UNG Mulls Investment in Interests Outside Futures

NEW YORK, Oct 13 (Reuters) - United States Natural Gas Fund (UNG.P), an exchange traded fund in the natural gas market, reiterated on Tuesday that it could invest in interests other than futures contacts to comply with accountability levels and position limits.

UNG told Reuters last month it rebalanced its portfolio to decrease positions in listed natural gas futures, while increasing the fund's holdings in over the counter natural gas swaps.

In a filing Tuesday, UNG said it may invest in other interests including cash-settled options on futures contracts, forward contracts for natural gas, cleared swap contracts and over the counter transactions based on natural gas, crude oil and other petroleum based fuels.

UNG said that despite the move futures contracts will remain its principle investment. (Reporting by Edward McAllister; Editing by Lisa Shumaker)

Crude Oil Going to Test Key Resistance as USD Tumbles

Crude oil price surges to 74.47 in European morning as USD continues to decline against major currencies except for British pound. Moreover, advance in stock markets in Asia also helps boosts demand for oil as well as other risky assets. Leading the rally in the Nymex energy complex is heating oil which adds +1.9% to 1.926. The benchmark contract has soared for 4 straight days and accumulated more than +8% gains. RBOB gasoline rises for the second day to 1.828.

As the driving season is over and the heating season approaching, investors have shifted their focus to heating oil from gasoline. Gold price strengthens and rises to a new record high of 1069.7 amid dollar's weakness. Others in the precious complex such as silver and platinum also rally with silver gaining +1% to 18 and platinum jumping +1.5% to 1370, the highest level....read the entire article.

Bloomberg Analysis: Commodities to Gain 10% If Crude Breaks $75

The S&P GSCI Index is poised to surge 10 percent by the end of the year if oil prices breach resistance above $75 a barrel this week, according to a technical analysis from Oscar Gruss & Son in New York. The GSCI has just broken out of a four month consolidation after moving above resistance at 481, and if crude oil rallies, “this index could easily move significantly higher,” said Michael Shaoul, chief executive officer at Oscar Gruss.

The index soared as much as 2.7 percent today to 485.03, the highest level since Oct. 20, 2008. The next resistance for the GSCI is at 530 points, marking a 38.2 percent retracement of the 2008 collapse, he said. The index tumbled from a high of 893.86 on July 3, 2008 to 305.59 on Feb. 19. “This target is comfortably achievable during this quarter,” Shaoul said.....read the entire article.

ALERT: Weekly Trade Triangle Buy Signal For Crude Oil

Attention all MarketClub Members: Our Weekly Trade Triangle strategy flashed a buy signal on November crude oil this morning at 72.65.

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Dow Jones Commodity Index Fund Trading Opportunity

From guest analyst Chris Vermeulen of The Gold and Oil Guy.....

Dow Jones Commodity Index Fund
This index tracks the entire commodity market as a whole. Over the past two years we have seen commodities drop in value substantially. The good news is that we could be seeing prices rise going forward from here.

2009 has been a fantastic year for trading commodities with the market bottoming and starting to move higher. This commodity index clearly shows a Cup & Handle pattern and is looking ready to breakout in the coming weeks. The C & H pattern is the best chart formation we could get. Breakouts from these patterns generally provide a rally which can last months at a time.

Let’s take a look at what kind of opportunity looks to be just around the corner.

Dow Jones Commodity Index Chart – Weekly
Commodities appear to have bottomed and are getting squeezed into the apex of the bullish wedge. This index could easily rally to the 180 level which is about 35-40% Gain.


DJP iPath Commodity Index Fund – Weekly
After reviewing several different commodity index funds I like the characteristics for DJP the most. There is enough volume traded which makes for a smooth trading fund on an intraday basis when looking at the 10 minute chart. Several other funds were choppy and thinly traded.

This is Exciting, everyone knows how most commodity funds vary from the underlying commodity price, well this fund trades identical to the index. What does this mean? It means we can trade the DJP commodity index fund for short term and long term positions because there isn’t any price decay over time.


Performance Chart of Commodity Index & Fund
This chart goes back almost 2 years. As you can see the % change for the index and the fund are virtually identical. We do not need to worry about Contango with this fund.


