low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional short term gains are possible. If December extends the rally off Octobers low, the 62% retracement level of the May-October decline crossing at 100.08 is the next upside target. Closes below the 20 day moving average crossing at 94.17 would confirm that a short term top has been posted. First resistance is the 62% retracement level of the May-October decline crossing at 100.08. Second resistance is the 75% retracement level of the May-October decline crossing at 105.41. First support is the 10 day moving average crossing at 97.01. Second support is the 20 day moving average crossing at 94.17.

Natural gas was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.720 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.616. Second resistance is the 20 day moving average crossing at 3.720. First support is the overnight low crossing at 3.387. Second support is monthly support crossing at 3.225.

Gold was lower overnight as it consolidates some of last Friday's rally. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1738.50 are needed to confirm that a short term top has been posted. If December extends the rally off September's low, the 75% retracement level of September's decline crossing at 1826.50 is the next upside target. First resistance is the 75% retracement level of September's decline crossing at 1826.50. Second resistance is the 87% retracement level of September's decline crossing at 1875.10. First support is the 20 day moving average crossing at 1738.50. Second support is the reaction low crossing at 1681.20.

Phil Flynn: The Widow Maker Continues To Scream!

While the global markets fret about another subpar Italian auction and turmoil in Europe, the energy complex is worrying about global tightness in distillate supply. The heating oil versus gasoline spread continues to scream so refiners know where to put their focus. Demand is screaming, surging in Japan, China, South America and the spread has put in its best performance in years. Not only is heating oil trading at a premium to heat oil, something that would have been almost unthinkable just a few years ago, but has picked up a dime on the spread.


U.S. supply of distillate, when compared to demand, is at a four year low. Dow Jones reports, "Surging demand for heating oil and diesel fuel, at a time of slumping gasoline consumption, has pushed the price difference between the fuels to its highest level since January 2009r December delivery settled Friday at nearly 57 cents a gallon, or about 18%, higher than the price of RBOB gasoline futures. Early Monday, the gap widened to near 65c. EIA says US diesel/heating oil demand was at 3 1/2 year high in latest 4 weeks, while gasoline use is at a 12 year low for this time of year." US Exports of diesel are near an all time high.


Reuters News reported that, "Gasoil refining margins in Europe pushed higher on Monday, up to levels not reached since January 2009, as tight supply continued to bite and traders eyed the expected seasonal demand from Germany with the weather about to turn colder. The ICE gasoil crack was trading at around $21.58 a barrel at 1655 GMT, its highest level since January 2009, up from Friday's $19.74 a barrel." We have been telling you about the potential for this spread for some time!


Make sure you are getting Phil's daily trade levels and reports. Just email him at pflynn@pfgbest.com

Crude Oil, Natural Gas and Gold Bulls All Take a Slide

Crude oil closed lower due to profit taking on Monday as it consolidated some of the rally off October's low. The mid range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If December extends the rally off this month's low, the 62% retracement level of the May-October decline crossing at 100.08 is the next upside target. Closes below the 20 day moving average crossing at 92.96 are needed to confirm that a short term top has been posted. First resistance is the 62% retracement level of the May-October decline crossing at 100.08. Second resistance is the 75% retracement level of the May-October decline crossing at 105.41. First support is the 10 day moving average crossing at 95.59. Second support is the 20 day moving average crossing at 92.96.

Natural gas gapped down and closed sharply lower on Monday as it extends this year's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.758 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.686. Second resistance is the 20 day moving average crossing at 3.758. First support is today's low crossing at 3.449. Second support is monthly support crossing at 3.225.

Gold closed lower on Monday and the low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1726.00 would confirm that a short term top has been posted. If December extends the rally off September's low, the 75% retracement level of the 2008-2011 rally crossing at 1826.50 is the next upside target. First resistance is the 75% retracement level of the 2008-2011 rally crossing at 1826.50. Second resistance is the 87% retracement level of the 2008-2011 rally crossing at 1875.10. First support is the 20 day moving average crossing at 1726.00. Second support is the reaction low crossing at 1681.20.


How to Trade Oil ETFs When $100 Per Barrel is Reached

How to Trade Oil ETFs When $100p/b is Reached

Crude oil was THE commodity to trade back in 2007-2008 when prices rocketed above $145 per barrel then dropped like a rock all the way back down to $35 per barrel leaving many investors and traders either greatly rewarded or dead broke.

Since then the focus of the world has moved to gold and silver as currencies spiral out of control with more and more reasons why individuals and entire countries should focus on owning physical metals rather than eroding currencies.

Just because a commodity is not under the direct spot light does not mean you can’t trade it or make money from it. With that said here is my analysis on how to trade oil if $100 per barrel is reached in the coming trading days.

Let’s take a look at the charts…

Long Term Weekly Oil Futures Chart

Here you can see how oil is trading round the $100 level. When the price is trading below it then $100 will act as resistance and when oil is above then it becomes support.

How To Trade Oil ETF

Intermediate Term Daily Oil Trading Chart:

This is more of a close up look at oil and the $100 price point. Notice how oil has moved higher for an entire month without any real pullbacks and that it has a clean support trend line underneath. If oil sees some big sellers step in here at the $100 – $104 level then I expect the green support trend line to be broken. If that takes place oil could quickly and easily drop back down to the $90-$92 area.

How To Trade Crude Oil

How to Trade Oil Using an Oil ETF

This chart shows a long (bullish) oil ETF along with its price by volume levels. I like to review the price by volume analysis from time to time when nearing a major support or resistance level on a chart.  For those who have difficulty finding support and resistance levels then this indicator/volume analysis tool will take most of your guess work out of the equation.

To make a long story short, the longer the volume bars on the left side of the chart are then the more people either bought or sold crude oil at that price. Keep in mind that it does not matter if they bought or sold here… the key to remember is that there are a lot of new positions here and that is where people exit their positions at breakeven because they held such a large draw down over the past few months and just want their money back.

Most traders and investors who trade off pure emotions (fear/greed) would have held a losing position through the August – October selloff and are now going to be more than happy to exit the trade at breakeven and move on to the next emotional roller coaster. It’s this type of trading which allows the non-emotional traders who thrive off of price action and mass psychology to catch price swings in the oil market.

The chart below clearly shows that oil is entering into resistance level and a pullback is becoming more likely each day. Those looking for an etf how to trade oil should look at buying SCO ETF. This oil ETF goes up in value when oil loses value.

How To Trade Oil ETFs

How to Trade Oil and Oil ETFs Conclusion:

In short, oil is becoming overbought meaning it has moved up to far too fast and should have some profit taking shortly. The fact the oil is reaching a century number ($100) I feel there will be a couple days of selling starting soon. Traders looking to play this support trendline breakdown should look at trading SCO oil etf.

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Chris Vermeulen