Bloomberg: Crude Oil Gains for First Time in Three Days

Crude oil rose for the first time in three days as advancing European equity markets eased concern that the region’s debt crisis is damping demand for fuel, while investors bet that some supplies may be at risk.

Futures in New York gained as much as 1.4 percent, halting a slide of more than 4 percent in the previous two trading days, as the Stoxx Europe 600 index advanced 1.6 percent. Opposition fighters in Libya continued to battle loyalists at the town of Bani Walid and the city of Sirte, while anti government protests in Yemen left 50 people dead this week.

“Given the scale of the price fall, we are seeing some buying interest out there,” said Amrita Sen, a London based analyst at Barclays Plc. “The fundamentals still look robust with demand, even after slowing down, outpacing supply growth.”

Oil for October delivery on the New York Mercantile Exchange gained as much as $1.21 to $86.91 a barrel and was at $86.75 a barrel at 12:48 p.m. London time. The contract fell 2.6 percent yesterday and will expire today. The more actively traded November future was up $1.02 at $86.83 a barrel.

Brent crude for November settlement was up $1.40 at $110.54 a barrel on the ICE Futures Europe exchange in London. The contract yesterday fell 2.7 percent to $109.14 a barrel. The European benchmark future was at a premium of $23.67 to the November price of West Texas Intermediate, compared with a record settlement of $26.87 on Sept. 6......Read the entire Bloomberg article.


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Phil Flynn: Twisted

Oil prices are trying to rebound in the aftermath of Greek default fears and despite the fact that S&P decided to downgrade Italy. Is it possible the Fed is getting ready to do the twist?

Lets twist again like we did last summer, ok back in the sixties when the Federal Reserve, in an attempt to stimulate long term investment, would buy paper at the long end of the yield curve thereby driving down yields in the hopes that individual investors and business would start making some long term commitment with their money.

Looking at the yield curve and the falling rates on the long end there seems to be a large sector of the trading population that thinks this is a done deal. Today it is the first day of the Federal Open Market Committee and it appears that instead of QE-3d, baby let's do the twist.

Of course the reason that the Fed is twisted is the fact that QE2 did not seem to have the desired effect. The fall out of rising oil and commodity prices and the fact that the money seemed to stay in bank vaults as opposed to getting into the real economy, is making it more difficult for the Fed to justify its 3D version. Now the question is, will it work and is it bullish or bearish for oil?......Read the entire PFGs Best article.

OPEC’s $1 Trillion Cash Quiets Poor of the Middle East

Saudi Arabia will spend $43 billion on its poorer citizens and religious institutions. Kuwaitis are getting free food for a year. Civil servants in Algeria received a 34 percent pay rise. Desert cities in the United Arab Emirates may soon enjoy uninterrupted electricity.

Organization of Petroleum Exporting Countries members are poised to earn an unprecedented $1 trillion this year, according to the U.S. Energy Department, as the group’s benchmark oil measure exceeded $100 a barrel for the longest period ever. They are promising to plow record amounts into public and social programs after pro democracy movements overthrew rulers in Tunisia, Egypt and Libya and spread to Yemen and Syria.

Unlike past booms, when Abu Dhabi bought English soccer club Manchester City and Qatar acquired a stake in luxury carmaker Porsche SE, Gulf nations pledged $150 billion in additional spending this year on their citizens. They will need to keep U.S. benchmark West Texas Intermediate crude oil at more than $80 a barrel to afford their promises, according to Bank of America Corp.....Read the entire article.

Crude Oil and Gold Market Commentary For Monday Evening Sept. 19th

The October crude oil contract was immediately on the defensive when it opened today and moved down to the key $85.00 support level. This is a very important area for this market and we would view a close below $85.00 as a very negative sign for crude oil. This would break a support trendline that began on August 9th.

We do not think that the crude oil market is ready to go higher, based on our long term monthly Trade Triangle which remains negative. The $90 a barrel resistance continues to stop this market on the upside. Look for crude oil to continue to move in a sideways to lower manner.