Major Commodities Breaking Out or Bottoming
Gold, Crude Oil and Natural Gas are highly traded commodities and will play a large role in the direction of the commodity index.

Gold is breaking out to a new high – Bullish


Crude Oil is consolidating in a bullish wedge – Bullish



Natural Gas is trying to bottom and should move higher into the winter – Bullish



Dow Jones Commodity Index Trading Conclusion:
Money has been moving into the commodity sector since March of this year. As a technical trader this opportunity jumps out at me. I wanted to share it with fellow traders because this could be once of the easiest trades of the year if the index breaks out in the coming weeks.

If you would like to receive my Free Weekly Trading Newsletter please visit my website, The Gold and Oil Guy.

Chris Vermeulen

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From guest blogger Adam Hewison.....

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I was a former floor trader on the IMM, IOM, NYFE and LIFFE as well as a risk manager of a large, multinational corporation in Geneva, Switzerland. I also have written books on forex trading and trend following. In 1995, I founded INO.com and later co founded MarketClub. I’ve been in the trading biz for over three decades and have seen it all. I created this course as a way to give back and share trading tips and techniques that I still use in my trading today.

In my Free Mini Email Course, I will show and explain the tools and strategies you need to increase your success rate in the marketplace.

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Interior Boss Says No to Drilling on 8 Utah Parcels

Eight of the 77 oil and gas lease parcels sold during a December auction that a saboteur wrecked and a federal judge later halted will be off limits to drilling, Interior Secretary Ken Salazar has decided. Allowing development on the 7,670 public acres near Canyonlands and Arches national parks, Desolation Canyon and Nine Mile canyon could harm critical sage grouse habitat with little obvious benefit to oil and gas development, concluded a 39 page analysis released Thursday.

During a Washington news conference, Salazar said 52 parcels would be held back pending further study and 17 would be allowed back at upcoming auctions. Drawing from the report compiled by an 11 member team from the U.S. Bureau of Land Management, National Park Service and Forest Service who examined more than 103,000 acres from the ground up Salazar scolded the Bush administration for allowing the Dec. 19 auction in Salt Lake City to go forward.....read the entire article.

Phil Flynn: Global Warming Takes a Holiday!

Get the ear muffs out. Oil bears gets frosted as cold temperatures give the energy complex a Columbus Day boost. Global warming takes a holiday as heaters across the country seemed to go on much earlier than usual. Stunning records for cold were set across the nation increasing the demand for heating fuels over the weekend. The Chicago Marathon, according to the Chicago Tribune, had its coldest start since a 33 degree low in 2002 which they say was a far cry from 2007 when temperatures soared into the upper 80s and officials canceled the marathon after 3 1/2 hours into the event. In Denver it was reported that an artic cold front moved in and broke a cold temperature record that stood for 104 years.

In fact on Friday, Denver saw temperatures plunge 23 degrees in five hours setting the stage to make that record low. There were record lows in many parts of the country like Wyoming, Utah, Illinois and Iowa and if records were not broken in many areas it was extremely close. The early blast of winter is giving oil a bit of a boost on this lightly traded holiday market. It kind of makes you wonder what happened to global warming. In fact that is what the BBC is wondering in an article titled, "Whatever happened to Global Warming?" The BBC said, “This headline may come as a bit of a surprise, so too might that fact that the warmest year recorded globally was not in.....Read the entire article.

Crude Oil Higher as Net Long Positions Return to 2009 High

Crude oil was higher overnight as it extends the rally off September's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If November extends the rally, September's high crossing at 73.58 is the next upside target. Closes below the 20 day moving average crossing at 70.22 would temper the near term friendly outlook in the market.

Monday's pivot point, our line in the sand is 71.58

First resistance is the overnight high crossing at 73.13
Second resistance is September's high crossing at 73.58

First support is the 10 day moving average crossing at 70.54
Second support is the 20 day moving average crossing at 70.22

Here is Some Potential Mega Trades For Q4


Natural gas was higher due to short covering overnight as it consolidates some of last Friday's decline. Stochastics and the RSI are diverging and are neutral to bearish signaling that a short term top might be in or is near. Closes below the reaction low crossing at 4.351 would confirm that a short term top has been posted.

