EIA Weekly Petroleum Status Report

U.S. crude oil refinery inputs averaged 14.0 million barrels per day during the week ending November 20, 177 thousand barrels per day above the previous week’s average. Refineries operated at 80.3 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.2 million barrels per day. Distillate fuel production decreased last week, averaging 4.0 million barrels per day.

U.S. crude oil imports averaged 9.0 million barrels per day last week, up 371 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 1.4 million barrels per day below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 928 thousand barrels per day. Distillate fuel imports averaged 234 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.0 million barrels from the previous week. At 337.8 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.0 million barrels last week, and are slightly above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week.

Distillate fuel inventories decreased by 0.5 million barrels, and are above the
upper boundary of the average range for this time of year.

Propane/propylene inventories decreased by 1.9 million barrels last week and are in the lower half of the average range.

Total commercial petroleum inventories decreased by 0.9 million barrels last week, and are above the upper limit of the average range for this time of year.

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Bloomberg Analyst: Oil to Extend Drop, Test Channel Below $74

Crude oil, declining since touching a one-year high of $82 a barrel Oct. 21, is poised to test the bottom of a downtrend channel below $74, according to an analysis of price charts by Societe Generale SA. Oil, trading lower today for the fourth day in five, could extend its drop as traders pull out in the absence of profit opportunities, according to Stephanie Aymes, a London based commodity technical analyst at France’s second largest bank by market value. “We are in a range, a descending channel,” Aymes said in an e-mail. “It looks like the one in August, but that was deeper. This range is very long and the daily indicators are breaking supports.”

Crude oil has pared its gains for this year from as high as 84 percent to 70 percent amid concern weaker growth in the U.S., the world’s largest energy consumer, may slow the recovery in demand. Futures for January delivery on the New York Mercantile Exchange was at $76.01 a barrel in electronic trading, down 1 cent, at 11:57 a.m. Singapore time. Prices, which fell yesterday after the Commerce Department said the U.S. economy expanded less than estimated in the third quarter, are approaching a technical support area and may soon test its resilience, Aymes said.....Read the entire article.

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Crude Oil and Natural Gas Technical Outlook For Wednesday Morning

Nymex Crude Oil (CL)

Crude oil's remains soft today and is struggling around 75.57 support. As noted before, with 80.51 resistance intact, short term risks remain on the downside, below 75.57 will bring deeper decline towards 61.8% retracement of 65.05 to 82 at 71.52 next.

In the bigger picture, we'd continue to slightly favor the bearish case as long as 80.51 resistance holds. That is, a medium term top is formed at 82.0 on bearish divergence conditions in daily MACD as whole rise from 33.2 has completed. Break of trend line support (now at 70.60) will add more credence to this case and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. However, break of 80.51 will indicate that price actions from 82.0 are merely consolidations in the medium term rise only. Further break of 82.0 will bring medium term rise resumption. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.....Here is the charts!

Nymex Natural Gas (NG)

Near term outlook in natural gas is quite mixed for the moment. But after all, with 5.318 resistance, we'd slightly favor the case that it has topped out already and favor another fall. Below 4.157 will target 61.8% retracement of 2.409 to 5.318 at 3.52 first.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The break of 55 days EMA, even though it's brief so far, suggests that rebound from 2.409 is possibly just a corrective rise only and may have completed after failing to sustain above 55 weeks EMA. Deeper decline could now be seen for a retest of 2.409 support first. On the upside, break of 5.318 resistance is needed to revive the case that Natural gas has bottomed in medium to longer term.....Here are the charts!

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Land Rig Count Recovery Continues: What Goes Down Must Come Up

Driven by a confluence of factors including the credit crunch, commodity price collapse and widespread economic malaise, the U.S. land rig count decline witnessed between August 2008 and June 2009 was by far the most devastating downturn of the last 20 years. On a percentage basis, the recent downturn was similar to the 1998-1999 downturn, it just occurred in half the time. In absolute terms, more than twice as many rigs fell out of the rig count in the 2008-2009 downturn than in each of the last two major collapses.