Crude oil closed lower on Monday and below August's uptrend line crossing near 86.62. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought, diverging and are turning bearish signaling that sideways to lower prices are possible near term.

Closes below last Monday's low crossing at 85.17 would confirm an end to the corrective rally off August's low while opening the door for a larger degree decline into the end of September. Closes above the May-July downtrend line crossing near 91.86 would confirm an end to this summer's decline. First resistance is last Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 91.86. First support is last Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 75

The gold bulls have to be disappointed with today’s market action even though the longer term trend for gold remains positive. We still believe that the $1,750 area is important support for spot gold. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side.

The Williams % R is once again in an oversold condition. The $1,840 level is resistance for gold at the moment. Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.

December gold closed lower on Monday as it consolidates below the 20 day moving average. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If December extends this month's decline, the reaction low crossing at 1705.40 is the next downside target. If December renews this year's rally into uncharted territory, upside target are hard to project. First resistance is this month's high crossing at 1920.70. First support is last Friday's low crossing at 1765.40. Second support is the reaction low crossing at 1705.40.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55


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EIA Report: World Wide Energy Use Expected to Increase 53% by 2035

In a statement released on Monday the EIA, the U.S. Energy Information Administration, predicts that the worlds energy consumption will increase by as much as 53% by 2035. in China and India.

Todays report, the 2011 International Energy Outlook, predicts that consumption of energy from renewable and alternative sources will be the fastest growing in the energy sector. Reaching 15% of the world energy use by 2035 compared to 10% in 2008. But fossil fuels will still be the world's dominant source, accounting for about 78% of the world's energy use in 2035.

The EIA said it expects oil prices to remain high, reaching $125 per barrel in 2035, but added that consumption of oil will still grow during that period.

The EIA also predicts that petroleum prices are "very sensitive to both supply and demand conditions" and that prices could fall to $50 per barrel or approach $200 per barrel, depending in part of the rate of economic growth in developing countries.

The EIA report projects changes in world energy markets between 2008 and 2035. It doesn't take into account the potential impacts of policy changes that have not yet been implemented.

One area that will be particularly sensitive to policy actions: competition between coal, natural gas, and renewable sources to meet electricity demand, said Howard Gruenspecht, the acting EIA administrator, during a speech at the Center for Strategic and International Studies.

The report projects, absent policy changes, tremendous growth in coal consumption by China and to a lesser extent India and other developing countries. That growth is a key driver of a projected increase in worldwide carbon dioxide emissions, which EIA predicted would jump about 43% between 2008 and 2035. China's carbon emissions were somewhat higher than those of the U.S. in 2008, but are projected to be "more than twice as high" as U.S. emissions by 2035, Gruenspecht said.

Natural gas consumption was projected to grow at a faster rate than any other type of fossil fuel, thanks in part to increased supply from the U.S. and elsewhere. Consumption will grow from 111 trillion cubic feet in 2008 to 169 trillion cubic feet in 2035, the report predicted.

Use of nuclear power increases slightly in the EIA projections, but "the full extent of the withdrawal of government support for nuclear power is uncertain" in the wake of the Fukushima Daiichi crisis in Japan, Gruenspecht said.

Gruenspecht said that due to budget cuts impacting the EIA, the outlook report might not be released next year. "That's a little bit of question mark in the present resource environment."


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Phil Flynn: Can't Get Away From Greece

Global oil markets are falling as the Greece problem continues to weigh on market sentiment. Market odds put a Greek default at 98% and rising. The Wall Street Journal reported, "In Greece, the cabinet of Prime Minister George Papandreou met on Sunday to discuss growing concerns over the nation's ability to meet its fiscal targets. The so called "troika" of international lenders the International Monetary Fund, the European Central Bank and the European Commission are withholding the next disbursement of aid to Greece until the government comes up with a credible plan to meet its deficit-reduction commitments."


