Oil Trades Near $72 After Supplies Drop to Lowest Since January

Oil traded near $72 a barrel in New York after the U.S. Energy Department reported that crude stockpiles in the biggest energy consuming nation dropped to the lowest level since January. Crude inventories fell 4.73 million barrels, the weekly report showed yesterday, more than the 2.5 million barrel decline forecast in a Bloomberg News analyst survey.

Prices also gained as the dollar declined to the weakest level in almost a year and as global equities advanced, spurring expectations of improving fuel demand.“The gains in equities support optimism for the economic recovery that would drive oil demand and lead to supply tightness,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore.....Read the entire article

New Video: Crude Oil Rises After EIA Report

New Video: USD$ Dollar Index UPDATE

The last time we made a video of this index was a little over two months ago. In that video our Trade Triangle technology predicted that we would see further weakness in the Dollar Index.

Guess what? This market has weakened substantially since our last video on July 14. We also pointed this out in a blog post on September 3rd.

Our Trade Triangle technology has really been on top of this market and captured every major move since inception. MarketClub’s “Trade Triangles” remain steadfastly bearish and there appears to be no lasting turnaround in the Dollar Index as of this writing.

In this short video, we want to show you exactly how the Trade Triangles can benefit your own trading. The process is very simple, very direct, and yes, very profitable. Nothing is guaranteed in trading, but you will certainly put the odds in your corner using our Trade Triangle technology.

Just Click Here to watch the video!

There is no need to register for this video and of course you can watch it with our compliments. I highly recommend watching this video today otherwise you risk missing out on what could be the move of the year.

Please feel free to leave a comment and let us know what you think.

Is Resolution of Natural Gas Conundrum About to Emerge?

For most of this year, natural gas prices have moved counter to almost everyone's expectations falling while crude oil prices have risen dramatically. The conventional explanation has been that natural gas production coming from the newly completed wells in the prolific gas shale formations around the country is much greater than from traditionally located and drilled wells. The unanswered questions are when will this phenomenon of more productive wells coming on stream end and why are producers continuing to drill ANY gas wells in a sub $3 per thousand cubic feet (Mcf) world?

Why are producers continuing to drill ANY gas wells in a sub-$3 per thousand cubic feet (Mcf) world?

Some producers have claimed that they have been scaling back their gas drilling activity lately, despite the recent uptick in gas drilling rigs, but the backlog of drilled but yet to be completed wells is being worked down and that accounts for many of the prolific new wells coming on stream. The answer to why producers are willing to drill and complete wells in today's low gas price world is answered by the strong contango that has prices for natural gas one year into the future selling at nearly $2 per Mcf higher than current fiscal spot prices. The two charts below.....Read the entire article with charts!

Technical Analysis for Energy Markets

The key support level for the ascending channel remained intact in front of the crude oil's constant attempts to decline, to push the price to the upside and halt at correction level 67.8% for the last downside wave, seen in the image above. It appears that a constant slant is towards the upside; thus, continuing the general upside within the main ascending channel (shown in the secondary image), while taking into consideration that achieving this upside requires some key terms; first one being the breach of level 71.15 (correction 67.8%), the second is breaching the minor resistance level 72.40 (resisting the minor descending channel, which could force the price in declining once again), and the third being the most.....Read the entire article with charts

Bloomberg Analysis: Crude Oil Risks a Pullback to $59 if $66 Support Fails

Crude oil, struggling to sustain gains above $70 a barrel this month, faces a decline to $59 if support on technical charts fails in the coming days, National Australia Bank Ltd. said. Oil is likely to continue drifting in a sideways pattern as traders seek to gauge the market’s short term depth, according to Gordon Manning, a Sydney based technical analyst. Your keywordFutures, which touched a 10 month high of $75 a barrel Aug. 25, haven’t traded at $59 since mid July.

“It’s trying to find a bit of a base,” Manning said in a telephone interview. “A close below $66 would easily take it lower.” Crude oil yesterday rallied 3 percent, the most in a week, after Federal Reserve Chairman Ben S. Bernanke said the recession has probably ended, fanning expectations global demand would rebound. The contract for October delivery on the New York Mercantile Exchange traded at $70.28 a barrel, down 65 cents.....Read the entire article

Natural Gas Extends Gain From Seven Year Low as Economy Lifts

Natural gas advanced, extending its gain to 38 percent from a seven year low earlier this month, on speculation that a rebound in demand will reduce a surplus of the power plant and industrial fuel. Manufacturing in the New York region grew in September at the fastest pace in almost two years and U.S. retail sales jumped in August by the most in three years, economic reports today showed. Gas tumbled to $2.409 per million Btu on Sept. 4, the lowest price since March 2002, on a glut of the fuel.

