Musings: Iran Gaining Control of Iraq Without Firing A Shot?

In early July we wrote an article entitled “Middle East: Oil Industry’s And World’s Next Black Swan?” At that time all eyes in the oil industry and among American citizens were focused on the developments with BP’s Gulf of Mexico Macondo well, which was then spewing oil and creating one of the world’s worst environmental disasters. We suggested that maybe people should be scanning the horizon for the next industry Black Swan.

We went on to offer our best guess on what that Black Swan might be, the Middle East. We said that many people wouldn’t consider the Middle East to be a Black Swan, an unknowable and thus unanticipated event, but rather just an ignored developing trend. In that article we said: “A number of recent data points have emerged that suggest the Middle East may become a focal point of political and possibly military action before the end of the year, or maybe even earlier.”

We suggested that maybe people should be scanning the horizon for the next industry Black Swan
In July, the focus of Middle East developments was on when Iran might be able to complete building a nuclear weapon. That timetable is dependent upon the country’s ability to produce enriched uranium, which is being done in one or maybe more nuclear facilities. The buzz at that time among military and intelligence sources was that Israel was preparing an air strike to destroy Iran’s nuclear facilities as it had done a number of years earlier.

Supporting that view was Congressional testimony from Secretary of Defense Robert Gates and Central Intelligence Agency head Leon Panetta that Iran would be completing development of a nuclear weapon in one to two years time at the outside. Also revealed in Defense Secretary Gates’ testimony was that the U.S. had overhauled its NATO missile defense plans based on intelligence that Iran could fire “scores or hundreds” of missiles against Europe in salvoes rather than one or two at a time. Sec. Gates did not mention Israel in his testimony but clearly that nation is considerably closer to Iran than most of Europe......Read the entire article > Iran Gaining Control of Iraq Without Firing A Shot?



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Crude Oil Technical Outlook For Thursday Morning Oct. 28th

Crude oil was higher due to short covering overnight as it consolidates some of Wednesday's decline. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term.

Closes above the reaction high crossing at 84.80 are needed to confirm that a short term low has been posted. If December renews last week's decline, trendline support drawn off the August-September lows crossing near 78.57 is the next downside target.

First resistance is Monday's high crossing at 83.28
Second resistance is the reaction high crossing at 84.80

Crude oil pivot point for Thursday morning 81.72

First support is last Wednesday's low crossing at 79.90
Second support is the uptrend line drawn off the August-September lows crossing near 78.57


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Sharon Epperson: Where is Crude Oil and Gold Headed on Thursday

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.



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SP 500 Signals Turning Bearish, Crude Wants to Move Higher

The S&P 500 index closed lower due to profit taking on Wednesday as it consolidates some of this fall's rally. The mid range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1165.21 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. First resistance is Monday's high crossing at 1193.00. Second resistance is April's high crossing at 1203.00. First support is today's low crossing at 1167.80. Second support is the 20 day moving average crossing at 1165.21.

Crude oil closed lower due to profit taking on Wednesday as it consolidates some of the decline off this month's high. The mid range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are turning bullish signaling that a short term low might be in or is near. Closes above the reaction high crossing at 84.80 are needed to confirm that a low has been posted. Closes below the reaction low crossing at 79.90 are needed to confirm that a short term top has been posted. First resistance is last week's high crossing at 84.80. Second resistance is this month's high crossing at 85.08. First support last week's low crossing at 79.90. Second support is the August-September uptrend line crossing near 78.43.

Natural gas closed slightly higher on Wednesday due to short covering as it consolidated some of this year's decline. Stochastics and the RSI are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.941 are needed to confirm that a short term low has been posted. If December extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 10 day moving average crossing at 3.825. Second resistance is the 20 day moving average crossing at 3.941. First support is Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed lower due to profit taking on Wednesday and remains poised to extend this month's decline. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices is possible near term. If December extends this month's decline, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. Closes above the 10 day moving average crossing at 1345.40 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1345.40. Second resistance is this month's high crossing at 1388.10. First support is last Friday's low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed higher due to short covering on Wednesday as it extends the rebound off last Friday's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish hinting that a short term low might be in or is near. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. If December extends the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. First resistance is today's high crossing at 78.51. Second resistance is the reaction high crossing at 78.61. First support is last Friday's low crossing at 75.85. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.

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B.I.G. Drowning in Crude

This week’s inventory report from the department of Energy showed a huge increase of 5.007 million barrels of crude oil versus expectations for a build of 1 million barrels. Gasoline inventories, on the other hand were down 4.387million barrels versus expectations for a build of 625 thousand barrels. Finally, distillate inventories were down 1.613 million barrels, which was slightly more than the forecast for a draw of 1.5 million barrels.

