Phil Flynn: Terror Premium Is A Cost Of Doing Business

What was striking in the Friday reports about the attempted mail bomb terror attack was the market's indifference. The market has already priced in a certain amount of terror possibilities and in a way we are paying for it every day. We are paying for it in the cost of insurance and freight and we are paying for it in terms of even higher commodity prices. It's sad that we have come to expect this type of evil in the world. Today oil is getting a boost out of strong data from China and India.

The Chinese official purchasing manager's index rose to a six-month high in October to 54.7 from 53.8 in September. The market was only looking for a 52.9 reading. The strong number brought back the risk appetite and rallied the oil and broke the dollar. The HSBC version came in at only 54.8 but did have one of the biggest month to month increases in history. With readings like these it is no wonder that China is trying to slow its economy down. The main driver for the market this week will be the Fed. Now everyone knows that the Fed and the size of its massive QE2 program and how it is implemented will be the main factor in the pricing of oil and all other commodities.

People are finally getting the fact that it has been the Fed and the different phases of this economic crisis that has driven the cost of oil, NOT SPECULATORS! US product exports should be strong again in this week’s reports. Oil Inventories are still at the highest level since the 1930s! Look for crude to be down 2.0 million barrels, gas down 2.0 million, distillates down 2.5 and runs up 0.5.

Watch Phil on the Fox Business Network every day. And get his trades by calling him at 800-935-6487 or email him at pflynn@pfgbest.com.


Share

Gold, Crude Oil, SPX....Trading Around the Election

This week we have a major wild card (Election) happening on Tuesday. Most of you know I don’t get involved with political discussion for several reasons… one of them being that I am Canadian “an outsider” looking in.

That being said, it looks and feels as though the market has been propped up and oil has been held down from an invisible force. Lots of theories going around saying higher stock and lower/stable oil prices will give voters the warm fuzzies to keep the current leaders elected… I prefer trading the charts and not getting caught in the Wall St. hype.

Let’s take a quick look at some charts

SPY – SP500 ETF Trading Vehicle
The broad market has been finding buyers as the beginning of each month and it looks as though it’s ready for another bounce. I do want to note that Tuesday or Wednesday we could see a very sharp move in the market as investors around the world digest the outcome. It is very important to keep positions small and or use protective stops incase of a flash crash or flash rally for those of you trying to pick a top.

Gold Price – Futures Contract
The price of gold looks to be setting up for another wave down in my opinion. More often than not we see a sharp pullback, sideways chop then a pop above recent highs. It’s that pop above recent highs which tends to suck in long positions only to roll over and make new lows quickly after. As noted in previous reports, gold has support around $1300 area and that’s what I am looking for. Again this week’s election will trump recent price action so we really just need to sit tight until the smoke settles.

Crude Oil Futures:
Crude oil has been trading sideways for a solid month while the US dollar has been dropping at tremendous rate. Many oil traders believe the price is being manipulated to stay down until the election is finished because of the strong negative affect rising oil prices have on the economy/end user/voters.

In short, this is a going to be a wild week in the market. Keeping position sizes small and using protective stops is crucial during times like these. We have taken profits on both of our positions from last week and have moved our stops to breakeven for the balance just incase of a crash.

Overall, I am neutral on the market for a couple days until we see what type of blip we get on the charts.

If you would like to receive my Daily Trading Commentary, Charts and Trades be sure to join my newsletter at The Gold And Oil Guy.com

Chris Vermeulen



Share

Oil N'Gold: Crude Modestly Higher ahead of FOMC Meeting

Crude oil price climbed higher in Asian session on Monday as USD's decline ahead of the FOMC meeting raised appeal for commodities. Data showing strong manufacturing activities in China also boosted oil prices. Gold kept hovering around 1360. We believe either upside or downside surprise from Fed's QE should benefit positive for gold in the long term. However, a milder than expected dose of QE may trigger selloff in the metal in the near-term.

Economic data released last Friday were mixed. US GPD grew by an annualized pace of +2% (consensus: +2.2%) in 3Q10, from +1.7% a quarter ago. University of Michigan consumer confidence was revised down -0.2 points to 67.7 in October. While the ‘economic conditions' index rose +3.6 points to 76.6, the ‘expectations index' fell -2.7 points to 61.9.Chicago PMI, however, beat market expectations and improved to 60.6 in October. We believe the set of data should not alter the Fed's decision to announce new QE measure at the meeting this week.

