EIA: North Dakota's Oil Production Has More Than Quadrupled Since 2005

North Dakota's oil production averaged over 460 thousand barrels per day (bbl/d) in September 2011, more than four and one half times its September 2005 level. Although the State's oil production growth slowed during the first few months of 2011, more favorable weather conditions helped operators significantly boost output in June, July, August, and September. North Dakota currently trails only Texas, Alaska, and California among oil-producing States.

The early 2011 slowdown in the State's oil production growth was due in large part to an especially severe winter and spring flooding that hampered exploration and development activity. Through May, monthly increases averaged just over 1%, well below the average monthly production growth of about 3% in 2010.

Source: U.S. Energy Information Administration, based on the North Dakota Department of Mineral Resources.

North Dakota operators reported stronger production gains more recently. In June 2011, oil production averaged 385 thousand bbl/d, an increase of nearly 6% over May. In July, oil production grew by more than 10% from the previous month, averaging 424 thousand bbl/d. Production in August and September rose by 5% and 4%, respectively. According to North Dakota's Department of Mineral Resources (DMR), warmer and dryer weather has resulted in a sharp increase in active drilling rigs and hydraulic fracturing activity as operators escalate exploration and development programs.

Production increases in North Dakota are mainly associated with accelerating horizontal drilling programs in the Bakken shale formation situated in the northwest portion of the State (and extending into Montana and portions of Canada). By combining horizontal wells and hydraulic fracturing (the same technologies used to significantly boost the Nation's shale gas production), operators increased North Dakota's Bakken oil production from less than 3 thousand bbl/d in 2005 to over 230 thousand bbl/d in 2010.

Citing a backlog of over 350 wells awaiting fracturing services, the DMR anticipates further oil production increases through the remainder of 2011 and over the next several years (reaching as much as 750 thousand bbl/d by about 2015, up from its earlier estimate of 700 thousand bbl/d mentioned in This Week in Petroleum). According to the DMR, the State's crude oil takeaway capacity (via pipeline, rail, and truck) is adequate to accommodate near term projected production increases.


Risk Surrounds Gold and the SP 500

Phil Flynn: Arab Spring Sprung

Ah another sign of spring. No, not the weather but the Arab spring. While oil got slammed yesterday on European Sovereign debt woes and fears that France may get a downgrade, the focus today may be on a new round of sanctions on Iran and another revolution in Egypt.

Oh sure it helps too that the rating agencies reaffirmed the US credit ratings after the Super Committee seemed to lose its super powers. Reuters News said, "rating agencies Standard & Poor's and Moody's said there will no immediate downgrade of their credit ratings on the United States due to the failure of a congressional "super committee" to reach an agreement on debt reduction. But Fitch, the third leading ratings agency, which currently has the most positive rating of the three on U.S. debt, said it could cut the outlook on its triple-A" rating, with a downgrade an outside possibility."

Yet while gold and silver plummeted, oil prices fought back off the lows despite the pressure in the outside markets as pictures of violence in Egypt flashed across the TV screen. Word that protesters were demanding an end to the military rule that has been in place since Hosni Mubarak was deposed caused the country's interim cabinet to resign. Yet the masses in the second Egyptian revolution don't seem to be buying it and appear even more determined than some of the "Occupy Wall Street" folks......Read Phil's entire article.


How to Trade Oil ETFs When $100 Per Barrel is Reached

Natural Gas Bulls Score an "Outside Up Day" in Monday Trading

Crude oil [now trading January contract] closed down $0.53 a barrel at $97.14 today. Prices closed nearer the session high today. A stronger U.S. dollar index again today and a sell off in the U.S. stock market pressured energies. Recent price action in crude does hint that a near term market top is in place. Crude bulls do still have the overall near term technical advantage, but they have faded.

Natural gas [also trading January contract] closed up 7.7 cents at $3.573 today. Prices closed nearer the session high today after hitting another fresh contract low early on. Today's price action scored a bullish “outside day” up on the daily bar chart and if there is good follow through buying on Tuesday then that would confirm a bullish “key reversal” up on the daily bar chart, which could be one early technical clue that a market low is finally in place. But right now the bears still have the solid overall near term technical advantage.

December gold futures closed down $56.40 an ounce at $1,668.90 today. Prices closed near the session low today as the market was hammered to a fresh four week low. The key “outside markets” were bearish for gold today, as the U.S. dollar index was firmer and crude oil prices were lower. Near term technical damage has been inflicted recently, including more today. Bears now have the slight near term technical advantage.


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Crude Oil Takes a Bearish Tone as January Contract Comes Into Play

Attention we are now tracking the January contract.