Below we highlight the weekly stockpiles of crude oil, gasoline, and distillates so far this year and compare them to their historical average. As shown in the charts, while stockpiles have been above average all year for all three, distillates and gasoline have been following their typical seasonal patterns. Crude oil, however, is a different story. As shown, not only have inventory levels of crude been above average all year, but they haven’t been following the seasonal script either. While they should have been declining over the last several months, stockpiles have actually remained relatively unchanged. With today’s large build, crude oil stockpiles are now at their highest point of 2010, and at a higher point relative to the historical average than at any other point this year.

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Phil Flynn: Shock and Bore

Promises, promises, quantitative easing the act of printing money to add excess money supply to the banking system by central banks to create inflation to combat deflation has been the policy tool that the Federal Reserve has used to in their mind have us avoid a “Great Depression”. Of course with the economy still sputtering and jobs growth anemic the Fed wants to do it to you one more time. The talk of “Quantitative Easing 2” by your Federal Reserve has been the overriding global economic force that driven the price of just about everything on the globe whether it be commodities or equities or bonds.

The anticipation of the Fed’s awesome money printing power has had the world markets giddy with excitement as they search for clues how the Fed was going to wow this moribund economy into a vibrant job creating monster. Yet if the Wall Street Journal is right then instead of QE2 being compared to a luxury liner it appears now that the market may compare it to a dingy. The Wall Street Journal is moving markets by reporting that the Federal Reserve is likely to unveil a program of US Treasury Bond Purchases worth a few hundred billion dollars over several months. A measured approach in contrast to.....Read the entire article.


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Oil N'Gold: Risk-Off Trades Dominate, Commodities Slump as USD Strengthens

Risk appetite remained weak in European session amid concerns about 'measured QE' policies. The dollar strengthened while growth currencies and other risk assets plunged. Aussie tumbled as inflation missed expectations. Focus in the US session will be on durable goods orders, new home sales and oil inventory data. Commodities fell across the board. The front month contract for WTI crude oil slipped below 82 ahead of official oil inventory report. Precious metals and base metals also slumped on profit taking.

The Wall Street Journal said that the Fed will likely announce a bond purchase program, worth a few hundred billion dollar spanning over several months, at the FOMC next week. The amount would be significantly lower than market expectations of at least $500B over 5 months. Investors took profits from previous 'short USD' trades as the selloff was probably over extended with such a 'small' amount of QE.

Currently trading at 0.9715, Australian dollar plummeted for a second day against the dollar as CPI surprisingly eased to +2.8% y/y in 3Q10 from +3.1% a quarter ago. This may prolong RBA's pause in tightening. Other commodity currencies, New Zealand and Canadian dollars also fell. The RBNZ will leave the official cash rate......Read the entire article.


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Crude Oil Technical Outlook For Wednesday Morning Oct. 27th

Crude oil was lower overnight as it consolidates some of the rebound off last week's low. However, stochastics and the RSI are turning bullish signaling that sideways to higher prices are still possible near term.

Closes above the reaction high crossing at 84.80 are needed to confirm that a short term low has been posted. If December renews last week's decline, trendline support drawn off the August-September lows crossing near 78.38 is the next downside target.

First resistance is Monday's high crossing at 83.28
Second resistance is the reaction high crossing at 84.80

Crude oil pivot point for Wednesday morning is 82.41

First support is last Wednesday's low crossing at 79.90
Second support is the uptrend line drawn off the August-September lows crossing near 78.38




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Crude Oil Snaps Three Day Gain on Strengthening Dollar, Rising Crude Stockpiles

Crude oil declined for the first time in four days as a strengthening dollar curbed investor demand for raw materials and traders bet stockpiles in the U.S. are rising. Futures dropped as much as 0.6 percent as the dollar climbed against all but one of its 16 most traded peers. An Energy Department report today may show crude inventories increased by 1 million barrels last week, according to a Bloomberg News survey of analysts. The American Petroleum Institute said yesterday stockpiles surged 6.43 million barrels.

“Oil continues to react to dollar movements,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “With seasonal maintenance and outages at refineries, I’d expect to see some build in crude stockpiles.” The December contract fell as much as 47 cents to $82.08 in electronic trading on the New York Mercantile Exchange, and was at $82.10 at 11:18 a.m. Singapore time. Yesterday it added 3 cents to $82.55. Futures are up 3.6 percent this year.