The dollar fell against major currencies with the exception of Japanese yen. The market forecast the size of Fed's new bond buying program would be $1-2 trillion but it may begin by announcing $500B over several months or $100B per month. Apart from purchasing Treasury securities, the Fed may modify its language used in the accompanying statement. At the Boston Fed conference, Chairman Ben Bernanke said that 'clear communication about the longer run objectives of monetary policy is beneficial at all times but is particularly important in a time of low inflation and uncertain economic prospects such as the present' and the FOMC will continue to 'actively review its communications strategy with the goal of providing as much clarity as possible about its outlook, policy objectives, and policy strategies'.

China's PMI expanded to 54.7 in October from 53.8 a month ago. This is the fastest growth pace in 6 months and signaled the country's economy can sustain through the government's tightening measures. This is also positive news for the oil market as, according to IEA, China has overtaken the US as the world's largest oil user.

Let's Look at the Commitment of Traders....


Finding the Trend in the Foreign Exchange Markets

Share

Crude Oil Market Commentary For Monday Morning Nov. 1st

Crude oil was higher overnight as it consolidates some of last week's decline. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term.

If December renews last month's decline, trendline support drawn off the August-September lows crossing near 78.87 is the next downside target. Closes above last Monday's high crossing at 83.28 are needed to confirm that a short term low has been posted.

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

Crude oil pivot point for Monday morning is 81.37

First support is the reaction low crossing at 79.90.
Second support is the uptrend line drawn off the August-September lows crossing near 78.87.



Share

UNG: Why I Consider This ETF a Frightening Investment

From overleveraged Delta Petroleum, to overhyped Houston American Energy, to over the hill Energy Conversion Devices, there's no shortage of spooky investments in the energy sector. These are all relatively small companies, though, and unlikely to draw in space monster sized amounts of money.

For me, the most terrifying investment vehicle in the space is an ETF that has vaporized untold amounts of wealth since some mad scientists of Wall Street brought it to life in 2007. I'm talking about the United States Natural Gas Fund (UNG) exchange traded fund.

The ETF's popularity is easy enough to understand. Like the SPDR Gold Trust (GLD) or the Powershares DB Agriculture Fund (DBA), UNG provides investors a way to bet on the direction of a commodity (or basket of commodities, in the case of the agriculture fund) without having to accept company risk, dabble in futures contracts, or take delivery of a silo full of grain.

With commodities increasingly viewed by investors as an asset class, such funds are all the rage with pension funds, hedge funds, and retail investors alike. UNG trades more than 20 million shares daily, or well over $100 million by dollar volume. The liquidity here is tremendous, keeping the fund price closely in line with daily net asset value. Nothing frightening so far, right?

The problem with UNG, as well as countless other ETFs that invest in near month futures contracts, is that the fund's value gets chewed up like a zombie victim as the contracts get rolled from month to month. Compounding this issue of "roll yield" is that the larger the fund gets, the harder it gets to nimbly exit expiring contracts and enter new ones. The fund spreads its roll dates over four days, which in theory should help to minimize the impact of its trading, but I still suspect that other savvy market players are able to game this pattern.

After the past few years' performance, shares are off roughly 85% since inception, you'd think that investors would have run away screaming by now. For some reason, though, they just keep getting lured back in. Perhaps there's a mind control device at work here. That, or investors think they can actually time a recovery in natural gas with great enough precision to avoid getting their faces ripped off by the Negative Roll Yield Mutant.

If you want to trade in and out of this ETF in a matter of minutes or hours, that's your prerogative. For those investors out there who, like me, anticipate an eventual recovery in natural gas prices but want to be able to ride out another year of depressed prices if need be, I'd suggest ditching this frightening fund in favor of a low cost producer who can survive the current rig invasion. Two companies that potentially fit the bill are Range Resources (RRC) and Southwestern Energy (SWN). You can read my case for the latter company, one of the premier shale gas operators here.

From Toby Shute at Seeking Alpha


Share

ExxonMobil: A Big Bet on Natural Gas

Exxon Mobil is the biggest publicly traded company in the world, but its stock price has been lagging over the last year chiefly because a lot of people wonder why it’s making such a big bet on natural gas. Exxon Mobil spent $41 billion a year ago to acquire XTO Energy, doubling its natural gas reserves. And it is building up a massive liquefied natural gas capacity around the globe. Too bad for Exxon Mobil that a gas glut in the United States and elsewhere is causing gas prices to tank, and a boom in shale drilling promises moderate prices for years to come.