As we mentioned last week, we felt that the crude oil market was topping out. In retrospect, we have confirmation that is indeed the case. We are now expecting and look for support to come in at $94.55 (basis the January contract), which is a 61.8% Fibonacci retracement. At the present time both our monthly and weekly trade triangles remain in a positive mode, which is the direction of the major long term trend. Resistance is the $100 level. Long term, Intermediate term should be long this market with appropriate money management stops.

Combined Strength of Trend Score = +55

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative


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Risk Surrounds Gold and the SP 500

By JW Jones - Options Trading Signals.com

The current trading environment is one of the most difficult that I can recall in recent memory. Risks abroad regarding the European sovereign debt crisis is keeping market participants on edge as headline risk seemingly surrounds traders at every turn.

In addition to the risk posed by Europe, the market’s reaction to the Congressional Super Committee’s upcoming statements also poses risks. As it stands now, the media is reporting that the committee is in gridlock and has yet to compromise. The deadline for the Super Committee is Wednesday, November 23^rd. The gridlock leads to uncertainty, and Mr. Market hates uncertainty. High levels of uncertainty corresponds with increased volatility levels, thus caution is warranted.

Recently I have been actively trading around the wild price action, but I have been utilizing smaller position sizes in light of the elevated volatility levels. In addition to the smaller position sizes, I have been aggressively taking profits and moving stops in order to protect trading capital.

This past week, members of my service enjoyed two winning trades. We were able to lock in gains on a SPY Put Calendar Spread for a nice 20% gross gain. On Friday we closed a USO Put Calendar Spread for a gross gain of 17%. These trades were relatively short term in duration, but the gains they produced were strong.

Both trades took advantage of increased volatility which resulted in enhanced profits. If volatility remains elevated going forward which I expect, these types of trades will offer great risk / reward going forward. Volatility is an option traders friend, and this past week members of my service were able to lock in some strong gains with relatively muted levels of risk.

Gold Futures

I have not written much about gold recently as I have honestly not seen a great deal of opportunity in either direction there. The price action has been quite volatile, but this past week we saw gold futures sell off sharply. I believe the explanation for the selloff is partially due to strength in the U.S. Dollar. The daily chart of the U.S. Dollar Index is shown below:

The recent selloff in gold can likely be attached to the increase in margin calls around the world as a likely consequence of the MF Global bankruptcy. Uncertainty surrounds the commodities market as the collapse of MF Global has interrupted traditional capital flows and broad based volume around the world. The MF Global situation continues to provide a negative headwind for financial markets in general.

I continue to be a long term bull regarding precious metals as nearly every central bank is either printing money deliberately or is increasing the money supply through quantitative easing. With multiple calls coming out of Europe over the weekend for the European Central Bank to print money to monetize European sovereign debt, it may not be long before the ECB begins their own quantitative easing program. In the long term this can only mean higher prices for gold.

Right now the short term looks bearish for gold as the daily chart of gold futures shows gold tested near the top of a recent rising channel and failed. The selloff was strong, but  a pullback here makes sense from a technical perspective. The daily chart of gold is shown below:

The longer term time frame continues to remain technically positive for the yellow metal. As long as gold prices hold in their multi-year rising channel, higher prices remain likely. Right now the $1,500/ounce price level needs to hold as support if the bulls are going to remain in control in the long term time frame. The weekly chart of gold futures shown below illustrates the long term rising channel:

Right now we are in a seasonally strong period for gold. I am going to be watching closely in coming weeks for a solid entry point to get long the yellow metal for a longer term time frame. Right now the short term remains bearish, but the longer term is bullish from technical and fundamental viewpoints.

S&P 500

The S&P 500 Index sold off sharply during the past week. In my most recent article, I discussed two key price levels to monitor to the downside. The key support levels were the 1,230 and 1,190 price levels respectively. The bulls need the 1,190 area to hold as support to give them any chance for a “Santa Claus Rally” into year end.

Last week the S&P 500 Index closed below the 1,230 support level meaning the 1,190 area has to hold. Otherwise, we could see a sharp selloff into the end of the year. The daily chart of the S&P 500 below illustrates the key support levels:

The S&P 500 looks vulnerable to the downside presently. However, headlines coming out of Europe and/or the Super Committee this week could push prices higher. The key pivot line remains around the 1,257 price level on the daily chart. If the bulls can regain the 1,257 price level on a weekly close a test of 1,290 will become more likely. However, as long as prices remain below 1,230 and 1,257, the S&P 500 is vulnerable to additional downside.

I would not be shocked to see the S&P 500 push higher this week to work off short term oversold conditions. Truncated weeks result in lower than average volume which generally favors the bulls. However, in this environment anything could seemingly happen. Risk is high in either direction.

