asr: this article sumps up the BULL/BEAR/Neutral case for OIL. we have 3 cases with eqaul weight from this $75 as of 11/26/09. so BULL + Neurtal has 2/3 chances so 75 is today's price . I can say we will see 85 by end of JAN 2011 that is in 2 months again.
Hiding behind gold's flashy moves, oil's the true performer
Despite a hefty drop in oil and gold in electronic trading Friday, oil prices have still jumped around 65% year to date, far outpacing gold's 31 % rise -- and that may only mark the beginning of oil's fancy footwork.
Crude-oil futures climbed to a front-month record high above $147 per barrel in New York in July of 2008, only to sink back to lows around the $35 level by December. Then by June, they managed to double in price to trade at the $70 mark
Essentially, the Great Recession and oversupply have created an economic and psychological barrier at $80 per barrel," said Anthony Sabino, a professor of law at St. John's University whose legal practice includes oil and gas law
With that in mind, James Williams, an economist at WTRG Economics, thinks a "price collapse is far more likely than a new record -- or even $90."
"Unlike oil, a number of other commodity plays are getting very susceptible to having the rug pulled out from under them when investors lose interest," said Neal Ryan, a managing partner at Ryan Oil & Gas Partners LLC.
"As other commodity markets start getting toppy, interest will return to the oil sector because there is the fundamental support to be long-term bullish that might not exist in other commodities," he said.
"I don't believe consolidating at the $70-$80 price range is setting up for a major step back -- quite the opposite," said Ryan. "As the global economy continues to recover, we'll see prices start a slow march upwards to the triple-digit level again, but the price rise should be orderly and not cause the same issues that the doubling in price over six months caused a year ago."
As Michael Lynch, president of Strategic Energy & Economic Research, points out: "there's a huge surplus of oil in floating storage right now which should be depressing prices, but isn't."
And much of oil's price gains have been attributed to the U.S. dollar's decline.
Without the "weak dollar story, this market does not have much to be excited about and prices would be quickly vulnerable to a substantial sell off, said Todd Hultman, editor of DailyFutures.com.
The dollar weakness explains some of the current price, but "it doesn't explain most of it," said Williams. "At some point, the futures market must come into balance with the physical supply, demand and stocks -- when it does, we are looking at oil prices in the $50 to $60 range."
So, "while you can always find an anemic green shoot, the U.S. economy is still shedding jobs, the consumer is spending less and saving more and a significant percentage of homeowners are upside down in their mortgages with homes worth less than what they owe," he said.
"Unemployment is high and likely to remain high throughout 2010. This is just not an economic environment that argues for oil anywhere near the current price," he said.
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we need to add this Brad Zigler hardassetinvestor.com to our OIL Elite list of fundamental analysis
1) Jim Ritter Bushe
2) hightower report
3) pfgbest Phil energy
4) Brad Zigler hardassetinvestor.com
5) MF global OIL daily update ( sent when trading with them )
6) need to read oil COT report
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11/12/09
Petroleum Inventories: EVERYTHING Was Drawn Down
asr: I need to learn about this swap and money managers and COT report of OIL ( I have COT book and search there is a COT blog , I may need to take a private lesson with COT blog guy ).
Investment interest in crude oil reached new heights last week as money managers—speculative investment funds—built a record net long exposure in futures. In a countermove, swap dealers flipped to a net short position for the first time since December 2008. Presently, money managers are the only long trading block in the futures market; commercial users/producers, swap dealers and noninstitutional traders are all short.
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PFGbest notes
No Where to run to 11/11/2009
But before we get too bearish, overnight industrial production numbers out of China could get the bulls jets revved up. The Chinese Industrial production output number surged 16.1%. Hey, I thought the Chinese government was trying to slow things down! Well obviously at this point, not as much as the market thinks.
China was one of the reasons the Energy Information Agency raised their oil demand outlook by 150,000 barrels a day. The EIA said sustained economic growth in China and other Asian countries is contributing to the beginning of a rebound in world oil consumption, leading EIA to revise its expectations for world oil consumption upwards for the second consecutive month. Of course 150,000 barrels a day in a globe with millions of barrels of spare production capacity probably isn’t bullish enough to break us out of this range.
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PFGBest post on 11/9/09
Getting Blown Away
The oil market is getting blown in different directions. On one hand, Friday’s dismal jobs report would seem to suggest that demand for oil will be bad in the US. That drove oil lower on Friday. Yet on the other hand the weak jobs number means the Fed should keep the stimulus machine stimulating. In fact if we see more weak data it may even raise the possibility of more quantitative easing in the future. That would be dollar bearish and commodity bullish. That seems to be one of the reasons that oil is rallying this morning. Another reason is weather.
Hurricane Ida is a killer storm and is shutting down production in the Gulf of Mexico. Matt Rogers at Commodity Weather Group, LLC says that hurricane Ida is
At this point it seem unlikely that there will be any major damage to the facilities in the Gulf yet the market has to be cautious. It is hard to determine how much of the rally in oil is Ida related and how much is it is dollar related.