In a sharply worded statement released after the cabinet meeting Sunday, Finance Minister Evangelos Venizelos said the government takes full responsibility for the implementation of the agreed program, but also warned that Greece shouldn't be the "scapegoat" used by European institutions to hide their inability to manage the euro-zone crisis." So take that and please write me a check! The Greek government knows that it is going to be very messy for the Euro Zone if they are allowed to fail so at some point they may just tell Europe to either come up with more cash or face the consequences that will come when Greek goes belly up.....Read the entire article.


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Demand Concerns, European Debt Crisis Continue to Pressure Oil Bulls

Negative statements on future oil demand estimations by OPEC Secretary-General Abdalla El-Badri and remarks from European finance ministers that they are ruling out the use of stimulus measures to combat the European debt crisis had crude oil trading much lower in Sunday evenings overnight trading session. Stochastics and the RSI remain overbought, diverging and are turning neutral to bearish hinting that sideways to lower prices are possible near term.

Closes below last Monday's low crossing at 85.17 would confirm that the corrective rally off August's low has ended while opening the door for a possible test of August's low crossing at 76.61 later this fall. If November extends the rally off August's low, the May-July downtrend line crossing near 91.81 is the next upside target.

First resistance is last Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 91.81. First support is last Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47. Crude oil pivot point for Monday morning is 88.47.


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CFTC Commitments of Traders (COT) Reports For August 2011

NYMEX WTI Crude Oil
Crude Oil futures open interest fell 0.8 percent in August. Commercial participants, who accounted for 53.6 percent of open interest, held net short positions; they increased their long positions by 1.4 percent and decreased their short positions by 2.2 percent. Non-commercial participants, who accounted for 41.6 percent of open interest, held net long positions. They decreased their long positions by 2.0 percent and decreased their short positions by 1.4 percent. Non-reportable participants, who accounted for 4.8 percent of total open interest, held net long positions; they decreased their long positions by 9.4 percent and increased their short positions by 30.2 percent.

NYMEX Henry Hub Natural Gas
Natural gas futures open interest increased 2.5 percent in August. Commercial participants, who accounted for 34.9 percent of open interest, held net long positions; they increased their long positions by 10.2 percent and increased their short positions by 9.5 percent. Non-commercial participants, who accounted for 58.9 percent of open interest, held net short positions. They decreased their long positions by 1.4 percent and decreased their short positions by 0.3 percent. Non-reportable participants, who accounted for 6.3 percent of total open interest, held net long positions; they decreased their long positions by 8.8 percent and increased their short positions by 7.3 percent.

NYMEX Heating Oil 
Heating oil futures open interest fell 0.8 percent in August. Commercial participants, who accounted for 66.8 percent of open interest, held net short positions; they increased their long positions by 7.4 percent and decreased their short positions by 2.2 percent. Non-commercial participants, who accounted for 23.3 percent of open interest, held net long positions. They decreased their long positions by 13.2 percent and increased their short positions by 5.8 percent. Non-reportable participants, who accounted for 9.9 percent of total open interest, held net long positions; they decreased their long positions by 8.3 percent and
decreased their short positions by 3.3 percent.

NYMEX RBOB Gasoline
Gasoline futures open interest fell 2.6 percent in August. Commercial participants, who accounted for 63.8 percent of open interest, held net short positions; they increased their long positions by 4.2 percent and decreased their short positions by 8.5 percent. Non-commercial participants, who accounted for 30.0 percent of open interest, held net long positions. They decreased their long positions by 5.5 percent and increased their short positions by 29.5 percent. Non-reportable participants, who accounted for 6.2 percent of total open interest, held net long positions; they decreased their long positions by 25.2 percent and decreased their short positions by 5.9 percent.

EIA: Over 90% of Syrian Crude Oil Exports go to European Countries

Source: U.S. Energy Information Administration, Syria Country Analysis Brief.

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Syria, the only significant crude oil-producing country in the eastern Mediterranean, produced 387,000 barrels per day (bbl/d) of crude oil (including lease condensate) in 2010. Estimated net crude oil exports were 109,000 bbl/d in 2010, the vast majority of which went to OECD European countries. Germany, Italy, France, and the Netherlands comprised over 80% of Syria's crude oil exports.