Subscribers of Options Trading Signals have pocketed more than 150% return in the past few months. If you’d like to stay ahead of the market using My Low Risk Option Strategies and Trades check out my OTS service at Options Trading Signals.com and join the hundreds that are taking home the profits.

Precious Metals Charts Point to Higher Prices – Part II

Over the recent couple months the precious metals charts have made some sizable moves. Most investors and traders were caught off guard by the sharp avalanche type sell off and lost a lot of hard earned capital in just a few trading sessions. Gold dropped over 20% and silver a whopping 40%.

The crazy thing about all this is that these types of moves in precious metals can be avoided and even taken advantage of in certain situations. There is no reason for anyone to continue holding on to those positions after they pullback 6% of more because of the type of price and volume action both gold and silver had been displaying in the past few sessions.

I warned investors on August 31^st that precious metals were about to top any day and that protective stops should be tightened or taking profits was also a smart move. It was only 2 trading sessions later that precious metals topped and went into a free fall. You can get my detailed analysis if you read my report “Dollar’s On the Verge of a Relief Rally Look Out!”.

A couple weeks later once precious metals has found support and the uneducated investor’s were licking their wounds wondering what the heck just happened to their trading accounts… I put out another report but this time with a bullish outlook. Silver was currently trading at $29.96 and I had a $35-$36 price target over the next two months. Gold was trading down at $1611 and I saw it heading back up to $1750-$1775 area before finding resistance and pulling back. Both these forecasts were reached over the next two months. You can quickly review the report called “Precious Metals Charts Point to higher Prices” for more info.

With all that said, what exactly are the charts saying right now?

Current Precious Metals Charts Summary:

The past 6 weeks we have been watching both gold and silver struggle to hold up but they have managed to grind their way to my price targets. After reaching those targets a couple weeks ago sellers have stepped back into the precious metals market and put pressure these metals.

Last week gold and silver started to pullback in a big way with rising volume. This could just be the start of something much larger which I will cover in just a moment.

The wild card for precious metals and for every stock and commodity for that matter is Europe. Every other day there seems to be headline news moving the market and most of takes place in overnight trading for those of us living in North America. It’s this wild card which is keeping me from getting aggressive in the market right now.

Let’s take a look at the charts…

Silver Precious Metals Chart:

Silver is currently in a down trend and may be starting another leg down this week. Long term I am bullish but for the next couple months I am remain neutral to bearish for silver until it forms a base to start a new uptrend from.

Precious Metals Charts

 Gold Precious Metals Chart:

Currently I am neutral/bearish on gold. If it can trade sideways for a few weeks then I will become bullish.

Precious-Metals-Charts

 Precious Metals Charts Conclusion:

In short, I feel there is a good chance the US dollar will continue higher and if that happens we should see strong selling in North American equities, commodities and likely on the precious metals charts.

Financial markets around the world are at a tipping point meaning something really big is about to take place. The question is which way will investment move. The only thing we can do is trade with the current trends, price patterns and volume.

At this time I still see a higher dollar and that means lower stocks and commodities. This could change at the drop of a hat depending on the news that comes out of Europe so the key to trading right now is to remain cash rich and taking only small positions in the market.

If you would like learn more about etf trading and receive my daily pre-market videos, intraday updates and detailed trade alerts which even the most novice trader can follow then join my FREE trading education newsletter and my premium trading alert service here at  The Gold and Oil Guy.com

Chris Vermeulen

ONG: Crude Oil Weekly Technical Outlook

Crude oil rose to as high as 103.37 last week but failed to sustain above 100 psychological level and retreated. A short term top should be formed and initial bias is mildly on the downside for deeper pull back towards 94.65 support. Nevertheless, downside is expected to be contained by 89.16/17 cluster support (50% retracement of 74.95 to 103.37) and bring rebound. On the upside, above 100.15 minor resistance will turn bias neutral and bring consolidations. But break of 103.37 resistance is needed to confirm rally resumption. Otherwise, we'll stay near term neutral and expect more sideway trading first.

In the bigger picture, current development indicates the fall from 114.83 has finished at 74.95. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not finished yet. As long as 89.16/7 support holds, we'd now favor a break of 114.83 resistance to resume the rally from 33.2. Meanwhile, break of 64.23 support is needed to confirm completion of the whole rise from 33.2. Otherwise, we'll continue to stay bullish in crude oil.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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

One to Three Years Left For Gold’s Run

Gold has a couple more years to outperform the stock market before the end of this leg, if history is any guide.