However, the recovery so far has been promising, and in the five months since the downturn, the rig count has recovered by 241 rigs or 29%. In absolute terms, this is more than in the first five months of either of the prior two recoveries. On a percentage basis, the current rebound is unfolding faster than the 2001-2002 recovery but not as quickly as the 1998-1999 recovery. The table below summarizes the last three downturns and the five month periods following the troughs.



Rig Count Likely Headed Higher, but Risks Abound
Although a general consensus has formed that the land rig count will continue to increase during 2010, it would be wise to balance optimism with a sense of caution in the current recovery. While the recovery periods in each of the last two cycles generally exhibited an up and to the right pattern (for two and six years respectively), the present upturn is occurring in a noisy environment where multiple variables could take a course that would result in a plateauing rig count or possibly even a second bottom.....read the entire article.

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Oil Falls as Economic Growth Revised Lower, Supplies May Gain

Crude oil fell after a report showed that the U.S. economy grew at a slower level than previously estimated, and on forecasts that supplies gained. Oil retreated after the Commerce Department said that the economy expanded at a 2.8 percent annual rate in the third quarter, down from a 3.5 percent increase initially stated. The U.S. Energy Department will probably report tomorrow that crude oil supplies grew by 1.5 million barrels in the week ended Nov. 20, according to a Bloomberg News survey. “As long as there are tepid headlines about the economy, oil is going to be under pressure,” said Michael Fitzpatrick, vice president of energy with MF Global in New York. “We seem to be attracted to the lower end of the recent range and will probably test it before long.”

Crude oil for January delivery declined $1.48, or 1.9 percent, to $76.08 a barrel at 10:59 a.m. on the New York Mercantile Exchange. Futures have gained 71 percent this year. Transactions may be lighter than normal because of this week’s U.S. Thanksgiving holiday. There will be no trading on Nov. 26 and floor trading will end early on Nov. 27. “I’m not getting excited about anything I see this week as far as price action is concerned,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “Volume and liquidity are down, so volatility is going to be through the roof”.....Read the entire article.

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New Video: Finding the Trend in Forex

Here is the fastest and easiest way to tell the trend in the foreign exchange markets.

In today’s video we are going to share with you a wonderful way to look at the forex markets and determine which way they are headed in a matter of seconds. We’ll be looking at three different cross rates and how they all correlate together in a way that I think may surprise you.

The forex markets are the biggest markets in the world and MarketClub not only covers all of them, but also covers them in real time with pricing and charts. I hope you learn from this video and take the time to post your comments on our blog.

Just click here to watch the video and as always there is no charge and no registration to watch this educational trading video.

Good trading,
Ray C. Parrish
President/CEO Crude Oil Trader

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Oil Little Changed Before Report Forecast to Show Supply Gain

Crude oil traded little changed around $77 a barrel before a report forecast to show that higher than normal crude inventories grew last week in the U.S. The U.S. Energy Department will probably report tomorrow that stockpiles grew by 1.5 million barrels in the week ended Nov. 20, according to a Bloomberg survey. Analysts were split over the change in supplies of distillate fuels such as heating oil and diesel, which are 28 percent above the seasonal average.

“At least until the end of the year we see $80 as the top of the range,” said Tobias Merath, a commodity analyst at Credit Suisse Group in Zurich. “What’s limiting the potential in the short term is the supply glut in the distillate market.” Crude oil for January delivery traded for $77.52 a barrel on the New York Mercantile Exchange, 4 cents lower, as of 11:16 a.m. London time. Oil, which rose as high as $79.92 yesterday, has failed to close above $80 since Nov. 4. Futures have gained 73 percent this year. Oil was capped by strengthening in the U.S. dollar, which often limits the appeal of commodities for hedging inflation. The dollar traded at $1.4946 per euro at 11:15 a.m. in London, from $1.4961 yesterday in New York.....Read the entire article.

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Crude Oil Rises on Weaker Dollar, Iranian Military Exercise

Crude oil rose as a weaker dollar heightened the appeal of commodities to investors and an Iranian military exercise bolstered concern that Middle Eastern supplies may be disrupted. Oil climbed as much as 3.2 percent and gold reached a record as the greenback dropped on speculation the Federal Reserve will keep its stimulus measures in place and ensure interest rates remain at virtually zero. Iran is testing an air defense system this week, in a military exercise to assess the vulnerability of its nuclear plants.