According to the European Commission, European Union (EU) countries imported 1.35% of their petroleum from Syria in 2010. Although exports from Syria represented a small share of the EU's overall oil needs, these exports accounted for 30% (or $4.1 billion) of Syrian government revenues in 2010.

Declining oil production has been the main driver of lower Syrian oil exports (see chart below). Efforts to reverse the declining trend for production and exports by expanding exploration and production through partnerships with foreign oil companies have been hampered by U.S. sanctions.

Source: U.S. Energy Information Administration, Syria Country Analysis Brief.
Download CSV Data

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Recent political unrest in Syria and the indiscriminate use of deadly force against dissent by the Syrian government has prompted further U.S. sanctions, including a ban on the import of crude oil or petroleum products of Syrian origins. On September 2, 2011, the EU, whose members purchase over 90% of Syrian oil, announced a ban on imports of Syrian crude oil, which may further hinder Syrian efforts to expand their petroleum industry.

Syria has opened its offshore territory for development; however, this region is expected to contain mostly natural gas. The Syrian Ministry of Petroleum and Mineral Resources and General Establishment of Geology and Mineral Resources has also opened up bidding for shale oil deposits containing an estimated 285 billion barrels of oil. This new exploration, plus rehabilitation of current oil fields, may help counter the current decline in petroleum production.

Although Syria is not a major producer of oil and gas, it occupies a strategic location in terms of prospective energy transit routes and regional security. EIA's Country Analysis Brief on Syria features additional analysis on these trends, along with a broad discussion of Syria's energy sector.

Oil N Gold: Crude Oil and Gold Weekly Technical Outlook

Here is your weekend Technical outlook for crude oil and gold from the traders at Oil N Gold. Com......



Crude Oil
Crude oil's corrective rise from 75.71 extended further last week but struggled to take out 55 days EMA. Also strong resistance around 90 psychological level. While such correction might extend, current development suggests that it should be to completion and rise attempts should be limited by near term falling trend line resistance (now at 92.3). A break of 85.00 minor support will be the first signal of resumption of fall from 114.83 and should turn bias to the downside for retesting 75.71 low first.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. However, break of 100.62 resistance will indicate that fall from 114.83 has completed after meeting missing 100% projection target. The corrective structure of such decline in turn argues that rise from 33.2 is still in progress for another high above 114.83.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

Gold
Gold's choppy fall from 1923.7 extended to as low as 1765.4 last week and there is no sign of completion yet. Such decline is either consolidation to rise from 1705.4 or the third leg of the consolidation pattern from 1917.9. In either case, more choppy trading would still be seen in range of 1705.4/1923.7. But in case of deeper fall, we'd expect strong support above 1705.4 to contain downside and bring up trend resumption. Above 1923.7 should in turn send gold towards 61.8% projection of 1478.3 to 1917.9 from 1705.4 at 1977.1.

In the bigger picture, firstly, gold's long term up trend is still intact and there is no signal of reversal yet. Another record high should still be seen. But we'll be cautious on another near term reversal near to 2000 psychological level and finally bring some lengthier consolidation. Meanwhile, a break of 1705.4 will argue that gold has indeed topped out with a double top reversal pattern (1917.9, 1923.7) and in such case, deeper pull back could be seen back towards resistance turned 1577.4 support instead.

In the long term picture, rise from 681 is treated as resumption of the long term up trend from 1999 low of 253 and there is no sign of topping yet. Current up trend could now be targeting 161.8% projection of 253 to 1033.9 from 681 at 1945.6. Sustained trading above 2000 psychological level should pave the way to 261.8% projection at 2727.2.

The Battle Continues Between the Bulls and the Bears

The battle between the Bulls and Bears continues in the equity markets. This past week the Bulls won with a very positive 5.35% return.