This week's chart looks at the Dow Jones Industrial Average expressed in terms of the number of ounces of gold it would take to "buy" the DJIA's index value.  This is a popular comparison that a lot of chartists like to show, especially when it gets up to a really high level like it did back in 1999-2000, at the end of the tech bubble.

 

It has been falling since then, as gold prices have gone higher.  Having an ounce of gold become more valuable means that it takes less of it to buy something else.  And the (violently) sideways movement of the stock market over the past decade has allowed gold's price rise to pull this ratio back down toward "normal" levels seen over the past century.

Based on this way of looking at the DJIA, there have been 3 big bubble tops in the DJIA as expressed in ounces of gold.  What I find interesting and relevant just now is that the declines out of those first two took 13 and 14 years respectively.  So if the current decline follows the same course, then we can expect this ratio to bottom out about 13-14 years from the most recent top.

Doing the math on that is a little bit problematic, since the last top was actually 2 tops, in August 1999 and October 2000.  So if we take 13 years from 1999, and 14 years from 2000, that gives us a date range of 2012-2014 for when to expect a bottom for this ratio. 

That tells us about the "when", but it does not tell us about the "how far".  The bottoms for this ratio in the 1930s and 1940s were down below 3.0, and it got all the way down to 1.3 at the low in January 1980 (based on monthly closes).  If the DJIA were to stay around 12,000 for the next few years, then a ratio of 2-3 would mean gold at around $4000 to $6000 an ounce.  Or the ratio could get down below 3 by having gold stay where it is, and the DJIA get cut in half, or some other combination of movements.  That's how the math works. 

It is risky to forecast both the timing and the price for the end of a trend, so I'll refrain from endorsing those numbers.  I just offer them as food for thought.  Nothing mandates that this ratio reach any particular level. 

The more important conclusion to take from this is that the decline in this ratio does not seem to be done, and is not due to be done for a little while longer.  But the end to this decline in the DJIA/gold ratio is going to come someday, probably when the Fed decides to wake up and start fighting inflation again via higher interest rates.  That does not appear to be on their agenda any time soon. 

Tom McClellan
Editor, The McClellan Market Report

Crude Oil Confirms Thursdays Key Reversal Down Day

Crude oil closed lower on Friday confirming yesterday's key reversal down and closed below the 10 day moving average crossing at 98.11 hinting that a short term top might be in or is near. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought 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 95.46 are needed to confirm that a short term top has been posted. If December renews the rally off this month's low, the 75% retracement level of the May-October decline crossing at 105.42 is the next upside target. First resistance is the 75% retracement level of the May-October decline crossing at 105.42. Second resistance is the 87% retracement level of the May-October decline crossing at 110.46. First support is the 20 day moving average crossing at 95.46. Second support is the reaction low crossing at 89.17.

Natural gas closed lower on Friday as it extended this year's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.669 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.525. Second resistance is the 20 day moving average crossing at 3.669. First support is today's low crossing at 3.285. Second support is monthly support crossing at 3.225.

Gold posted an inside day with a higher close on Friday as it consolidated some of Thursday's decline but remains below the 20 day moving average crossing at 1748.40. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If December extends this week's decline, the reaction low crossing at 1681.20 is the next downside target. Closes above Monday's high crossing at 1797.60 are needed to confirm that a short term top has been posted. First resistance is Monday's high crossing at 1797.60. Second resistance is the 75% retracement level of the 2008-2011 rally crossing at 1826.50. First support is Thursday's low crossing at 1711.00. Second support is the reaction low crossing at 1681.20.


How to Trade Oil ETFs When $100 Per Barrel is Reached

Crude Ends Below $98 As Rally Fades

Crude oil futures prices dropped Friday, tipping under $98 a barrel in further retreat from the triple digit levels hit earlier this week. After topping $100 Wednesday following the sale of a key U.S. pipeline, traders have pulled back due to concerns about ripple effects from Europe's debt crisis and worries that crude rallied too high, too fast.

While the sale and planned reversal of the Seaway Pipeline should ameliorate a U.S. supply glut beginning sometime next year, in the short term the effect on the physical crude markets will be minimal. For that reason, the spike in oil futures appeared to be an overreaction for many market participants, who opted to lock in returns.

"It's reached levels where you should be taking profits," said Brian LaRose, an energy analyst at brokerage United-ICAP. "There is the risk here in the short term for a substantial correction." Light, sweet crude for December delivery settled $1.41, or 1.4%, lower at $97.41 a barrel on the New York Mercantile Exchange, after falling as low as $96.64 in earlier trading.....Read the entire Rigzone article.

