Natural Gas Fund, UNG, Says New Share Creation Tougher Than Expected

The U.S. Natural Gas Fund,UNG,the largest exchange traded fund in the fuel, has found it more difficult than expected to create units using a new process that has purchasers trade natural gas swaps for shares. The Alameda, California based fund has gotten inquiries from market makers and hedge funds, said Jim Stegall, manager of institutional sales for the fund. Many investors prefer swaps of a few weeks or less, while the fund wants six month swaps.

“The vast majority hear that and they don’t want anything to do with that,” Stegall said. The complex swaps for shares creation process may take several weeks, he said.
The $3.9 billion fund grew 11 fold since the start of the year to 347.4 million shares outstanding before it ran out in July. The fund backs its shares with natural gas contracts.....read the entire article

Can you learn to trade crude oil in just 90 seconds?

Atilla's "Reinforcing Gravity of Price Time Continuum"

As most of my regular readers know I am staying near term bearish on the whole oil and nat gas sector, I still see 58 before 100. And from time to time I like to share the work of some of my favorite bears, don't worry when we are in a bull market I will share the work of my favorite bulls.

Here is a couple of current charts reflecting the work of one of my favorite bears Atilla at the xtrenders website. Check it out and please feel free to leave a comment and our readers know what you are thinking.

$OSX - Oil and Gas Drillers / Monthly


$XOI - Oil Index
Due to the short history of Oil Index ($XOI), I prefer to analyze one of its major and historical component, Exxon. / monthly


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Oil Declines as U.S. Cuts More Jobs Than Forecast, Stocks Drop

Crude oil dropped, tracking global equity markets, after a report showed the jobless rate in America climbed to a 26 year high in September. Oil snapped two days of increases as equities slumped around the world. U.S. employers cut more jobs than forecast last month, according to a Labor Department report, raising concern that consumer spending won’t increase fuel demand. Crude is still set for a weekly increase after gasoline supplies dropped unexpectedly.

“Economic indicators are very important and there is still a lot of speculation on what oil demand will be next year,” Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna, said before the jobs report. “Equity markets are declining and the crude market is declining as well.” Crude oil for November delivery dropped as much as $1.96, or 2.8 percent, to $68.86 a barrel in electronic trading on the New York Mercantile Exchange.....read the entire article

Globally Off Balance with Phil Flynn

Globally off balance and no, I am not talking about Mahmoud Ahamadineajad, though I could be. No, what I am talking about is a perceived imbalance in the strength of the US economic recovery and the perceived strength of the recovery in the rest of the world. Yesterday the global commodity markets were knocked for a loop when it was reported that the Chicago Purchasing Manager report came out a lot worse than expected and that the ADP jobs report is still showing labor weakness. What made matters worse is it came out after stronger than expected economic readings in the UK, Germany, Australia, New Zealand and good readings in Japan and China.

This raised concerns that the US is lagging the rest of the world is in a rebound phase and may force the US to be kept on the stimulus lifeline longer than some of the others. This imbalance on the last day of the quarter helped smash the dollar and sent money scrambling to find a place to profit or at the very least seek cover. It is obvious that today’s economic data, especially today’s ISM Manufacturing number, should be determining the next big.....read the entire article

Crude Oil Declines on Concern U.S. Economic Recovery May Stall

Crude oil declined, paring this week’s gain, as a gauge of U.S. manufacturing unexpectedly fell, jobless claims rose and a stronger dollar bolstered skepticism about the recovery in the biggest energy consuming nation. Oil snapped two days of increases after the number of Americans filing first time claims for unemployment benefits climbed and a report showed manufacturing dropped lower than projected by economists. Oil also fell as the dollar rose to a three week high against the euro.

“Commodities overall took a hit from that negative turn in macro sentiment, combined with the advancing dollar,” said Toby Hassall, a research analyst at CWA Global Markets PTY in Sydney. Crude oil for November delivery dropped as much as 72 cents, or 1 percent, to $70.10 a barrel in electronic trading on the New York Mercantile Exchange, and was at $70.14 at 8:54 a.m. Singapore time. Yesterday, the contract rose 21 cents to settle at $70.82.....read the entire article

Why it Pays to Think Small About Oil

It’s clear that a good investor should have some exposure to oil and gas. But you need to know where to look – and here it pays to think small, not big. There’s a problem with buying into the oil majors, such as BP and Shell. They sell so much of the stuff each day that they a face a continual, expensive challenge to replenish their reserves. But small explorers are not in this position. This is of real significance to you as an investor. Let me explain…

If a small explorer makes a good oil discovery it does not simply offset the oil that it’s selling. Instead, it takes them from a position of having no oil and consequently, a very uncertain outlook into one where they have a profitable long term future. So shareholders who look to small explorers can make big money. But where exactly should you be looking?