If November extends the rally off September's low, August's high crossing at 5.133 then the 50% retracement level of this year's decline crossing at 5.320 are the next upside targets.

Nat gas pivot point for Monday is 4.84

First resistance is last Tuesday's high crossing at 5.12
Second resistance is August's high crossing at 5.13

First support is last Friday's low crossing at 4.75
Second support is the 20 day moving average crossing at 4.74

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The U.S. Dollar was lower overnight as it consolidates some of last Friday's rally but remains above monthly support crossing at 75.73. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term.

If December extends this month's decline, monthly support crossing at 73.39 is the next downside target. Closes above the reaction high crossing at 77.74 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 76.80
Second resistance is the reaction high crossing at 77.74

First support is last Thursday's low crossing at 75.68
Second support is monthly support crossing at 73.39

Crude Oil Weekly Technical Outlook

Crude oil edged higher last week but momentum is so far quite unconvincing. Nevertheless, further rise is still in favor as long as 68.16 support holds. Break of 73.16 resistance will confirm that fall from 75.0 has completed at 65.05 already. The corrective structure will in turn indicate that medium term rally is still in progress for another high above 75.0 before completion. On the downside, below 68.16 will suggest that rebound from 65.05 has completed and will flip intraday bias back to the downside.

In the bigger picture, medium term term outlook is quite mixed so far with crude oil still struggling around 55 weeks and 55 months EMA. The bearish case is still slightly in favor with 73.16 resistance intact. That is, medium term rebound from 44.2 has completed at 75.0 on bearish divergence conditions in daily MACD and RSI. Break of 65.05 support will solidify this case and target 58.32 cluster support (38.2% retracement of 33.2 to 75.0 at 59.03) for confirmation. However, break of 73.16 will in turn favor the case that rise from 33.2 is still in progress for another high above 75.0. Nevertheless, strong resistance should be seen in 76.77/90.24 fibonacci.....Entire article and charts!

Crude Oil Rises a Third Day on Recovery in Global Fuel Demand

Crude oil rose for a third day on speculation fuel demand will increase as the global economy emerges from recession. Oil climbed after U.S. equity markets reached their highest in a year Oct. 9, fanning hope for a recovery in world energy consumption. An Investors Business Daily survey due tomorrow in the U.S., the world’s largest energy user, may show consumers were optimistic for a third month, according to economists surveyed by Bloomberg News.

“We are looking at an international economy that is going to be stronger in 12 months’ time,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “There’s that conviction that things are going to be better down the track” even when some data is not “especially supportive,” he said. Crude oil for November delivery climbed as much as 79 cents, or 1.1 percent, to $72.56 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.23 at 9:26 a.m. Singapore time. Futures have gained 62 percent this year.....Read the entire article.

Invest AD Technical Analysis: Natural Gas May Climb to $7 Dollars

Natural gas may climb to $7 per million British thermal units after the commodity last month rebounded from a long term support level, according to Abu Dhabi-based Invest AD. Natural gas futures have almost doubled to $4.77 per million British thermal units since reaching a more than seven year low on Sept. 4. “Holding above a 20 year support and rebounding sharply from that level, signals an increase in demand for natural gas,” said Aksel Kibar, a portfolio manager at Invest AD, the investment firm owned by the Abu Dhabi Investment Council. “Any break above the $5.00-$5.50 range will push the prices toward the $6 to $7 area.”

Gas for November delivery fell 3.9 percent to $4.77 on the New York Mercantile Exchange Oct. 9. The fuel is down 15 percent this year, while crude oil is up 61 percent. “Natural gas underperformed crude oil in the last 10 years and in September the natural gas and crude oil ratio reached the lowest level in 20 years,” Kibar said. “This clearly shows an oversold condition for natural gas”.....read the entire article.

New Natural Gas ETF's on The Way

It's no surprise with the recent increase of interest in natural gas that we have more choices coming our way in the ETF arena. Jefferies is expanding their coverage of nat gas with two new funds, the Jefferies Natural Gas Equity ETF and the Jefferies Energy Wildcatters Equity ETF.