So Much For One Hundred Dollars Per Barrel

Much was made of WTI crude oil passing the $100.00 mark and many thought that if we closed above $100 a barrel we would be in some type of new era for oil. Well that era is now over and lasted only a day as European debt fears, as well as the realization that the reversal of the seaway pipeline ultimately is more bearish then bullish. A terrible Italian and now Spanish debt auction stirred fears that the Euro zone credit woes are expanding.

Lack of confidence in the EU is causing buyers of Eurozone debt to command post EU record highs. Fear of a EU meltdown is overshadowing the fact that in the US our economy is starting to recover. More evidence yesterday came with a strong jobless claims number, retail sales, housing starts as well as other data that seems to suggest we are starting to move. The dollar and bond rallied in a safe haven bid and commodities started to tumble.

Get ready to party! Natural Gas supply hit a record high! The Energy Information Agency reported working gas in storage was 3,850 Bcf as of Friday, November 11, 2011. This represents a net increase of 19 bcf from the previous week. Stocks were 14 bcf higher than last year at this time and 224 bcf above the 5 year average of 3,626 bcf. In the East region, stocks were 58 bcf above the 5 year average following net injections of 9 bcf.

Stocks in the producing region were 148 bcf above the 5 year average of 1,098 bcf after a net injection of 11 bcf. Stocks in the West region were 18 bcf above the 5 year average after a net drawdown of 1 bcf. At 3,850 bcf, total working gas is above the 5 year historical range. Now the question is whether or not we will end the winter at a record.

Reuters News reports, "U.S. natural gas inventories should end winter at a 21 year peak after starting the heating season at an all time high for a third straight year, creating a buffer for consumers over the summer, according to a Reuters poll of traders and analysts. Without winter temperatures that come close to matching last year's severe cold, brimming inventories next spring could spell more trouble for prices, which hit a two year low this week of $3.11 per mm Btu despite the fast approaching peak heating demand season.

The Reuters storage poll put the consensus forecast for end winter inventories at 1.864 trillion cubic feet, nearly 300 billion cubic feet, or 19 percent, above average and the highest since 1991 when stocks in late March stood at 1.912 tcf. Such high inventories at the start of the spring and summer stock building season give utilities more bargaining power when rebuilding supplies for next winter, and can help lower power costs for consumers during summer when prices can go up as air conditioners come on."

Phil Flynn

Make sure you are getting a trial to Phil's daily trade levels by emailing him at pflynn@pfgbest.com to open your account.

Crude Oil Bulls Lose Ground on Key Reversal Down Day

Crude oil posted a key reversal down on Thursday and below the 62% retracement level of the May-October decline crossing at 100.08 as it consolidated some of the rally off October's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If December extends the rally off this month's low, the 75% retracement level of the May-October decline crossing at 105.42 is the next upside target. Closes below the 20 day moving average crossing at 94.97 are needed to confirm that a short term top has been posted. First resistance is the 75% retracement level of the May-October decline crossing at 105.42. Second resistance is the 87% retracement level of the May-October decline crossing at 110.46. First support is the 10 day moving average crossing at 97.83. Second support is the 20 day moving average crossing at 94.97.

Natural gas closed higher due to short covering on Thursday as it consolidated some of this year's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.695 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.573. Second resistance is the 20 day moving average crossing at 3.695. First support is Wednesday's low crossing at 3.326. Second support is monthly support crossing at 3.225.

Gold closed lower on Thursday and below the 20 day moving average crossing at 1743.90 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. If December extends today's decline, the reaction low crossing at 1681.20 is the next downside target. Closes above Monday's high crossing at 1797.60 are needed to confirm that a short term top has been posted. First resistance is Monday's high crossing at 1797.60. Second resistance is the 75% retracement level of the 2008-2011 rally crossing at 1826.50. First support is today's low crossing at 1711.00. Second support is the reaction low crossing at 1681.20.


How to Trade Oil ETFs When $100 Per Barrel is Reached

Nymex Crude Tips Back Below $100 Per Barrel

U.S. oil futures slid back below $100 a barrel Thursday, reversing the previous day's gains, as doubts surfaced about the economy's ability to stomach high oil prices.

Light, sweet crude for December delivery settled down $3.77, or 3.7%, to $98.82 a barrel on the New York Mercantile Exchange. The December contract is set to expire at the end of trading Friday. The more heavily traded January contract settled down $3.67, or 3.6%, to $98.93 a barrel.

Brent crude on the ICE Futures Europe exchange recently traded down $2.89, or 2.6%, to $108 a barrel.

Nymex futures pushed lower on a wave of selling, as traders thought twice about whether $100 crude was sustainable given the cracks in the global economy. A sinking stock market in the U.S., combined with intensifying worries about Europe's sovereign debt crisis, took the wind out of a price rally that had dominated the oil market for the last several weeks.....Read the entire Rigzonearticle.