“The primary reason for today’s move is that the dollar is in steady retreat,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The drumbeat from Iran seems to also be giving prices a boost.” Crude oil for January delivery rose $1.64, or 2.1 percent, to $79.11 a barrel at 11:43 a.m. on the New York Mercantile Exchange. Prices are up 77 percent this year. The December contract expired on Nov. 20 at $76.72 a barrel. Oil traded between $74.79 and $82 the past five weeks after surging in early October.....Read the entire article.

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ETF Update - Gold, Silver and Oil Out Perform their Equities?

Since the market crash in late 2008 we have seen investors favor quality stocks that pay dividends and have steady earnings. Fast growth companies and equities with physical resources like commodities have also done well.

Let’s examine the monthly charts of gold, silver, oil and natural gas, and observe how they have traded in comparison to their mining equities

Gold – Monthly Chart
Looking at the monthly chart as far back as 2004, we see that gold has formed the same patterns repeatedly. This has created a stair step pattern and allows us to calculate measured moves and a time frame for this to take place.

As we can see gold has broken its 2008 high and is starting another rally which we have seen several times before. I figure we could see gold rally for another 3-5 months and possibly reach the $1500 -$1600 level before forming a multi month or year consolidation.

Investors around the world are buying gold because it is a physical product which has been proven to hold its value.


Silver & Precious Metal Stocks – Monthly Chart
Silver and PM stocks have been trading in tandem since 2004 and we can see this by looking at a price performance chart of both silver and the HUI index. The interesting part is that the physical commodity silver has held its value better than the stocks during corrections.
Apparently investors prefer tangible investments over stock certificates of mining companies in periods of increased volitility. Lower risk is in the commodity.


Oil – Monthly Chart
Crude oil has held its value over energy stocks for the majority of the time since 2003. And currently, investors are more comfortable holding oil as a safe investment over energy stocks.


Natural Gas – Monthly Chart
Natural gas is the energy sector’s underdog in my eyes. The world has found so much natural gas in the ground and discovered cost effective ways to collect gas that it will continue to see investors move away until inventory start to deplete.


Commodity Trading Conclusion:
Investors around the world continue to put money into gold which is a universal hedge against inflation. The broad market appears to be trading at a major resistance level. Tops in the market generally take a much longer than to reverse directions than market bottoms. We will not knot for sure if we are entering a top for a couple months as the charts unfold. Now that commodities are trading back at reasonable levels I think they will hold up better than equities if the market starts to correct.

We continue to enter low risk setups and trade with this strong up trend but are aware that we must be protected and focus on the lower risk plays.

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New Video: A Look at the Dollar Index

The markets are always interesting, but they are particularly interesting right now.

Today we’re looking at the dollar index and some important elements that we see building in this market and want to bring to your attention. In this short video we outline the key areas to watch for and one important component that you may not have seen. We think this factor could, in fact, be a short term game changer for this market.

Just click here to watch the video and as always our MarketClub videos are free to watch and there is no need to register. Please take a moment to let our readers know where you think the U.S. Dollar is headed.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

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New Video: Crude Oil Market Update

In our new video on crude oil we update some of the thoughts we have recently published, but also some important elements that are still in play and could push this market significantly higher.

In this new video we outline the key support zone that we see and also highlight some other technical elements could come into play to push this market higher.

Just click here to watch the video, and as always our videos are free to watch and there is no need to register. Please take a moment to leave a comment and let our readers where you think oil is headed.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

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Crude Oil Falls a Second Day as Dollar Gains, Equities Drop

Crude oil fell for a second day as the dollar strengthened against the euro and global equity markets declined. Oil slipped as much as 1.6 percent as the U.S. currency advanced for the third time in four days. Stocks and equity futures retreated after European Central Bank President Jean-Claude Trichet said policy makers will withdraw emergency cash gradually to avoid fueling inflation, and Dell Inc.’s earnings trailed analysts’ estimates.