For me, the crucial factor is whether the explorer’s license area has the potential to host a really major reserve. That is why I like Kurdistan, home of
Gulf Keystone (GKP) which this week further increased the estimated size of its Shaikan find – and Sterling Energy (SEY). I also like the Falklands, where the licence holders are Borders & Southern (BOR), Desire (DES), Rockhopper (RKH) and Falkland Oil & Gas (FOGL)......read the entire article

Oil Price Has Little Change Depsite IMF's Upgrades

Hovering around 70, the benchmark contract for crude oil changes little ahead of US opening. IMF's upgrades on economic forecasts and OPEC's production cut in September are bullish factors but investors probably feel nervous to push oil higher after the +5.8% rally yesterday.

IMF forecasts world economy will expand +3.1% in 2010, compared with +3.1% projected in July, as driven by growths of +9% and +6.4% in China and India respectively. As stated in the report, 'the recovery has started and financial markets are healing...'in most countries, growth will be positive for the rest of the year, as well as in 2010'. However, 'to sustain the recovery, private consumption and investment will have to strengthen as high public spending and large fiscal deficits are unwound'.

For OECDs, GDP in the US, Japan and the Eurozone are anticipated to rise by +1.5%, +1.7% and +0.3%. All of these estimates have been revised upward from Julys' projections. According to Bloomberg's estimates, OPEC's crude production declined 50K bpd from August to 28.395M bpd in September as led by reductions in Iraq, Saudi Arabia and Angola. For the 11 members (excluding Iraq) that are subject to quota, total output dropped -10K bpd to 26.045M bpd in September, though the production was still higher than the target.....read the entire article and charts!

Oil Poised to Test Resistance in the Mid $70s

Crude oil is poised to enter a “bullish channel” and test resistance at the mid $70 a barrel level after rising the most in almost six months yesterday. If prices close above $71.55 a barrel, oil is set to test resistance at $75.89, according to a technical analysis by Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania.

Crude oil for November delivery rose $3.90, or 5.9 percent, to settle at $70.61 a barrel yesterday on the New York Mercantile Exchange. “If you are bearish you’ve got a problem right now,” said Schork. “If the channel holds we’ll get a re test of the low to mid-$70s, which is where resistance has held since the summer”.....read the entire article

Crude Oil Technical Analysis From Oil N Gold

Crude oil's price powerfully pushed yesterday, after the release of inventory fundamentals touching the key resistance level at almost 70.90, which forms a support level for the main breached ascending channel, previously. However, reaching this level will be accompanied by the stochastic entering an overbought areas ; thus, making us expect for today, a downside move on an intraday basis where its first main targets are around 68.00, requiring trading to remain below level 70.90, essentially. The trading range for today is among the key support at 66.20 and the key resistance at 73.15. The general trend is to the upside as far as 47.20 remains intact with targets at 85.00.....Read the entire article

Oil Declines on Concerns U.S. Economy Struggling to Recover

Crude oil in New York fell after an unexpected drop in U.S. business activity and as companies cut more jobs than estimated, adding to concerns over the pace of revival in fuel demand in the biggest energy consuming nation.

Crude oil pared some of yesterday’s 5.9 percent gain after the Institute for Supply Management Chicago Inc.’s business barometer trailed economists’ estimates. Companies in the U.S. cut payrolls by a greater than forecast 254,000 jobs, a report from ADP Employer Services showed, indicating the labor market will be slow to recover.

“The poor economic news suggests oil should not go too much higher in price, because the U.S. economy is not improving as quickly as hoped,” Mike Sander, an investment adviser at Sander Capital in Seattle, said in an e-mail. “The economy is still in dire shape”.....read the entire article

Crude Oil Chart Damage Appears to be Repaired, For Now

Crude oil closed up $3.58 at $70.29 a barrel today. Prices closed nearer the session high today. The big gains today were supported by a bullish weekly storage report from the DOE, from a lower U.S. dollar and by the recent heightened tensions between the U.S. and Iran over its nuclear ambitions. Recent serious chart damage was mostly repaired today.

Natural gas closed down 3.8 cents at $4.837 today. Prices closed near mid range today. Prices are still in a three week old uptrend on the daily bar chart. Bulls still have upside technical momentum. The next upside price objective for the bulls is closing prices above solid technical resistance at the August high of $5.133.

The U.S. dollar index closed down 41 points at 76.94 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 79.00.