I caught up with William M. Colton, the company’s vice president for corporate strategic planning, late Friday afternoon and asked him about natural gas. I got an earful of passionate praise for the product that Exxon Mobil has staked so much on. There is no doubt about gas with this executive. “If there is any kind of major trend, we think it’s going to be a shift toward more natural gas,” he said. “Natural gas is available. It’s the most efficient way to generate massive power. It’s affordable. We already have gas infrastructure in place. From a CO2 emissions standpoint, it’s 60 percent cleaner than coal, and it’s all U.S. We have 100 years of supply.”

And for the world? “Natural gas will be the fastest growing fuel to supply the world’s growing demands into the future.” Okay, okay, natural gas is great then. But can it ever be profitable?
That’s where the discussion gets really interesting. Mr. Colton thinks policymakers are one day going to put a price on carbon dioxide emissions, a debatable point of view, perhaps, now that cap and trade legislation looks dead in Congress and some anti-tax Republicans appear poised for victory on Tuesday......Read the entire article.

Here is your FREE trend analysis for ExxonMobil

Share

Halliburton Rejects Blame for BP Cement Job

Halliburton, whose failed cement job on the BP well in the Gulf of Mexico was identified as a contributing factor to the deadly blowout by a presidential investigative panel on Thursday, is defending its work and assigning the blame for the accident to BP. Panel Says Firms Knew of Cement Flaws Before Spill (October 29, 2010) Inquiry Puts Halliburton in a Familiar Hot Seat (October 29, 2010) In a six page statement issued Thursday night, Halliburton questioned tests that showed its cement mixture to be unstable and incapable of holding back the oil and the gas in the well, saying the tests were conducted on formulas other than what was eventually used on BP’s Macondo well. It said that a sample of the cement mixture it planned to use on the well, tested shortly before pumping began on April 19, had produced a positive result.

But Halliburton admitted that no stability test was conducted on the actual recipe for the cement used on the well. The company said that BP had ordered a change in Halliburton’s customary formula for cement by adding a higher proportion of a chemical that slows the hardening of the mixture. The well blew out on April 20, killing 11 workers and eventually releasing nearly five million barrels of oil into the gulf. Since then, BP, Halliburton, Transocean and other partners in the well have traded accusations of blame as civil and criminal investigations have proceeded.......Read the entire article.


Share

Oil N'Gold: Crude Oil Weekly Technical Outlook For Saturday Oct. 30th

Crude oil continued to be bounded in choppy sideway trading between 79.25 and 84.45 last week. Outlook remains unchanged. With 78.04 support intact, there is no confirmation of reversal yet. The consolidative price actions from 84.43 also suggests that recent rally is not over. An upside break out will be in favor. Though, in case of another rise, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and deeper decline should be seen to retest this support level first.

In the bigger picture, after all, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Recovery from 64.23 is treated as a correction and should be near to completion, if not finished. Even in case of another rise, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.

In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Price actions from 147.27 are treated as consolidation in the larger up trend and with 90.24 fibo resistance intact, a test of 33.2 eventually is in favor. Though, decisive break of 90.24 will bring stronger rally to above 100 psychological level as a relatively powerful second wave of the consolidation continues.

Nymex Crude Oil Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts.


Share

Commodity Corner: Crude Oil Settles Lower; Natural Gas Breaks $4.00 Mark

Crude oil for December delivery settled lower Friday after the U.S. Commerce Department reported a lower than expected gross domestic product (GDP) estimate for the third quarter of 2010. Oil ended Friday's trading session $81.43 a barrel, a 75 cent decline from the previous day. The Commerce Department stated earlier in the day that Real GDP grew 2.0 percent at an annual rate during the third quarter, below the 2.1 percent that the private sector anticipated. During Friday's session, oil peaked at $82.12 and bottomed out at $80.56. The commodity is down 1.3% compared to Monday's settlement price.