“We will take oil prices down another notch because of the strengthening dollar,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consultant. “Things are bearish everywhere you look.” Crude oil for December delivery fell $1.20, or 1.6 percent, to $76.26 a barrel at 9:11 a.m. on the New York Mercantile Exchange. Prices are little changed this week and 71 percent higher this year. The December contract expires today. The more actively traded January contract fell $1.09, or 1.4 percent, to $76.96 a barrel. Oil dropped 2.7 percent yesterday as the greenback gained and on concern the rally in commodities and equities has outpaced the prospects for economic growth.....Read the entire article.

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Crude Oil Closes Lower Amid a Rebound in The U.S. Dollar

Crude oil closed down $1.87 at $77.71 a barrel today. Prices closed nearer the session low today amid a rebound in the U.S. dollar index and solidly lower U.S. stock index futures prices. Crude oil bulls still have the overall near term technical advantage. However, the bulls do not want to see a bearish weekly low close on Friday.

Unleaded gasoline (RBOB) closed down 381 points at $.19733 today. Prices closed nearer the session low today. Bulls still have the overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the October high of $2.1015.

Natural gas closed up 8.9 cents at $4.343 today. Prices closed near the session high after hitting a fresh contract low early on today. Short covering in a bear market was seen today. Serious near term chart damage has occurred recently. Bears have the solid near term technical advantage.

The U.S. dollar index closed up 14 points at 75.40 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage, amid no early clues of a market bottom being close at hand.

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EIA Natural Gas Weekly Update

Overview for the week ending Wednesday, November 18, 2009

Since Wednesday, November 11, natural gas spot prices rose at nearly all market locations in the lower 48 States, with increases of up to 55 cents per million Btu (MMBtu). Prices at the Henry Hub climbed $0.15 per MMBtu, or about 4 percent, to $3.74 per MMBtu.

At the New York Mercantile Exchange (NYMEX), the futures contract for December delivery at the Henry Hub settled yesterday, November 18, at $4.254 per MMBtu. The price of the near month contract decreased by 25 cents or about 6 percent during the report week.

Natural gas in storage was a record setting 3,833 billion cubic feet (Bcf) as of November 13, which is about 12 percent above the 5 year average (2004-2008). The implied net injection for the week was 20 Bcf.

The spot price for West Texas Intermediate (WTI) crude oil increased by $0.39 per barrel since Wednesday, November 11, to $79.55 per barrel or $13.72 per MMBtu.



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Is the S&P 500 About to Fall Out of Bed or is it Headed Higher?

In our latest video we hope to answer those questions and show you what we think could happen to this market in the near term.

There is a fascinating cycle at work that we want to share with you. If this cycle remains in effect, we could be looking at the beginning of a turn down for this index.

Just click here to watch the video and as always our MarketClub videos are free to watch and there is no need to register.

Please take a moment to leave a comment and let us know what you think about the direction of the market.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

Phil Flynn: The End of Panic

Have you been worried about the dramatic drop in the dollar? Are you worried that the dollar is falling because of our ballooning deficit or the fact that this country is printing money like there is no tomorrow? Well if the Fed is not worried maybe you shouldn’t be either.

Panic time is over! The President of the Philadelphia Fed, Charles Plosser, says the drop in the dollar reflects the end of panic. In fact he even says its drop in value should not be a surprise and was even expected. Well yeah if you keep printing money and keep rates below zero. Take that Nouriel Roubini! Mr. Plosser says that there is no particular reason why you wouldn't expect the dollar to go back to where it was before the panic set in.

He says that the U.S. government has historically let the dollar fluctuate, and a weaker dollar in recent years can be understood as a market response to imbalances in the U.S. current account. The dollar as an instrument to tackle asset price bubbles, monetary policy alone isn't adequate, and that more research should be made on the issue of whether there's a connection between policy rates and such bubbles.....Read the entire article.

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Crude Oil Declines for First Time in Four Days as Dollar Gains

Crude oil fell for the first time in four days as the dollar gained against the euro, dulling the appeal of commodities as a currency hedge. Oil fell after reaching a one week high yesterday as the U.S. Department of Energy said crude stockpiles dropped unexpectedly last week. Stock markets fell today across Europe on concern that this year’s rally has outpaced the prospects for economic growth.