Crude Oil Price Reacted Mildly Positive to Less Than Expected Distiallte Stock Gain

Crude oil inventory rose +2.8 mmb, compared with consensus of +2 mmb increase, to 338.4 mmb in the week ended September 29. The good thing is Cushing stock recorded significant drop of -1.5 mmb. Situation in oil product stockpiles was better than previously anticipated. Gasoline inventory drew -1.66 mmb while distillate inventory gained only +0.32 mmb. Both readings beat market expectations.

WTI crude oil price changes little after the report, only edging slightly higher to 67.5 from 66.5 before the release. Investors probably need to gauge the implications of a higher crude build with lower distillate build. Heating oil bounces to 1.71 while RBOB gasoline rises to 1.65 after the report. Lack of positive response from investors was also driven by disappointing US employment data and Chicago PMI. ADP reported -254K decline in employment in September following a -277K drop in the prior month. The market had expected.....Read the entire article

Bloomberg Analysis: Oil’s Sideways Trend Points to $70 Breakout

Crude oil has a greater chance of rising above $70 a barrel the longer it stays in the sideways pattern that has characterized trading in the past two months, according to National Australia Bank Ltd. Oil has been locked in a band of $65 to $75 a barrel since the start of August as traders weighed optimism over the prospects for a recovery in global demand against a supply glut. As the market has held its floor, prices will soon rise, said Gordon Manning, a Sydney based analyst, citing technical charts.

“The longer we’re in a sideways pattern, when we do break out, potentially the more powerful it’s going to be,” Manning said in an interview. “I wouldn’t be surprised to see that sort of ‘kick’ from around these current levels back up to about $70. There’s more of a risk of a $3 rally than a $3 fall from here”.....Read the entire article

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Crude Oil Rises as Growth in China, Japan Buoys Demand Outlook

Crude oil rose above $67 a barrel in New York as manufacturing expanded in China and Japan, buoying hopes for a rebound in fuel demand.

Oil is nonetheless heading for its first quarterly decline this year amid swelling fuel inventories in the U.S. The Energy Department will probably report that supplies of crude and fuel increased last week, according to a Bloomberg survey. Chinese manufacturing rose for a sixth month in September and Japanese industrial output climbed for a sixth time in August.

“Emerging markets have definitely been driving the demand recovery,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “Industrial production has increased. We will see a gradual improvement in the economy, but prices have got ahead of the physical fundamentals”.....Read the entire article

Hype hype, hype hype Iran

Oil prices got a bid from a rising stock market and concerns over Iran. Now, while some traders and analysts try to hype the Iran story, the truth is the odds of an imminent military conflict with Iran are being greatly exaggerated. And if we do actually get into a conflict, it is unclear as to whether or not it will have a long term impact on oil prices in a world awash in supply.

Many analysts point to the fact that the Iranians have threatened to close the Straits of Hormuz, a major choke point for global supply. The Straits are located between Oman and Iran and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. According to the Department of Energy, Hormuz is the world's most important oil choke point due to its daily oil flow.....Read the entire article

Saudi Aramco CEO: Sluggish Demand in West Not Offset by China

Oil demand remains "sluggish" throughout the developed world, and growth in China isn't making up for the loss, said Saudi Aramco CEO Khalid Al Falih. "It will take time to make up for the millions of barrels of lost demand that we have experienced," said Al Falih, the head of Saudi Arabia's state oil company, in an interview to air Monday evening on the Nightly Business Report on PBS. "But ultimately, it will come."

Saudi Arabia, the world's biggest oil exporter, is seeing its efforts pay off to hold down production within the Organization of Petroleum Exporting Countries. While supplies are higher than normal worldwide, prices are holding steady around $70 a barrel, roughly where Al Falih said it is necessary to encourage investment in new production. Al Falih was interviewed .....Read the entire article

Oil Drops as Dollar Rises, Analysts Forecast Supply Increase

Crude oil dropped as a stronger dollar reduced the appeal of commodities as an alternative investment and analysts forecast fuel supplies will climb. Oil futures have almost doubled since February as the dollar declined 17 percent and rising equity markets buoyed investor confidence. U.S. oil and fuel inventories probably increased last week amid refinery maintenance and a sluggish economic recovery.

“The dollar continues to be a leading indicator for oil prices because of the global nature of the asset,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Crude oil for November delivery declined 13 cents to settle at $66.71 a barrel at 2:44 p.m. on the New York Mercantile Exchange. Oil prices have increased 50 percent this year. Futures fell 8.4 percent last week, the biggest drop since the week ended July 10.....Read the entire article