Out of the 6 markets that we track, only two closed with a positive gain for the week and they were the S&P 500 index and crude oil. We consider both of these moves counter trend rally’s. Both the silver and gold markets lost ground last week, with silver closing down 1.89% and gold dropping 2.36%.

The Dollar Index saw some profit taking and closed down .85% for the week.
The Reuters/Jefferies CRB Commodity Index also came under pressure and closed down 1.38% in line with the general trend.

Let’s go take a look at the markets and see how we can preserve and protect and grow your capital in 2011.

S&P 500 Change for the week: + 5.35%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short Term Trends: = Positive
Combined Strength of Trend Score: = + 70

Silver Change for the week: – 1.89%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = + 65

Gold Change for the week: – 2.36%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = + 65

Crude Oil Change for the week: + .91%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = + 55

Dollar Index Change for the week: – .85%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = + 75

CRB Index Change for the week: – 1.38%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = – 75

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Brent Crude Dips After Platts Changes Formula

US benchmark crude contracts fell on concerns that the economic recovery in the US is slowing, while Brent crude was on the rise in London as the outlook for the European debt crisis brightened. However, the trends changed late in the week as Brent fell after Platts decided to change the way it calculates the benchmark price. Oil futures on the New York Mercantile Exchange (NYMEX) were hit by a slew of downbeat US data that came out late in the week. Thursday’s employment report from the US Labor Department revealed s surprise increase in US jobless claims to 428,000 last week.

Manufacturing data that was released on the same day also disappointed, showing a decline in the Empire State index from minus-7.7 in August to minus-8.8 in September, while the Philly Fed rose 13.2 to minus-17.5 in September, but still missed expectations. In the meantime, Brent contracts were on the rise, enjoying support from reassuring statements from European politicians that Greece will not quit the euro zone and the EU will go as far as necessary to prevent it from going into a default.

Demand for Brent was also supported by lingering concerns over supplies from the North Sea following a series of delays over the past few weeks. However, Brent futures fell sharply late on Friday after Platts, the energy information arm of McGraw Hill, said it will change the Brent crude pricing formula sooner than expected. The changes to the benchmark that is used to price two third of the world’s oil will come into effect in January 2012 instead of the first quarter of 2013 as was planned before.

Platts has decided to change the pricing benchmark due to a reduction in Brent crude supplies in recent years, which has made it easier for traders to manipulate the market. The Brent crude prices will now be assessed based on contracts signed over a 16 day period instead of the previous 12 day span. “Recent events in the market, including disruptions to the Forties pipeline system and shortfalls in cargo deliveries, show clearly that timely action is needed to maintain the strength of the physical benchmark,” said vice president of editorial at Platts Dan Tanz.


Posted courtesy of Pro Active Investors

Zacks: Kinder Morgan-Valero Pipeline Pact

Leading petroleum product pipeline owner and operator Kinder Morgan Energy Partners L.P (KMP) has partnered with San Antonio based Valero Energy Corporation (VLO) to build a new 136 mile, 16 inch pipeline to transport gasoline, jet fuel and diesel. Known as Parkway Pipeline LLC, the proposed initiative is estimated to cost $220 million.

While both companies will own the pipeline system, Kinder Morgan will be the operator. Parkway Pipeline is expected to have an initial capacity of 110,000 barrels per day that can be eventually expanded to over 200,000 bpd.

The refined products would be shipped from refineries in Norco, Louisiana to the Collins, Mississippi hub, owned by a subsidiary of Kinder Morgan, Plantation Pipe Line Company. Kinder Morgan has a 51% stake in the petroleum transportation hub of which it is also the operator. Thereafter, the refined petroleum products will be distributed by the pipeline systems, including Plantation, to important markets in the southeastern United States from this hub.

The pipeline is expected to begin operations by mid 2013 after getting approvals from the concerned environmental and regulatory authorities. It is expected to be accretive for Kinder Morgan unitholders upon completion as the project has a long-term backing of a credit worthy shipper.