Yet at the same time it seems that OPEC is pumping more oil. Mark Shenk With Bloomberg News reports that, "OPEC is increasing output at the fastest pace in two years, adding to near-record inventories and threatening speculators betting on $100 crude with losses." Shenk says that the number of options contracts to buy oil at $100 by March almost quadrupled in October and increased another 5.9 percent so far this month.
As traders piled in, OPEC boosted production 4 percent, or 1.1 million barrels a day, since March amid the worst global recession since World War II. Saudi Arabia’s King Abdullah has targeted $75 oil as a fair price for consumers and producers and has the capacity to increase pumping by about 50 percent, or 4 million barrels a day, enough for all of Brazil. The prospect of more supply comes with inventories in industrial countries already the highest since 1998, when oil collapsed to $10.”
asr: is this expected INCREASE saudis and OPEC oil production is causing OIL not to raise above 80 for last one week even with SP 1100 and EURO at 1.50 level. seems so
We're long December crude from apprx 7727 - raise stop to 7745!
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9/28/09 (monday):
0/ equity markets UP almost 1.7% SP gaining 18 points based on M&A activity.
1/ OIL varied from 66 to 67.75 and back to 67.0 level
1.2/ CNQ as usual showed 2% gain after OPEN against 1% of USO . then CNQ retreated to 1% then again back to 2%
2/ Phil said this:
Iran fired test missile. When Iran exports hover just above 2 million barrels a day, there are many oil producers waiting in line ready to pick up that extra slack. Saudi Arabia has enough spare production capacity to replace Iran’s exports two times over. Because of this, in a weird way the Iran’s lies and fireworks display might actually be more bearish for oil than bullish. Why you ask? Well because traders may seek the safety of the dollar ( bullish dollar) as this global crisis plays out. The dollar has had more impact on oil than supply anyway because we already know that we have plenty.
2.2/ EURO is 1.46 today down than usual 1.47 , USD firmed today confirming above Phil statement.
2.3 / above Phil's note may be holding else for 1.7% S&P gain oil should have gained easily 3% given their low of 66 , instead it gained 1.3% to 67.0
3/ JIM said fundamentals bearish this with this chart saying gasoline stocks are close to JULY peak high level.
DOE chart site here http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html
http://tonto.eia.doe.gov/oog/info/twip/twip_crude.html
4/ buying simple OIL CL or USO call is less risk option as JIM/Phil are bearish on OIL. on friday 66 at money call of $3 would have given $1.5 up today at one time should have given $1500 and easy low risk trade and exit in one day for 50% gain.
- even if market is up only 0.5% today OIL should have up atleast 1% , so getting out with this 1% is not bad
5/ here is basic reserach on option premium
for OIL USO or CL future the option premium is same that is 1.5% per week ( this is AT THE MONEY options premium )
- in case of USO that is 1.5% of $34 => 45 cents/week => $1.50 for 3 week before option expiry
- same % for CL that is for $66 => 1.5% is 90 cents/week so for 3 week contract $2.75
- so for 1 week for OIL 1.5% premium is not bad , if you break up "time volatality premium" say 65% and "price volatality premium" say 35% not bad for 1 WEEK preiod.
9/25/09:
1/ CL today at 66.07 ( +0.2%) while S&P betwen +1 and -7
2/ RIM with -15% down and durabled goods bad report pulled equities down
3/ morning CNQ rallied +2% by seeing OIL overnight recovery of +1% so at OPEN CNQ LONG should have been good trade to get out around +2% ( refer the other post of oil volatailty)
4/ at +2% , SHORT CNQ/LONG ES would have been good trade to trade the CNQ fade , for 2 hours ES was at +1 point and CNQ faded ( ofcourse after checking CNQ news )
5/ PFGbest lowered OIL short entry from 7400 to 6900 surprising given in the post IRAQ tensions OBama and western leaders pointed IRAQ secret nuclear facilities ( this should increase geo-political factor for OIL then why this guy lowered $4 short entry)
6/ USO options for strike $36 CALLS( equivalent $71 OIL ) remained same as yesterday that is at 40 cents( even if OIL is holding at 66 which is low , I thought when OIL hold at 66 these options will increase )
6.2/ CNBC heading: Crude futures ended Friday's volatile trading up slightly, rising for the first session in three after the release of mixed economic data. But futures tumbled more than 8% this week, the biggest weekly loss in more than two months.
7/ GOldman kept his 2009 year target of OIL $85
( asr: hope this goldman will keep lid on OIL bottom, I feel this is one of low entry of the rest 3 months 2009, this is positive to buy CALLS of $75 )
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Analysts at Goldman Sachs raised their forecasts Friday for global oil demand for the fourth quarter of 2009 and for 2010 by 1.2 million barrels a day and 1.6 million barrels a day, respectively.
"The permanent damage from the credit crisis is much less than we had previously thought, which means that we are beginning the recovery from a higher base," wrote Jeffrey Currie and other Goldman analysts in a research note.
At the same time, Goldman maintained its price forecasts, saying that higher anticipated demand has been met by stronger supply, particularly out of Russia and the rest of the former Soviet Union.
As a result, Goldman raised its global supply forecasts by an amount similar to its global demand forecast.
Goldman kept its end-of-year target for benchmark crude prices at $85 a barrel, along with an average 2010 price forecast of $90 a barrel and its end-of-2010 target of $95 a barrel.
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