Natural gas continued to benefit from predictions of colder temperatures for much of the Central and Eastern U.S. through next week. The December futures price settled at $4.04 per thousand cubic feet Friday, a 15 cent gain from the previous day and a 21.7% improvement from Monday's settlement price; note that the November contract was still being traded Monday. Gas traded within a range from $3.83 to $4.035 Friday. The price of gasoline for November delivery fell by a penny Friday, settling at $2.10 a gallon. Gasoline, which is up nearly 1% for the week, traded from $2.07 to $2.13.

Courtesy of Rigzone.Com

Share

Why Producers Aren't Hedging Natural Gas

Natural gas prices in Canada are so low that end users are now trying to seduce producers to hedge, so they can lock in longer term low prices. But few producers are keen to lock in long term losses. RBC, Canada’s largest brokerage firm, suggested in a weekly comment that producers still have many reasons to hedge at $3.27 a gigajoule (GJ) now, and $4.11/GJ in April 2011. For context, the full cycle cost for new gas in North America is $5.60/mmcf and in Canada is $6.85/mmcf, according to independent analysts Ziff Energy. So producers would be selling at a significant loss.

But some quick calls to the energy desks of the major Canadian firms showed that few producers are biting, and even one of my contacts at RBC said these “hedging strategies are geared more towards the end user market; the end users are trying to lock in really good prices. But nobody’s hedging.”

RBC lists several potential reasons for hedging, which often mirror the Ziff Energy white paper from June 2010 on the state of Canadian natural gas (a GREAT read – not too technical).

1. Strengthening Canadian Dollar

2. US Production Growth

3. Reduced Canadian Imports

4. Heightened Pipeline Delivery Competition in the US

5. Abundance of Canadian Storage

6. Material Expansion of Canadian Shale Gas Production

7. Growth in Marcellus Shale Gas Production – Production has increased by over 1 bcf/d since January 2010

That’s a big list! And it’s not good news for producers or their investors – especially the junior ones who either have high gas weightings or are close to their debt limit.

But despite producers losing money on every mmcf out of the ground, some may be inclined to hedge, says Ralph Glass of AJM Consultants.

“The bigger producers are still drilling and they can afford to (hedge); it’s part of their long term plan and their economics of scale allow it. The only advantage I can see is that if you’re making positive cash flow at $3.50/mmcf, this gives you stability to hang in for one more year. But it’s not an investment strategy.”

He added even small producers may consider it: “A small producer that has limited cash flow cannot afford to pay for capacity costs without actually producing the volumes.” This means they may have “take or pay” like provisions, where the producer must pay the pipeline companies their transportation tolls even if they don’t produce the gas.

For producers, it comes down to the same issue it always does, are prices going lower or higher? By not hedging, major producers are saying that despite all the gloomy market data, they see prices stable or higher.

Long term dated future gas prices are now below $5/mmcf for a full two years out now. With such a low, and flat futures pricing curve, producers are saying they would rather take their chances in the spot market then, rather than lock in losses now.

Keith Schaefer's Hottest Investment Plays in North America: Crude Oil and Natural Gas Bulletin


Share

Phil Flynn: Spooky QE2

Oil, boil, toil and trouble, we’re going to print more money. Count Bernanke is out to suck more blood out us poor turnips as the Fed looks like QE2 might be a whopper after all! Hey wait a minute! What? Is it possible that the Fed and the upcoming Mid-Term elections are not scaring the oil bear anymore? Well at least for a day the oil market seemed more spooked about mounting supply and decreasing demand then any spell that the Fed was going to cast upon the economy. Despite weakness in the dollar and the most impressive gold rush in weeks, oil struggled to close higher on the day.

Perhaps the market is still coming to grips with the horror of this week’s big build in U.S. supply which, according to the Energy Information Agency, is the highest level ever ending the month of October sitting at 366.2 million barrels. Now that’s scary! Not only that, the supply numbers are daunting with concern that demand from Asia is weakening. Dow Jones news wires reported that India's crude oil imports fell 21.9% to 10.94 million tons in September, or 2.67 million barrels a day, from 14.01 million tons a year earlier. Crude imports were up 14% from 9.57 million tons in August.

But there is still some concern about Indian demand. India imports about three quarters of its crude oil for its demand needs. We know that the global oil market feeds off of China and India feeds off of China and in China this week they took more steps to slow energy demand. After increasing interest rates, the Chinese attacked oil demand directly by increasing the cost of diesel and gasoline by 3%. Now we do not know whether or not a 3% increase will significantly slow demand but it might. Now take into account rising OPEC production and a glut of spare production capacity around the globe and it is no wonder why the oil upward momentum has been limited.