“The market is starting to count in an economic recovery, which should bring with it an increase in demand,” said Peter Beutel, president of Cameron Hanover Inc., an energy consultant in New Canaan, Connecticut. Natural gas for October delivery rose 2.3 cents, or 0.7 percent, to settle at $3.32 per million British thermal units at 2:51 p.m. on the New York Mercantile Exchange after rising as high as $3.60. Prices are down 41 percent this year.....Read the entire article

Crude Consolidates Just Below $70 Barrel

Crude futures are returning earlier gains after failing to break through the psychological $70/bbl level following much better than expected Retail Sales data. The optimistic Retail Sales data is an encouraging development for battered U.S. consumption. A recovery in Retail Sales implies an improvement in broad based consumption, lifting the price of crude. However, the positive impact from the out performance of U.S. data is being countered by a collapse in the GBP/USD. BoE Governor King delivered another monetary shock today (refer to GBP/USD analysis), sending the Pound sharply lower against all of its major crosses. The negative performance of the GBP/USD is dragging on crude since it is a dollar denominated commodity. On the other hand, it is encouraging to see the EUR/USD and gold holding steady despite the.....Read the entire article

What Glut? Oops, Maybe There Is A Glut After All

For weeks the talk in the investment world and the energy business was what would happen when the glut of natural gas rendered winter storage no longer an option. The debate focused on what would happen to the surge in natural gas production if we completely filled the nation’s available storage capacity before the start of the heating season. How would producers handle involuntary well shut ins? What would happen to the price of natural gas would it be like some periods in recent memory in which Rocky Mountain gas sold for pennies?

How would producers handle involuntary well shut-ins?

But then an amazing thing happened. The Energy Information Administration’s (EIA) weekly gas storage report for the week ending September 4th came out showing that producers had injected only 69 billion cubic feet (Bcf). The gas futures market took off. Gas injection volumes for the week were below the average expected by analysts and traders on Wall Street.....Read the entire story

Crude Oil Rises for First Time in Three Days as Dollar Weakens

Crude oil rose for the first time in three days as the dollar traded near its lowest level against the euro in a year, spurring demand for crude as an inflation hedge. The U.S. Energy Department will probably say tomorrow that supplies of distillate fuel, which includes diesel and heating oil, rose for a fourth week from their highest level since 1983, according to a Bloomberg News survey. U.S. crude oil inventories are likely to have fallen last week as refineries bought fewer cargoes before idling plants for upgrades and repairs. “The U.S. currency continues to set the trend for oil in the absence of any major fundamental developments,” said Andrey Kryuchenkov, a VTB Capital analyst in London. “We’ll probably see more sideways trading ahead of the inventory numbers”.....Read the entire article

Crude Oil Daily Technical Outlook

Crude oil's corrective rebound from 67.05 should have completed at 72.9 already. Intraday bias remains mildly on the downside for 67.05 support first. Break will confirm that whole decline from 75.0 has resumed and should target 100% projection of 75 to 67.05 from 72.9 at 64.95 next. On the upside, above 69.81 will turn intraday outlook neutral again and bring recovery. Nevertheless, break of 72.90 is needed to indicate resumption of rise from 67.05 Otherwise, risk will remain mildly on the downside. In the bigger picture, there is no change in the view that rise from 33.2 is a correction to whole down trend form 147.27. Question remains on whether such rally has completed at 75.0 already. Crude oil is now at important medium term trend line support. Sustained trading below will be the first alert that such rise has finished. Break of 58.32 will confirm this case and turn outlook bearish for 33.2 low next.....Read the entire analysis and charts!

Oil Falls for 2nd Day as Refiners Idle Units, Fuel Supply Gains

Crude oil fell for a second day as refineries idle units for maintenance and on speculation that U.S. fuel stockpiles will climb as consumption declines.

U.S. refiners perform repairs and upgrades in September and October as gasoline demand falls and before heating oil use rises. U.S. supplies of distillate fuel, a category that includes heating oil and diesel, climbed to their highest level since 1983, an Energy Department report showed last week.

“The fundamentals for oil are bearish,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “The driving season is over, heating oil demand has yet to pick up and refineries are going into turnarounds, which means a lot of demand for crude oil will be offline. If there is a correction, it’s going to happen now”.....Read the entire article

Petrobras to Hire Up to 28 New Rigs for Ultra-Deepwater Exploration

Petrobras' Executive Board has approved the strategy to hire up to 28 new drilling rigs to be built in Brazil, with increasing national content, and to be used for ultra deepwater exploration, including the fields located in the pre-salt layer. The rigs are slated to be delivered between 2013 and 2018. A first phase foresees the hiring of a minimum lot of 9 rigs. Of this first lot, seven vessel type units will be built, based on consolidated technologies widely used in the global market, and constructed in a single shipyard. Contracting these seven rigs from a same shipyard will allow the winning bidder to make the investments that are required in order for it to construct the needed infrastructure and to achieve the necessary economies of scale. The two other units, which may be either vessel.....Read the entire story