How to Trade Oil ETFs When $100 Per Barrel is Reached

Pipeline Reversal Of Fortune

Don't think of it as crude oil prices rallying, think of it as Brent crude prices falling. Oil prices surge above $100 a barrel for the first time since last July as the "broken" global oil market gets fixed in a big way. Conoco Phillips had a big payday by selling its interest in Gulf Coast Seaway pipeline in Cushing, Oklahoma to Enbridge Corporation which will reverse the flow of oil out of instead of into the NYMEX delivery point in Cushing, Oklahoma. This is a big step to ending the bottleneck in Cushing and allow the bonanza of Canadian oil sands crude and shale crude to be sent to Gulf Coast refiners that have too often had to rely on foreign imports of crude.

Followers of crude imports realize the cost of imported crude was rising as evidenced by what became a record differential between the Brent Crude versus West Texas Intermediate spread. West Texas Intermediate (WTI), which historically Brent Crude traded at a premium to, reversed on a host of challenges. In Oklahoma the influx of crude exceeded refiners ability, or at least desire, to run crude at those rates that would use the influx of new sources of oil. In the Gulf Coast where supplies were tight the infrastructure did not exist to transport the oil in sufficient amount. The US pipelines remain the most popular transport option, carrying about two-thirds of U.S. oil.....Read the entire article.


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Crude Oil Pulls Back Overnight, Bulls Maintain the Advantage

Crude oil was lower due to profit taking overnight as it consolidates some of the rally off October's low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional short term gains are possible. If December extends the rally off October's low, the 75% retracement level of the May-October decline crossing at 105.42 is the next upside target. Closes below the 20 day moving average crossing at 95.08 would confirm that a short-term top has been posted. First resistance is the 75% retracement level of the May-October decline crossing at 105.42. Second resistance is the 87% retracement level of the May-October decline crossing at 110.46. First support is the 10 day moving average crossing at 98.04. Second support is the 20 day moving average crossing at 95.08.

Natural gas was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.693 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.570. Second resistance is the 20 day moving average crossing at 3.693. First support is the overnight low crossing at 3.325. Second support is monthly support crossing at 3.225.

Gold was sharply lower due to profit taking overnight as it consolidates some of the rally off September's low. Stochastics and the RSI are overbought 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 1745.20 would confirm that a short term top has been posted while opening the door for additional weakness during November. If December renews the rally off September's low, the 75% retracement level of September's decline crossing at 1826.50 is the next upside target. First resistance is the 75% retracement level of September's decline crossing at 1826.50. Second resistance is the 87% retracement level of September's decline crossing at 1875.10. First support is the 20 day moving average crossing at 1745.20. Second support is the reaction low crossing at 1681.20.


Don't miss our recent post "How to Trade Oil ETFs When $100 Per Barrel is Reached"

Rigzone: ANWR Bill Boosts Jobs, Domestic Energy Production

Citing an increase in domestic energy production and job creation, the House Natural Resources Committee proposed legislation Friday that would open up the Arctic National Wildlife Refuge for oil and natural gas production.

Committee Chairman Doc Hastings, of Washington, and Alaska Rep. Don Young announced plans to introduce the Alaskan Energy for American Jobs Act, which is part of the energy and infrastructure jobs bill announced by Ohio Rep. John Boehner in early November.

Officials said the act would open less than 3 percent of ANWR's 19 million acres in the North Slope, which the U.S. Geological Survey estimates contains at least 10.4 billion barrels of oil and at peak production can yield nearly 1.5 million barrels of oil per day -- more than the current daily U.S. imports from Saudi Arabia. The area was specifically set aside for energy production by Congress and President Jimmy Carter.

"ANWR is a site that is easily accessible, has great potential and is one of America's most highly concentrated areas of energy resources," Hastings said. "An investment in America's energy security is an investment job creation and infrastructure projects that will benefit every American without job destroying tax increases."

The committee held an oversight hearing in September with local Alaskans vocalizing their support for the bill, saying the plan "benefits local communities, tribes, businesses, Alaska and the nation."

Young said the Highway Trust Fund is struggling "to stay in the black" and believes the Alaskan Energy for American Jobs Act will provide new sources of revenue to fund infrastructure projects.

"This is a common sense plan; the revenue generated from drilling in ANWR will help keep the Highway Trust Fund from defaulting and will create jobs at the same time," Young said.

Carey Hall, an Ice Road Truck Drive with Carlile Transportation Systems believes the plan will keep the Trans-Alaska Pipeline from shutting down, securing jobs for decades to come.

"ANWR is not a band aid for our debt and economy; it is a long term sustainable solution," Ice Hall said during the oversight hearing.