Check Phil out on the Fox Business Network! And sign up for his trade buy and sell points by calling him at 800-935-6487 or emailing him at pflynn@pfgbest.com.



Share

Total Profits Soar on Higher Oil, Refining

French oil company Total posted a 54 percent profit rise on Friday as higher oil and gas prices and strong refining margins lift industry earnings worldwide. Finnish refiner Neste Oil also reported improved profits after similarly strong performances from sector heavyweights Exxon Mobil and Shell on Thursday. Total said net income, excluding unrealized gains related to changes in the value of inventories, was 2.875 billion euros in the third quarter, boosted by gains from selling oil fields.

Stripping out one offs, the result was up 32 percent and in line with analysts' average forecasts. Neste said fatter refining margins lifted its operating profit, excluding inventory gains or losses, by 36 percent to 57 million euros ($79 million), in line with a mean forecast in a Reuters poll. The world's largest non government controlled oil company by market value, Dallas based ExxonMobil, reported a 55 percent jump in net income on Thursday, while industry No. 2, Royal Dutch Shell reported an 18 percent rise, which would have been higher but for non cash charges......Read the entire Reuters article.


How To Find Winning Trades In Any Market

Share

Crude Oil Daily Technical Outlook For Friday Morning Oct. 29th

Crude oil was lower overnight as it extends this week's decline. Stochastics and the RSI are turning neutral to bearish signaling that sideways to lower prices are possible near term.

If December renews last week's decline, trendline support drawn off the August-September lows crossing near 78.72 is the next downside target. Closes above Monday's high crossing at 83.28 are needed to confirm that a short term low has been posted.

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 Friday morning is 82.11

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 78.72


Jump Start Your Trading, Get Market Club Today

Share

Crude Oil Pares Monthly Gain as Asian Shares Decline, Dollar Rebounds

Crude oil fell in New York, trimming a second monthly gain, as Asian equities dropped and the dollar’s rebound curbed investor demand for raw materials. Crude gave up yesterday’s 0.3 percent increase as equities declined, driving the MSCI Asia Pacific Index toward its second weekly drop. Crude stockpiles in the U.S., the world’s biggest oil consuming nation, reached the highest in 17 months after surging 5 million barrels in the week ended Oct. 22, according to Energy Department data. Futures have climbed 2.2 percent this month after an 11 percent rally in September.

“There’s no real consensus in markets so that’s why you’re getting this choppy trading where people are changing their view quite regularly, and that’s creating volatility,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “It does seem to be more sentiment driven and currency driven.” Crude for December delivery declined as much as 55 cents, or 0.7 percent, to $81.63 a barrel in electronic trading on the New York Mercantile Exchange. It was at $81.71 at 1:50 p.m. Singapore time. Yesterday, the contract added 24 cents to $82.18. Prices, little changed this week, have gained 3 percent since the start of the year.

The dollar climbed 0.4 percent to $1.3876 against the 16 nation euro, damping the appeal of commodities as a hedge against inflation. The yen rose against all major currencies......Read the entire article.


Every Once in a While, You Find Something Amazing....Check out Trend TVShare

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

CNBC's Sharon Epperson discusses the day's top business and financial stories, and looks ahead to where oil and gold are likely headed tomorrow.



John Murphy is one of the best technical analysts out there....check out this exclusive seminar for free

Share

Live SP500 Trading Video & Analysis

From Chris Vermeulen at The Gold And Oil Guy.com.....

Many have been wondering what the newly upgraded service The Gold And Oil Guy.com provides so I have put together this report so you can see the pre-market morning video, updates, charts and trades.

Watch "Live SP500 Trading Video & Analysis"



Share

Indexes, Crude Oil, Natural Gas and Gold Close Higher on the Back of the Weaker U.S. Dollar

The S&P 500 index closed slightly higher on Thursday and the mid range close sets the stage for a steady opening on Friday. 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 1167.57 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 Wednesday's low crossing at 1167.80. Second support is the 20 day moving average crossing at 1167.58.

Crude oil closed higher on Thursday and the mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI are neutral to bullish signaling that a short term low might be in or is near. Closes above the reaction high crossing at 83.28 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 Monday's high crossing at 83.28. Second resistance is last week's high crossing at 84.80. First support last week's low crossing at 79.90. Second support is the August-September uptrend line crossing near 78.55.