“When the dollar is strong and equities are lower, then the oil market goes lower too,” Frank Schallenberger, head of commodities research at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart. “It’s unusual to be stuck so long in a range” between $75 and $80. Crude oil for December delivery dropped as much as 82 cents, or 1 percent, to $78.76 a barrel in electronic trading on the New York Mercantile Exchange and traded at $79.22 a barrel at 2:05 p.m. London time. The contract expires tomorrow.....Read the entire article.

Energy ETF Trading Report - USO and UNG

So far this week has been generous with our commodity ETFs moving higher, other than natural gas which is clearly in a bear market. Each of the commodity ETF trading charts below is at a different stage and it will be interesting to see how things unfold in the coming weeks.

Trading ETFs is very rewarding when done properly and using multiple time frames for timing your entry and exit points is crucial. My main focus is on the weekly and daily charts but I use a 30 minute intraday chart when the time comes to actually pick an exact buy or sell point. Below I have provided both the weekly and daily chart so you can see how the same ETF looks completely different on the two time frames.

USO Fund Trading – Weekly & Daily Trading Charts
While gold and silver have been moving higher oil has been flagging sideways taking a breather. Both the weekly and the daily charts are aligned for a nice move higher if the trend and charts follow through on their patterns. We could get some tradable action in the next couple days.


UNG Fund Trading – Weekly & Daily Trading Charts
Natural gas is really starting to slide. Wednesday UNG dipped below the Sept low of $8.94 by a couple cents then moved up into the close. Overall it’s not bullish. This could be the start of a waterfall sell off which is a sharp heavy volume sell off that lasts 3-5 days.


Commodity ETF Trading Conclusion:
To sum everything up the gold and silver ETFs are on fire as they continue to surge higher. Being ready for a sharp reversal is important if you want to lock in gains on a portion of your position.

Crude oil is taking its time but looking ripe for a breakout higher. We continue to watch for some action.

Natural gas continues to get pushed down and it’s not looking good for higher prices anytime soon. We are waiting for a shorting opportunity or an oversold condition to play a 1-5 day bounce.

Quick Trading Tip: If you have a position which has done well and has moved up for an extended period of time be sure to draw some trend lines and tighten your stop, or set a stop, under a tight trend line. Sell some of your position (25-50%) to lock in gains and let the core position continue to mature. If you get a pullback to a support level (previous breakout level) you can buy back your other part of your position at a lower price.

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Weaker U.S. Dollar Supports Buying Interest in Crude Oil

Crude oil closed up $0.49 at $79.63 a barrel today. Prices closed near mid range again today. A weaker U.S. dollar supported buying interest in crude today. Crude oil bulls have the near term technical advantage in crude oil. The next downside price objective for the crude oil bears is to produce a close below solid technical support at last week's low of $75.57.

Natural gas closed down 26.9 cents at $4.26 today. Prices closed near the session low and hit a fresh contract low today. Serious near term chart damage has occurred recently, including more today. Bears have the solid near term technical advantage.

Unleaded gasoline (RBOB) closed up 100 points at $2.0149 today. Prices closed nearer the session low today. Bulls still have the near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the October high of $2.1015.

The U.S. dollar index closed down 29 points at 75.17 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage, amid no early clues of a market bottom being close at hand. Bulls' next upside price objective is to close prices above solid technical resistance at 77.00.

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Trader’s Blog Holiday Giveaway

The Crude Oil Trader has teamed up with INO.com to invite you to enter the “Trader’s Blog Holiday Giveaway”. Enter for your chance to win one of twelve prizes, worth over $5,000.00 total to be given away.

INO will be selecting one winner every Monday, Wednesday, and Friday starting on November 30th through December 25th. The winner will select their choice of prize and the remainder of the prizes will be available for the next winner picked.

Just click here to read all about the prizes that are up for grabs!

Good Luck and Happy Holidays,

Ray C. Parrish
President/CEO Crude Oil Trader



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