To curtail environmental impacts, Parkway Pipeline construction will follow prevailing utility rights of way wherever possible. The project is expected to boost fuel supply, and at the same time offer all shippers larger access to Gulf Coast refineries.

Kinder Morgan’s continuous effort to upgrade its portfolio is evident from its newest business segment, Trans Mountain Pipeline (now under Kinder Morgan Canada), an approximately 715 mile transport system overbooked by a wide margin for September. Trans Mountain has a pipeline capacity of approximately 300,000 barrels per day.

P{osted courtesy of Zacks on Seeking Alpha. Kinder Morgan holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we maintain a Neutral rating on the stock.

Phil Flynn: Prime The Pump And Bailout The Brent

Oh sure, now you go and bail out Europe and drive the Brent Crude versus West Texas Intermediate spread back above $25 wide! Brent crude gets pumped up as global central bank pumps dollar liquidity in to European banks. The reduced risk of bank default and kicking the Greece default can further down the road had the Brent crude supply demand fundamentals tightened in a minute.

The decision of the five largest central banks to dump dollars into European banks added to the support for oil but created fears of a tightness of supply in the Brent. Weak production from the North Sea and conflicting reports on the return of Libyan crude seems to be adding to the Brent woes. There is some short term confidence coming out of the Euro zone and this will increase demand or at least expectations of demand almost instantly.


The spread between Brent crude and West Texas had previously come in, especially after U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum reserve) fell by 6.7 million barrels which put US supply at 346.4 million barrels which is still well above the five year average.


Robert Campbell of Reuters News says writes, "Looking back at the impact of the Libyan civil war on the oil market the most remarkable fact is that the situation did not lead to an oil super-spike. After all, a scramble for sweet crude in 2007 is widely seen as the trigger for the spiral in oil prices until they hit nearly $150 a barrel. Although the data are still coming in, it would appear that the Atlantic basin refining sector is now more flexible, in part due to weaker demand and in part due to investments in new capacity. Sweet refiners may be suffering because of high crude costs, but the system as a whole is not breaking down."

He goes on to say, "The resilience of the market is all the more impressive once the other supply disruptions to the European short haul sweet crude market are considered. Normal decline of the aging fields in the North Sea is well known, as is the extraordinary sequence of problems at several important production facilities in the area. Less discussed is the reduction in crude oil production in Azerbaijan, an important supplier of very low sulfur crude.

Combined with the conflict in Libya a huge amount of sweet crude oil production was lost to European refiners, many of which rely on short haul cargoes. In the first half of the year sweet crude output from Azerbaijan, Britain, Libya and Norway was 215 million barrels less than in 2010. With this number in mind, the response of the International Energy Agency to the crisis.....a release of 60 million barrels of strategic stocks, seems almost timid. Doubtless, the IEA would argue that the problems in Azerbaijan, Britain and Norway were not the classic supply disruptions the agency is meant to guard against."


Posted courtesy of Phil Flynn and PFGs Best. You can contact Phil at 800-935-6487 or email him at pflynn@pfgbest.com. Get the "Power to Prosper" by tuning into the Fox Business Network where you can see Phil every day!

Crude Oil Pressured By Euro Weakness and Greek Bailout Doubts

Crude oil was slightly lower in overnight trading as the euro has stalled in it's advance against the dollar on worries that an agreement to bail out Greece may be held up by a number of countries. Stochastics and RSI ifor WTI oil remain overbought. If November extends the rebound off August's low, the May-July downtrend line crossing near 92.13 is the next upside target.

Closes below Monday's low crossing at 85.17 would confirm that the corrective rally off August's low has ended while opening the door for a possible test of August's low crossing at 76.61 later this fall.

First resistance is Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 92.13. First support is Monday's low crossing at 85.17. Second support is last Tuesday's low crossing at 83.47. Crude oil pivot point for Friday morning is 89.19.

EIA: Key Factors Affecting the Outlook for Restoring Libya's Oil Production

As the fighting in Libya begins to wind down and the Transitional National Council (TNC) establishes itself as the internationally recognized government, it is timely to review the many factors that will affect the pace and timing of the restart of the Libyan oil industry.