Natural gas closed sharply higher on Thursday as it extends this week's short covering rally. Stochastics and the RSI are bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.930 are needed to confirm that a short term low has been posted. If December renews this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 20 day moving average crossing at 3.930. Second resistance is the reaction high crossing at 4.207. 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 Thursday but remains poised to extend this month's decline. The high range close sets the stage for a steady to higher opening on Friday. 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 Monday's high crossing at 1349.50 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 1343.40. Second resistance is Monday's high crossing at 1349.50. 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 Thursday ending a two day short covering bounce. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain 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 renews 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 Wednesday'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.

Why Diversification Doesn't Work

Share

Phil Flynn: Crude Surge!

Let’s forget all that quantitative easing stuff for a moment and focus on some of that old time supply and demand stuff. The Energy Information Agency reported that crude oil supplies hit the highest level ever, in this county, for this time of year. Well at least since the EIA has been tracking monthly data. After a whopper build of 5.0 million barrels, we see supply hit a hefty 366.2 million barrels which according to Dow Jones newswires is the highest level of supply at this time of year since 1931. To put that in perspective, that was a year when the “Model A” was the car of choice for many Americans and Herbert Hoover was President.

Of course this bounty of crude supply did not translate to gasoline supply which according to the EIA fell 4. 4million barrels last week and probably kept the entire petroleum complex from falling totally apart. Gas exports were a contributing factor as the strike in France created an increased demand for our supply. Gasoline production increased last week, averaging 9.2 million barrels per day while imports a mere 1.0 million barrels per day. Over the last four weeks, motor gasoline demand has averaged 9.0 million barrels per day, down by 0.8 percent from the same period last year.

Distillates, according the EIA, fell by 1.6 million barrels. If the French had not been siphoning off supply, that number might have been larger. The impact of the strike influenced our demand numbers which averaged 3.9 million barrels per day over the last four weeks, up by 8.7 percent from the same period last year. Distillate fuel demand has averaged 3.9 million barrels per day over the last four weeks, up by 8.7 percent from the same period last year.

The EIA reported that refineries operated at 83.7 percent of their operable capacity last week and over all oil use hit the lowest level since December. Demand is still weak over all and may be restricted somewhat by the price spike caused by the QE2 threat! With oil trading in a tight trading range for the majority of this year it is time to get Phil's daily buy and sell points. Just call him at 800-935-6487 or email him at pflynn@pfgbest.com. You can also catch him every day on the Fox Business Network!


Share

ExxonMobil Beats Street

ExxonMobil is set to open higher on earnings, with Jason Gammel, Macquarie Capital USA



Get a FREE Trend Analysis for ExxonMobil

Share

Bloomberg Analysis: Crude Oil Faces Resistance at $81.74 a Barrel

Crude oil in New York is facing resistance at $81.74 a barrel, setting the stage for prices to climb to $87 or fall to $78, based on levels using Fibonacci analysis, the Schork Group Inc. said. Intra-day futures prices have straddled the 76.4 percent retracement level of $81.74 for nine of the past 11 trading sessions, Schork Group President Stephen Schork said in a report yesterday. Prices may push to the top of the Fibonacci range at $87.15, the highest price this year, or drop to $78.40, depending on whether the U.S. Federal Open Market Committee decides to buy government securities to boost economic growth.

“This is the textbook definition of sideways trading, What are the markets waiting for?” the report said. “We are waiting for the FOMC meeting and its implication for the dollar before we place our bets.” The FOMC, which makes decisions on money supply and U.S. interest rates, is set to meet on Nov. 2 and Nov. 3. A decision to buy government securities, known as quantitative easing, may cause the dollar to decline against other currencies, increasing the investment appeal of commodities. The $78.40 a barrel level for crude is the 61.8 percent retracement from the $87.15 high for the year.

Futures for December delivery on the New York Mercantile Exchange traded at $82.13, up 19 cents, at 3:21 p.m. Singapore time. Prices have risen 3.5 percent this year. The Fibonacci sequence, identified by Italian mathematician Leonardo Fibonacci in the 13th century, is used by traders in financial markets to predict points of support and resistance.

Courtesy Bloomberg News

Bloomberg reporter Christian Schmollinger can be reached at christian.s@bloomberg.net

Share