Oil Falls for Second Day on Doubts Over Pace of Demand Recovery

Crude oil fell for a second day as higher U.S. fuel stockpiles raised concern gains in prices may have outpaced the recovery in the global economy. Oil slipped to its lowest in nearly a week before a report tomorrow in the U.S., the world’s largest energy consumer, which may show retail spending barely changed in August if gasoline and autos were excluded. The country’s stockpiles of distillate have climbed to their highest levels since 1983, according to Energy Department data last week. “Crude oil is just following weak fundamentals,” said Ken Hasegawa, a commodity derivative sales manager at broker Newedge in Tokyo. “If the price goes down below $68, then it’s possible to go down to $66”.....Read the entire story

Consolidation in Crude Oil will Continue in Coming Months

Commodity prices rose modestly last week amid weakness in USD. Reuters/Jefferies CRB Index added +1.4% while USD Index plunged almost -2% to 76.6, the lowest close in a year. Commodities normally trade in opposite direction with the dollar. The generation low interest rate in the US (Fed funds rate: 0-0.25%) has caused massive selloff in USD. Against the euro, the greenback plunged for 4 out of 5 trading days and closed -1.9% lower at 1.457, the lowest level in 9 months, for the week. Against the pound, USD also slid -1.6% to 1.6655, a 1-month low, last week. There were 3 central bank meetings last week. All of the RBNZ, BOE and BOC left interest rates unchanged at 2.5%, 0.5% and 0.25% respectively during the meetings but policymakers indicated brighter economic outlooks for 2H09 and 2010. In the coming week, the BOJ and SNB will decide on rates. We believe both banks will leave policy rates unchanged at 0.1% and 0.25% respectively.
Crude Oil
After spiking to 72.9, crude oil tumbled to as low as 68.8. The October contract plunged -3.9% to settle at 69.12 Friday, leaving this week's gain to +1.2% only. The black gold's decline Friday was accompanied by the dollar's weakness and strong US economic data. These were in contrary to the usual inverse relationship between commodities and USD.....Read the entire article

Natural Gas Fund to Offer Limited Sale of New Shares

U.S. Natural Gas Fund, the world’s largest exchange traded fund in the fuel, will begin selling new shares under “limited circumstances” beginning Sept. 28, the fund said today in a regulatory filing. The fund, which ran out of new shares on July 7, may condition the creation and sale of new shares on a purchaser’s ability to sell to the fund investments that track the price of natural gas, including over the counter swaps, the fund said in its filing to the Securities and Exchange Commission. The Commodity Futures Trading Commission has moved to curb energy speculation and imposed limits on natural gas trading. That has forced the fund to halt new share creation while it looks for alternative natural gas investments, it said in an Aug. 12 filing with the SEC.....Read the entire article

Analyst Phil Flynn on Gold and the Oil Markets

While the media focuses on OPEC, one analyst says the price of oil is really driven by gold. Phil Flynn of PFG Best Research joins the Energy Report from the Chicago Board of Trade.

Oil Can't Sustain This Week's Rally, Natural Gas Falls Again

After rallying for four days, the price of oil fell more than $2 in trading on the New York Mercantile Exchange Friday. While initially, the price of oil made gains to threaten $73, crude oil eventually fell below $70 a barrel. The price of crude oil fell $2.55 on the NYMEX Friday to settle at $69.29 a barrel and erase the gains made during the week's rally. "Oil was rallying, once again, for reasons other than supply and demand," said Phil Flynn, vice president in charge of research for PFG Best in Chicago. "Earlier in the week, you had all this market momentum: The stock market was rallying every day; the dollar was getting slammed; and oil was rallying really reluctantly all week." The price of oil has been propped up beyond what the underlying fundamentals can support by positive economic data that points to an end to the global recession and an increase in energy demand.....Read the entire article

Trade Triangle Buy Signal Issued For Gold

Gold is hot! And our Market Club "Trade Triangle" Technology has issued another buy signal for Gold. Just click here for a free online tour of Market Club....and a risk FREE 30 day test drive.

Mexico's Fading Oil Output Squeezes Exports, Spending

Mexico's oil output is falling faster than expected, increasing the chance that the country will lose its status as a major oil exporter in coming years and face a worsening budget shortfall. Output at state owned oil monopoly Petroleos Mexicanos's offshore field Cantarell, once the world's second largest oil field, has plunged to 500,000 barrels a day from its peak of 2.1 million in 2005. "I don't recall seeing anything in the industry as dramatic as Cantarell," says Mark Thurber, assistant director for research at the Program on Energy and Sustainable Development at Stanford University.....Read the entire article