While UNG continues to be the most popular ticker, most commercial traders have focused on the FCG. And the Jefferies Natural Gas Equity ETF looks to be a direct competitor with the First Trust ISE Revere Natural Gas ETF.

The "Energy Wildcatters" ETF will focus on giving traders a way to trade a basket of small and mid cap companies in both the U.S. and Canada. All companies must have a market cap of between $200 million and $2 billion, and bring in at least 75% of their annual revenues from exploration and production of natural gas.

I for one love the nickname "wildcatters" for this fund. Let their be no mistake, this ETF does not follow the daily price of natural gas.

Here is the SEC filing for the Equity ETF and the SEC filing for the Wildcatters Fund.

Increased Natural Gas Pipeline Capacity in US Is Bad News for Canadian Natural Gas

A new natural gas pipeline in the United States is allowing cheap gas from the Rockies to displace more than 10% of Canada’s gas exports to the Midwest US, forcing more Canadian gas into storage and lowering natural gas prices for Canadian producers. The 1,679 mile, $4.4 billion Rockies Express pipeline, or REX, is providing about 1.5 billion cubic feet per day (bcf/d) of cheap gas from the Rockies through the Midwest to Ohio. The latest section of REX just opened June 29.

The new pipeline is displacing about 600 million cubic feet per day (mmcf/d) of Canadian production, says Jack Weixel, director of Energy Analysis for Bentek Energy. Bentek provides specialized energy pipeline information to clients in the oil and gas sector in North America. Weixel estimates the mid-continent corridor of pipelines send just over 5 bcf/d of gas, net, to the US from Canada (some western Canadian gas goes back into Southern Ontario via Michigan). “It has pushed off about 600 million cubic feet per day off the Northern Border Pipeline, which runs into Midwest pipelines at Ventura, Iowa,” Weixel told me over the phone from his Colorado office.....read the entire article.

Chevron Squeezes New Oil from One of World's Oldest Fields

Chevron Corp. is employing new technologies in hopes of extending the life of one of the world's oldest and most prolific oil fields, a process that is being replicated elsewhere to help the energy industry squeeze more out of aging oil basins. The Kern River field has produced more than 2 billion barrels of oil in its 110 year history, but Chevron estimates it still holds another 1.5 billion barrels.

Chevron is using the Kern River field as a real world laboratory, testing enhanced recovery techniques and bringing in engineers from around the world to learn them. "The thing about being in this old oil field," said Chevron engineer Joe Fram, "you can try stuff." To get as many of those barrels as possible out of the ground and do so cheaply enough to turn a profit Chevron is deploying high tech temperature sensors to monitor its production, using three dimensional computer models to plan its wells and filtering waste water from the fields through walnut shells so it can be re-used .....read the entire article.

The Dreaded Vote of Confidence

Oh no! The dreaded vote of confidence. You know in professional sports when your team is playing lousy and just put in a dismal performance and the owner of the team or the GM gives you a “vote of confidence” and you’re fired the next week? Well it is a good thing that the Treasury Secretary isn’t a baseball manager or he would be gone. After the dollar took another drubbing, the White House came out and said that Obama has "tremendous confidence" in Treasury Secretary Timothy Geithner right after the dollar hit an 18 month low.

Oh sure, the vote of confidence in question may not be in the US dollar but as the weakening dollar adds to inflation and increases the cost of oil and almost every commodity the average American buys, I would not feel too easy if I were Tim Geithner right now. The President has confidence in Mr. Geithner but do they have confidence in the dollar? The silence about the dollar out of the White House right now is deafening to the markets.....read the entire article.

Crude Oil Daily Technical Outlook

Crude oil edged higher to 72.55 but upside momentum remains unconvincing. Nevertheless, another rise is still mildly in favor with 68.16 support intact. Break of 73.16 will indicate that fall from 75.0 has completed at 65.05 already. The corrective structure will in turn indicate that medium term rally is still in progress for another high above 75.0 before completion. On the downside, below 68.16 will suggest that rebound from 65.05 has completed and will flip intraday bias back to the downside. Break of 65.05 will reaffirm the original bearish view that crude oil has topped out at 75.0 already and will bring fall resumption towards 58.32 key support next.