Environmentalists aren't sold on the plan though, saying the benefits are exaggerated. In an interview with the Associated Press on Nov. 11, Pamela Miller said the "legislation is dead on arrival" and it proposes a "false solution to a real crisis." Sierra Club Alaska community organizer Lindsey Hajduk told the AP the connection to jobs is "weak".

Technological advancements have improved the safety of energy production while also lessening environmental impacts of drilling, such as using one drilling platform to cover a 28,000 foot radius -- larger than the size of Washington D.C.

"ANWR would be a great opportunity for the environmental community and the oil industry to work closely together and show what American technology and ingenuity could do," Alaska District Council of Laborers (ADCL) Tim Sharp said in the oversight hearing. ADCL represents approximately 5,000 Alaskan union members.

Fenton Okomailak Rexford, Tribal Administrator for the Native Village of Katovik, said development of the North Slope will keep his community alive by sustaining a local school and continuing to provide search and rescue, police and fire protection.

"We would not favor development of the Coastal Plain unless we were confident that development can occur without jeopardizing our way of life. Responsible development of ANWR is a matter of self determination for my people," Rexford said. "Development of the Coastal Plain of ANWR is a win-win situation for the American people, particularly for those of us who call this area home."

The bill is expected to move through the House in the coming weeks. The Subcommittee on Energy and Mineral Resources is set to hear testimony Nov. 18.


Posted courtesy of Rigzone.Com

EIA: Rail Delivery of Crude Oil and Petroleum Products Rising

More U.S. crude oil is being shipped by rail, especially from North Dakota where a lack of pipelines has companies relying on tank cars to bring the state's soaring oil production to market. Pipelines remain the most popular transport option, carrying about two thirds of U.S. oil and petroleum products, but rail is on the rise.

The Association of American Railroads (AAR) tracks combined rail movements of oil and refined petroleum products. In the first ten months of 2011, nearly 300,000 tank cars transported U.S. oil and petroleum products, up 9.1% from the same period in 2010, according to AAR. The growth in petroleum by rail shipments is much stronger than the 1.8% increase for all railroad cargo combined during the same period.

While AAR does not issue separate data on crude oil and product shipments via rail, it notes that anecdotal evidence indicates most of the growth in the crude oil and petroleum products category is likely due to crude shipments. Based on different sources of rail traffic data, the trade group said shipments of crude oil and liquefied natural gas accounted for about 2% of all carloads in 2008, 3% in 2009, 7% in 2010, and about 11% so far in 2011. One carload holds 30,000 gallons of oil.

Tank cars are in strong demand in North Dakota, where oil production has soared from about 343,000 barrels per day (bbl/d) in January to a record high of about 464,000 bbl/d in September, according to North Dakota's Department of Minerals Resources (DMR), due to the increasing amount of crude oil extracted from rock in the Bakken Shale. DMR expects North Dakota will pass California during the second quarter of next year to become the third biggest oil-producing state. Burlington Northern Santa Fe (BNSF) and other railway companies are building or expanding terminals and adding tank cars to transport North Dakota's growing oil supplies to Gulf Coast refineries.

On November 7, the first crude oil unit train on the Bakken Oil Express, a newly constructed rail hub near Dickinson, North Dakota, departed via the BNSF Railway carrying its first shipment, 70,000 barrels of crude oil destined for St. James, Louisiana. The Bakken Oil Express receives Bakken-area crude oil by both truck and pipeline and has a current takeaway capacity of 100,000 bbl/d. The Bakken Oil Express is already planning a second phase of construction that would significantly expand its takeaway capacity to more than 250,000 bbl/d.

Deliveries of tank cars should total about 8,000 this year, up from only 4,839 last year, and then increase to 11,000 tank cars in 2012, according to Economic Planning Associates Inc., a consulting firm that tracks rail car assemblies. The firm does not have a breakdown of how many of the new tank cars will be devoted to carrying crude oil. Tank cars are also used for shipping ethanol, chemicals, fertilizer, and corn syrup.

Tank cars would also be useful in the major oil hub of Cushing, Oklahoma, where a glut of supply is depressing the key U.S. benchmark crude oil price. Pipelines bringing oil into Cushing from the north are nearly full and there is not enough pipeline infrastructure to move oil south out of the area to Gulf Coast refineries. The Surface Transportation Board (STB), the federal agency that resolves railroad rate and service disputes and reviews railroad mergers, told EIA that it saw little movement in recent months of crude oil out of Cushing by rail. Railway companies send the STB confidential information on their cargo shipments and where they are sending them.