The dollar advanced after the U.S. Conference Board said yesterday consumer confidence climbed in October from a seven month low. The greenback rose 0.3 percent versus the euro and the yen. The Energy Department report at 10:30 a.m. in Washington today may show gasoline stockpiles rose by 625,000 barrels last week, according to the Bloomberg News survey. The industry funded API reported yesterday that supplies of the motor fuel slipped 1.81 million barrels......Read the entire article.



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Sharon Epperson: Where is Crude Oil and Gold Headed on Wednesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.



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Stock Market and Commodities Commentary For Tuesday Evening Oct. 26th

The S&P 500 index closed lower due to profit taking on Tuesday as it consolidates some of Monday's rally but remains above the 87% retracement level of the April-July decline crossing at 1178.21. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that additional short term gains are possible. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. Closes below the 20 day moving average crossing at 1163.45 are needed to confirm that a short term top has been posted. First resistance is Monday's high crossing at 1193.00. Second resistance is April's high crossing at 1203.00. First support is the 10 day moving average crossing at 1175.99. Second support is the 20 day moving average crossing at 1163.45.

Crude oil closed higher on Tuesday as it consolidates some of the decline off this month's high. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning neutral to bullish signaling that a short term low might be in or is near. Closes above the reaction high crossing at 84.80 are needed to confirm that a low has been posted. Closes below the reaction low crossing at 79.90 are needed to confirm that a short term top has been posted. First resistance is last week's high crossing at 84.80. Second resistance is this month's high crossing at 85.08. First support last week's low crossing at 79.90. Second support is the August-September uptrend line crossing near 78.33.

Natural gas closed higher on Tuesday due to short covering as it consolidated some of this year's decline. Stochastics and the RSI are oversold, and are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.961 are needed to confirm that a short term low has been posted. If December extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 10 day moving average crossing at 3.851. Second resistance is the 20 day moving average crossing at 3.961. First support is Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed higher due to short covering on Tuesday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices is possible near term. If December extends this month's decline, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. Closes above the 10 day moving average crossing at 1350.10 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1350.10. Second resistance is this month's high crossing at 1388.10. First support is last Friday's low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed higher due to short covering on Tuesday and the high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bullish hinting that a short term low might be in or is near. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. If December extends the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. First resistance is today's high crossing at 78.04. Second resistance is the reaction high crossing at 78.61. First support is last Friday's low crossing at 75.85. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.



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Phil Flynn: French Press

Oil prices got a boost from the beleaguered dollar but word that the Strikes in France may be winding down may have taken away some of the upside allure. Oil prices broke after Bloomberg News reported that Workers at Fos-sur-Mer and Port Jerome-Granvenchon, two Exxon Corp. refineries in France that have been on strike for 10 days, have voted to return to work, Jean-Michel Maton, a representative of the CFDT union, said by telephone. The French Strikes have led to larger than expected US exports of Diesel as reports of tankers being destined for Europe have been making the rounds.

Still the Dollar seems to be the major factor for oil and the price break from France may be offset if the dollar renews its assault on the downside. Still the big news overnight was some strong data out of the UK. MarketWatch reported that the” British economy grew by 0.8% in the third quarter, easing from the previous quarter’s pace but defying forecasts for a sharper slowdown and dampening expectations the Bank of England will soon implement a further round of monetary easing. The Office for National Statistics said third-quarter gross domestic product expanded......Read the entire article.


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Major Oil & Energy Earnings On Deck

This is the peak of earnings season and the flow of earnings is coming on strong. This week is jammed full of energy companies reporting earnings and it will be interesting to see how these companies compare against last year’s earnings and after the September rise in oil prices. Of the integrated oil giants, we have ConocoPhillips (NYSE: COP), Exxon Mobil Corporation (NYSE: XOM), and Chevron Corp. (NYSE: CVX) this week. Solar is far from being a true energy sector of yet in the grand scheme of things when you see how little of the overall energy comes from it, but industry leader First Solar, Inc. (NASDAQ: FSLR) is on deck this week.

We have compiled the Thomson Reuters earnings estimates, shown price ranges and performance relevance and added in color on each where applicable. We have also added in the oil and gas ETF performance in the ProShares Ultra Oil & Gas (NYSE: DIG) for a comparison on how each has performed.

ConocoPhillips (NYSE: COP) reports its oil earnings Wednesday morning. Thomson Reuters has estimates for the oil giant of $1.45 EPS and $45.59 billion in revenues. Estimates for the quarter ahead are $1.36 EPS and $46.99 billion in revenues. With shares at $61.34, the stock just hit a new 52 week high of $61.88 on Friday and hit a new 52 week high on Monday of $62.63. The market cap here is $91.3 billion and the average analyst price target is $62.00. Shares are up more than 10% from the August lows......Read the entire article.