In the bigger picture, the lack of follow through selling so far dampens the bearish view that crude oil's medium term rise from 33.2 has completed at 75.0. Nevertheless, risk remains on the downside as long as 73.16 resistance holds. A break below 65.05 support will solidify the case the crude oil has topped out in medium term again. In such case, deeper fall should be seen to test on 58.32 cluster support (38.2% retracement of 33.2 to 75.0 at 59.03) first and break will target a retest of 33.2 low. However, a break of 75.0 will indicate that rise from 33.2 has resumed for 76.77/90.24 fibo resistance zone (38.2% and 50% retracement of 147.27 to 33.2) instead.....Here is the charts!

Oil Pares Weekly Gain as Bernanke Says Fed May Tighten Policy

Crude oil fell in New York, paring its weekly gain, as the dollar climbed after Federal Reserve Chairman Ben S. Bernanke said monetary policy may be tightened once the economic outlook has “improved sufficiently.” Oil traded near $71 a barrel as the U.S. currency rose against the yen and the euro, damping the investment appeal of commodities including gold. Prices rallied 3 percent yesterday after the dollar declined and the number of Americans filing for unemployment benefits dropped.

Bernanke’s remarks have had “a small impact on the immediate market,” said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo. “It shows policy is not decided yet. The trend of the dollar will continue” to give direction to oil prices, he said. Crude oil for November delivery fell as much as 66 cents, or 0.9 percent, to $71.03 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $71.13 at 11:09 a.m. Singapore time. Yesterday, it rose $2.12 to settle at $71.69. Futures are poised.....Read the entire article.

Devaluation of the Dollar Spurs Oil Investment

"Oil had a couple of things going on today -- most notably, the dollar went through its low from September," explained Darin Newsom, senior analyst with DTN, a market information service in Omaha, Nebraska. "So we've got this pressure in the dollar, and that is sparking all kinds of buying interest in commodities." Investment in the commodity is increased when the value of the dollar falls because oil is traded in the greenback and investors holding other currencies are able to purchase oil at a cheaper price. "We saw the dollar coming under pressure today on the idea that maybe the economy is still going to sputter around here for a while as we go into the fourth quarter, early first quarter of next year," Newsom continued.

"Even though the Federal Reserve hinted that in 2010 we would start to see interest rates possibly start to go up, certainly there is no indication now that is going to happen any time soon; and again with the dollar moving to the new low, it would seem to confirm that idea that we're in this time where we're going to just hold low interest rates.....read the entire article

Crude Oil Bulls Take The Momentum Into Weeks End

Crude oil closed sharply higher on Thursday as it extends this week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. The high range close sets the stage for a steady to higher opening on Friday.

If November extends this week's rally, September's high crossing at 73.58 is the next upside target. Closes below Monday's low crossing at 68.05 would temper the near term friendly outlook in the market.

First resistance is today's high crossing at 72.55
Second resistance is September's high crossing at 73.58

First support is Monday's low crossing at 68.05
Second support is September's low crossing at 65.05

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Natural gas closed higher on Thursday as it consolidates above the 10 day moving average crossing at 4.840. The mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI are diverging but are turning neutral to bullish signaling that sideways to higher prices are possible near term.

If November extends the rally off September's low, August's high crossing at 5.133 is the next upside target. Closes below the 20 day moving average crossing at 4.672 are needed to confirm that a short term top has been posted.

First resistance is Tuesday's high crossing at 5.12
Second resistance the August's high crossing at 5.13

First support is the 10 day moving average crossing at 4.84
Second support is the 20 day moving average crossing at 4.67

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The U.S. Dollar posted a new low for the year on Thursday as it extends this year's decline. A short covering rally tempered early session losses and the mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If December renews September's decline, monthly support crossing at 73.39 is the next downside target. Closes above the reaction high crossing at 77.73 would confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 76.81
Second resistance is the 10 day moving average crossing at 76.93

First support is today's low crossing at 75.68
Second resistance is monthly support crossing at 73.39