The TNC leadership, which views oil revenues as a means to rebuilding the country, and participants in world oil markets, who continue to grapple with tightness in the global supply of high quality crude, share a common interest in restoring Libya's oil production and exports. When this will happen is uncertain and depends to a significant extent on the political, military, and security situation that will determine when companies can return to oil fields to repair and/or restart production. It is also worth noting that at the time of writing, only the European Union and United Nations had lifted sanctions on Libya; U.S. sanctions remain in place.

Opinions vary across analysts. Some predict a slow and protracted recovery, while others are more optimistic, pointing to TNC statements on its commitment to restarting oil production. Most international oil companies (IOCs) have been cautious regarding their public statements on resuming production.

Political and military outcomes will each play an important role in creating conditions that speed or retard production activity. Politically, there must be sufficient legitimacy and legal clarity to allow for financing activity and exchanges of funds. A recognized government with the institutions in place to uphold contracts and manage revenues will be necessary for the IOCs to return. While the TNC has stated that it will respect existing contracts, IOCs seeking to purchase oil from Libya or invest in the country's oil sector must be able to identify their institutional and financial counterparts within the new regime.

One question to be addressed is whether oil revenues should be paid to the national oil company, to the oil ministry, or to other parties. Another option might be to allocate funds to an escrow account pending clarification of future arrangements so that operations can resume. IOCs also need to consider that the government and its institutions are likely to continue to evolve over time.

Militarily, remnants of the conflict may also continue to present challenges. As of this writing, Gaddafi loyalists are still in control of a few areas of the country and some analysts believe that pockets of resistance will remain even after the fighting has come to an end. Beyond the military conflict, security concerns could delay the return of oil workers and the resumption of production. While the oil industry is not very labor-intensive, a large part of the labor employed in the sector is highly specialized, and, in many cases, comprises expatriates who are likely to have found employment elsewhere. The conflict also scattered the Libyan workforce. It will take time to reassemble the staff, and even then there is a risk that the aftermath of the conflict could affect workforce morale and cohesion as employees face up to their differing roles and loyalties before and during the fighting.

Some of the security concerns are directly tied to the oil infrastructure (Figure 1). For instance, Gulf of Sirte, an area that accounts for about two thirds of Libyan oil production, saw the heaviest fighting and the most damage and is likely to face continuing security concerns. In terms of security, press reports suggest that the oil terminals and surrounding infrastructure of Ras Lanuf and Brega have been booby trapped with explosive devices.

Figure 1

The Financial Times cited land mine experts as saying it could take 18 months to clear some of the explosives, an issue that will need to be addressed before the known damage can be fully repaired. Resuming production will bring with it its own security concerns as the infrastructure is a relatively easy target. During the conflict, oil production out of the east was sporadic at times because when production resumed, it became a target for loyalist forces.

Read the entire article at www.eia.gov

Crude Oil Market Continues to Tease Us With It's Sideways Action

The crude oil market continues to tease us with its sideways action. While this market has been trending to the upside, we want to pay particular attention to the uptrend line from August 9th through today. We do not think that the crude oil market is ready to go higher based on our long term monthly Trade Triangle, which continues to be negative for this market.

The $90 a barrel resistance continues, as the market has had a difficult time moving over that area and maintaining a positive close above that zone. Look for crude oil to continue to move in a sideways to lower manner.

Crude oil closed higher on Thursday and remains poised to extend the rally off August's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are still possible near term.

Closes above the May-July downtrend line crossing near 92.64 would confirm an end to this summer's decline. Closes below Monday's low crossing at 85.17 would confirm an end to the corrective rally off August's low.

First resistance is Tuesday's high crossing at 90.60. Second resistance is the May-July downtrend line crossing near 92.64. First support is Monday's low crossing at 85.17. Second support is the reaction low crossing at 83.47.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = + 70

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Phil Flynn: The Worst Is Over?