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Crude Oil Daily Technical Outlook For Tuesday Morning Oct. 26th

Crude oil was higher overnight as it extends Monday's rally above the 10 day moving average crossing at 82.29. Stochastics and the RSI are turning bullish following Monday's rally signaling that sideways to higher prices are still possible near term.

Closes above the reaction high crossing at 84.80 are needed to confirm that a short term low has been posted. If December renews last week's decline, trendline support drawn off the August-September lows crossing near 78.28 is the next downside target.

First resistance is Monday's high crossing at 83.28
Second resistance is the reaction high crossing at 84.80

Crude oil pivot point for Tuesday morning is 82.42

First support is last Wednesday's low crossing at 79.90
Second support is the uptrend line drawn off the August-September lows crossing near 78.28


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Crude Oil Declines as Forecast Gain in U.S. Inventories Signals Slowing Demand

Crude oil declined in New York on speculation slowing fuel demand will result in higher inventories in the U.S., the world’s largest crude consumer. Futures earlier dropped as much as 0.6 percent as the dollar index gained, limiting the investment appeal of commodities. An Energy Department report tomorrow may show crude inventories rose 1.5 million barrels last week, according to a Bloomberg News analyst survey. “If you look at the inventory expectations, crude supplies should climb, so fundamentally there’s not much support,” said Serene Lim, an energy and commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The market will be determined by the price moves in the dollar.”

The December contract fell as much as 47 cents to $82.05 a barrel in electronic trading on the New York Mercantile Exchange and was at $82.20 at 2 p.m. in Singapore. Yesterday, it advanced 83 cents to $82.52, the highest close since Oct. 18. Prices are up 3.6 percent this year. Workers at three French oil refineries voted to return to work as a contested pension bill neared parliamentary approval and the government warned that fuel shortages were hurting the economy. The nation’s eight remaining active plants are either on strike or shut because of a lack of crude. The dollar traded at $1.3972 against the euro from $1.3965 in New York yesterday, having earlier risen to $1.3908. The dollar index, which tracks the greenback against six major currencies, rose as much as 0.3 percent, and was little changed at 77.091 from 77.103 yesterday.

Strikes ‘Psychological’
“The oil market might be taking a bit of a breather,” said ANZ’s Lim. “I doubt the strikes had a huge effect overall on the market, but it was more a psychological impact from the shutdowns.” U.S. gasoline supplies probably climbed by 625,000 barrels last week, according to the estimates in the Bloomberg survey. Supplies of distillate fuel probably decreased for a fifth week as distributors took deliveries before winter and exports to Europe increased, the Bloomberg News survey shows. Brent crude for December settlement traded at $83.34 a barrel, down 20 cents, on the ICE Futures Europe exchange in London. Yesterday it rose 58 cents, or 0.7 percent, to $83.54.

Bloomberg Reporter Christian Schmollinger can be contacted at christian.s@bloomberg.net


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Commodity Corner: Crude Oil Rises on Dollar Decline

The price of a barrel of crude oil for December delivery settled at $82.52 Monday, a 83 cent increase from the previous session. The increase stems largely from the weakening of the U.S. Dollar, which fell 0.34% against the euro Monday. Pending Federal Reserve action to increase the U.S. money supply in order to buy more federal government debt has placed downward pressure on the dollar. A weaker dollar tends to boost demand for oil from buyers holding other currencies.

Contributing to the bullish sentiment for oil was a report showing that existing home sales in the U.S. increased 10% last month. According to the National Association of Realtors, a housing recovery is occurring albeit in the early stages. An official with the trade group said the duration and impact of a foreclosure moratorium will influence how "choppy" the recovery will be. December crude traded from $81.45 to $83.28 Monday.

Milder than normal temperatures in typically heating depending U.S. regions such as the Northeast and Midwest have quashed demand for natural gas recently. Monday was no exception to this trend, with November natural gas settling a penny lower at $3.32 per thousand cubic feet. The front month gas price fluctuated between $3.29 and $3.40.

Labor unrest at French refineries and fuel depots is expected to reduce gasoline exports to the U.S. market. As a result, November gasoline futures rose two cents to settle at $2.08 a gallon. Gasoline peaked at $2.10 and bottomed out at $2.05.

Coutesy of Rigzone.Com


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Sharon Epperson: Where is Crude Oil and Gold Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.