Source: U.S. Energy Information Administration, based on the Association of American Railroads.
Note: Data are weekly average originations for each month, are not seasonally adjusted, and exclude U.S. operations of Canadian National Railways and Canadian Pacific Railway; one carload holds 30,000 gallons.

Crude Oil Opens at a Four Month High

Crude oil was slightly higher overnight before hitting $100 per barrel for the first time in nearly four months as it extends the rally off Octobers low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional short term gains are possible. If December extends the rally off Octobers low, the 62% retracement level of the May-October decline crossing at 100.08 is the next upside target. Closes below the 20 day moving average crossing at 94.17 would confirm that a short term top has been posted. First resistance is the 62% retracement level of the May-October decline crossing at 100.08. Second resistance is the 75% retracement level of the May-October decline crossing at 105.41. First support is the 10 day moving average crossing at 97.01. Second support is the 20 day moving average crossing at 94.17.

Natural gas was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.720 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.616. Second resistance is the 20 day moving average crossing at 3.720. First support is the overnight low crossing at 3.387. Second support is monthly support crossing at 3.225.

Gold was lower overnight as it consolidates some of last Friday's rally. Stochastics and the RSI are overbought 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 1738.50 are needed to confirm that a short term top has been posted. If December extends the rally off September's low, the 75% retracement level of September's decline crossing at 1826.50 is the next upside target. First resistance is the 75% retracement level of September's decline crossing at 1826.50. Second resistance is the 87% retracement level of September's decline crossing at 1875.10. First support is the 20 day moving average crossing at 1738.50. Second support is the reaction low crossing at 1681.20.

Phil Flynn: The Widow Maker Continues To Scream!

While the global markets fret about another subpar Italian auction and turmoil in Europe, the energy complex is worrying about global tightness in distillate supply. The heating oil versus gasoline spread continues to scream so refiners know where to put their focus. Demand is screaming, surging in Japan, China, South America and the spread has put in its best performance in years. Not only is heating oil trading at a premium to heat oil, something that would have been almost unthinkable just a few years ago, but has picked up a dime on the spread.


U.S. supply of distillate, when compared to demand, is at a four year low. Dow Jones reports, "Surging demand for heating oil and diesel fuel, at a time of slumping gasoline consumption, has pushed the price difference between the fuels to its highest level since January 2009r December delivery settled Friday at nearly 57 cents a gallon, or about 18%, higher than the price of RBOB gasoline futures. Early Monday, the gap widened to near 65c. EIA says US diesel/heating oil demand was at 3 1/2 year high in latest 4 weeks, while gasoline use is at a 12 year low for this time of year." US Exports of diesel are near an all time high.


Reuters News reported that, "Gasoil refining margins in Europe pushed higher on Monday, up to levels not reached since January 2009, as tight supply continued to bite and traders eyed the expected seasonal demand from Germany with the weather about to turn colder. The ICE gasoil crack was trading at around $21.58 a barrel at 1655 GMT, its highest level since January 2009, up from Friday's $19.74 a barrel." We have been telling you about the potential for this spread for some time!


Make sure you are getting Phil's daily trade levels and reports. Just email him at pflynn@pfgbest.com

Crude Oil, Natural Gas and Gold Bulls All Take a Slide

Crude oil closed lower due to profit taking on Monday as it consolidated some of the rally off October's low. The mid range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If December extends the rally off this month's low, the 62% retracement level of the May-October decline crossing at 100.08 is the next upside target. Closes below the 20 day moving average crossing at 92.96 are needed to confirm that a short term top has been posted. First resistance is the 62% retracement level of the May-October decline crossing at 100.08. Second resistance is the 75% retracement level of the May-October decline crossing at 105.41. First support is the 10 day moving average crossing at 95.59. Second support is the 20 day moving average crossing at 92.96.

Natural gas gapped down and closed sharply lower on Monday as it extends this year's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If December extends this year's decline, monthly support crossing at 3.225 is the next downside target. Closes above the 20 day moving average crossing at 3.758 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 3.686. Second resistance is the 20 day moving average crossing at 3.758. First support is today's low crossing at 3.449. Second support is monthly support crossing at 3.225.

Gold closed lower on Monday and the low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought 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 1726.00 would confirm that a short term top has been posted. If December extends the rally off September's low, the 75% retracement level of the 2008-2011 rally crossing at 1826.50 is the next upside target. First resistance is the 75% retracement level of the 2008-2011 rally crossing at 1826.50. Second resistance is the 87% retracement level of the 2008-2011 rally crossing at 1875.10. First support is the 20 day moving average crossing at 1726.00. Second support is the reaction low crossing at 1681.20.


How to Trade Oil ETFs When $100 Per Barrel is Reached