Is it possible that the worst is over? Despite the separation anxiety in the Euro Zone and a rouge trade that took away UBS profits, many markets are signaling that they believe that at least for now, all the bad news is out. Or maybe that things can't get any worse. It looks like the plunging euro currency, the British Pound and the Swiss franc, is turning the corner as well as crude oil, a market by the way that we have called that the low is in for the year. Stocks seem to have found a bottom and their lows look like they might be in as well. Do we deserve all this optimism? It seems that support from German Chancellor Angela Merkel and French President Nicholas Sarkozy, is making the markets think there may be a master plan to save the Euro zone and the global economy as well.

Is the market right ? Do we deserve a bottom? Well whether we deserve it or not the indicators from the technical side seem to be in alignment. Oil is gaining confidence and we are seeing signs that products are bottoming. Besides, the market is rebounding from sharply lower expectations from the likes of many of the major agencies like OPEC, the Energy Information Agency as well as the International Energy Agency. Besides lowering demand, the other key for the direction of oil may be when Libya's oil comes back to the market. The International Energy Agency says that, "As the fighting in Libya begins to wind down and the Transitional National Council (TNC) establishes itself as the internationally recognized government, it is timely to review the many factors that will affect the pace and timing of the restart of the Libyan oil industry.

The TNC leadership, which views oil revenues as a means to rebuilding the country, and participants in world oil markets, who continue to grapple with tightness in the global supply of high quality crude, share a common interest in restoring Libya's oil production and exports. When this will happen is uncertain and depends to a significant extent on the political, military, and security situation that will determine when companies can return to oil fields to repair and/or restart production. It is also worth noting that at the time of writing, only the European Union and United Nations had lifted sanctions on Libya; U.S. sanctions remain in place"......Read the entire article.

Marcellus Committee Clears Permit Fee Hurdle in West Virginia

Natural gas operators would pay $10,000 to drill a well in West Virginia's share of the Marcellus shale field, and $5,000 for each additional well at the initial site, under a proposal adopted Wednesday by a special legislative committee.

The House-Senate panel also approved provisions increasing bonds posted for well projects, enhancing public notice of drilling and compensating the owners of surface land where operators drill their wells. With the committee resuming its work next month, Wednesday's changes move lawmakers closer to a regulatory bill that they hope to propose during a special session before year's end.

But the permit fee amendment has been considered a crucial hurdle in the process. Operators now pay just a few hundred dollars for a permit. The resulting revenues have helped to leave the Department of Environmental Protection's Oil and Gas office with a $1 million shortfall in its budget.....Read the entire AP article.

National Oil Well Varco and Ameron Announce Merger Agreement

National Oilwell Varco, Inc. (NYSE:NOV) and Ameron International Corporation, (NYSE:AMN) have entered into an agreement under which NOV will acquire Ameron in an all cash transaction that values Ameron at approximately $772 million. Under the agreement, Ameron's stockholders would receive $85.00 per share in cash in return for each of the approximately 9.1 million shares outstanding. The boards of directors of NOV and Ameron have unanimously approved the transaction, which is subject to customary closing conditions, including the approval of holders of at least a majority of Ameron's outstanding shares. Closing could occur as early as the 4th quarter of 2011.

Ameron is a multinational manufacturer of highly engineered products and materials for the chemical, industrial, energy, transportation and infrastructure markets. Ameron is a leading producer of fiberglass composite pipe for transporting oil, chemicals and corrosive fluids, and specialized materials and products used in infrastructure projects, such as poles and construction materials in Hawaii. Ameron is also a leading provider of water transmission lines and fabricated steel products, such as wind towers.

Ameron operates businesses in North America, South America, Europe and Asia, has a presence through affiliated companies in the Middle East, and has approximately 2,900 employees and 25 manufacturing locations on a worldwide basis.

NOV is a worldwide leader in the design, manufacture and sale of equipment and components used in oil and gas drilling and production operations, the provision of oilfield services, and supply chain integration services to the upstream oil and gas industry.....Read the entire article.