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Stock Market and Commodities Commentary For Monday Evening Oct. 25th

The December S&P 500 index closed higher on Monday and above the 87% retracement level of the April-July decline crossing at 1178.21. The low range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that additional short term gains are possible. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. Closes below the 20 day moving average crossing at 1161.62 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1193.00. Second resistance is April's high crossing at 1203.00. First support is the 10 day moving average crossing at 1174.62. Second support is the 20 day moving average crossing at 1161.62.

Crude oil closed higher on Monday as it consolidates some of the decline off this month's high. The mid range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.90 are needed to confirm that a short term top has been posted. Closes above the reaction high crossing at 84.80 are needed to confirm that a low has been posted. First resistance is last week's high crossing at 84.80. Second resistance is this month's high crossing at 85.08. First support last week's low crossing at 79.90. Second support is the August-September uptrend line crossing near 78.10.

Natural gas closed shortly higher on Monday due to short covering as it consolidated some of this year's decline. Stochastics and the RSI are oversold, and are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.983 are needed to confirm that a short term low has been posted. If December extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 10 day moving average crossing at 3.877. Second resistance is the 20 day moving average crossing at 3.983. First support is today's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed higher due to short covering on Monday as it consolidates some of this month's decline. The mid range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices is possible near term. If December extends this month's decline, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. Closes above the 10 day moving average crossing at 1351.00 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1351.00. Second resistance is this month's high crossing at 1388.10. First support is last Friday's low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed lower on Monday and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are bullish hinting that a short term low might be in or is near. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. If December extends the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. First resistance is the 20 day moving average crossing at 77.85. Second resistance is the reaction high crossing at 78.61. First support is last Friday's low crossing at 75.85. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.


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UL: The End of Oil's Golden Age

One can argue that the world would be very different from what it is today if we hadn’t found crude oil and invented how to leverage this very convenient and relatively cheap energy source. The energy density of oil derivatives such as gasoline is superior to any other substance in liquid or gas form. That’s why the majority of cars are propelled either by gasoline or diesel and airplanes use kerosene.

Also, approximately 15% of oil is used to make asphalt, plastics and a wide variety of critical chemical products. Therefore, crude oil plays a key role in the modern globalized world economy. It has truly enabled a golden age for those that can afford to leverage it.

Unfortunately, oil is a finite resource and some day we will run out of it if we continue consuming it like we do. Long before this happens we will have serious problems, as soon as demand exceeds the supply. This is the essence of “peak oil” concept. International Energy Agency (IEA) estimated in their 2008 World Energy Outlook that oil production should not peak before 2030 if 64 million barrels per day (mb/d) of additional capacity is taken into use between 2007 and 2030.

In theory this is possible, but in practice there is a very real risk of under investment since the required new capacity is equivalent to six times the current production of Saudi Arabia. Therefore, the report concludes that an oil supply crunch can happen as early as 2015.

It is immensely hard to estimate the maximum rate at which the oil can be extracted from all different sources, both conventional and unconventional. Therefore, it is also hard to estimate when oil production will peak. What seems fairly certain is that it will do so within the next 30 years, and I personally believe it will happen within the next 10 years......Read the entire article.



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Renewed USD Selling Boosts Commodities

G20's pledge to avoid competitive devaluation failed to halt the slide in USD. Indeed, the market realized the agreement may only calm fears of currency tensions temporary while, in the long term, global economic imbalances persist. The focus has turned to the upcoming FOMC meeting which will be held on November 2-3. Announcement of some sort of easing measures has been priced in. The unknown is how aggressive the Fed will restart QE2. As the dollar weakens, commodities advance with gold rising to 1339 after plunging to as low as 1315.6 last Friday. Crude oil strengthened for a second day to 82.5 as strikes in France continue and tropical storm threatens.

There are few catalysts stopping the market from selling USD even after the G-20 meeting. While member countries agreed to 'refrain from competitive devaluation of currencies' and to move towards 'more market determined exchange rate systems that reflect underlying economic fundamentals', there's no proposal on how to reduce international trade imbalance between countries. It's only stated in the communiqué that 'persistently large imbalances, assessed against indicative guidelines to be agreed, would warrant an assessment of their nature and the root causes of impediments to adjustment as part of the Mutual Assessment Process'.

The US has also made no commitment to refrain from further quantitative easing in the fact of criticisms by other member countries. German Economy Minister Rainer Bruederle said 'it's the wrong way to try to prevent or solve problems by adding more liquidity…Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate'. Canadian Finance Minister Jim Flaherty also agreed with the notion that 'aggressive quantitative easing in the US would create devaluation pressure on the U.S. currency'......Read the entire article.


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