[MrBill]

I rarely follow the precious metals. Are they up on industrial demand or up on the back of future inflation expectations?

I used to trade physical gold, but it was so expensive to roll-over every month. That was 1998 and it costed about $1 per month to roll-over, so over 84-mos. that is $84. Okay, I would still be money ahead as I was long sub-$300, but as it did not earn interest and was costing money to roll-over I just saw more joy in other markets?

See some pretty significant support in WTi between $61 and $60 on the daily and weekly charts, but a short term reversal on short covering after last week's lows? Difficut to predict, may be prudent to close my short here and then look to buy any dips?

Interesting to note that retail gasoline prices have climbed on physical shortages even as futures have fallen? Strange beast that one?

Let's say you're long CASH. No debt. However, your expectation is a weaker dollar and higher inflation in the foreseeable future (slightly longer than tomorrow or perhaps end of the year ). Where to invest?

Investment grade bonds are crap in a rising I/R environment?

Stocks are doing nothing, unless you're a stock picker and think the cyclicals may benefit from clean-up & rebuilding of Katerina/Rita?

Regional real-estate is over-valued or in fact in a housing bubble?

Oil cos. are quite expensive, too?

May get some mileage out of coal technology & alternative energy spending by Congress, but you have to again pick the winning technologies or hope that they all buy from GE and buy GE stock? GE is still down 6% YTD, but its stock jumped lasts week maybe as a result of its coal and nat gas technology? But, at a P/E ratio of 20 it is not cheap espeically with a one year return of just 3.2% this year? Hmm?

Bottom picking is always risky, but I just don't see anywhere to invest at the moment, and I am worried about inflation, so although cash in the bank is nice, its gotta find a home somewhere?

[MrBill]

Today's news compliments of Refco Overseas London

$this->bbcode_second_pass_quote('', 'N')ews:
· · A Platt’s survey of OPEC 11 members showed that September production was 30.31 mbd, 50K bpd greater than August’s output. OPEC 10 output (excludes Iraq) fell 50K bpd.

· MMS update reports 1.163-mbpd or 77.53% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 50.106 million barrels or 9.152% of annual Gulf output. There were also 274 platforms and 6 rigs evacuated, or 33.46% of 819 manned platforms and 4.47% of 134 rigs currently operating in the Gulf.

PERSPECTIVE: Oil continues to weaken as traders try to price in deflated demand growth and as product import levels stand at record highs. Gasoline still faces tight stocks while heating oil could have to contend with a cold winter.

[rkerver]

MrBill:
$this->bbcode_second_pass_quote('', '[')color=darkblue]Let's say you're long CASH. No debt. However, your expectation is a weaker dollar and higher inflation in the foreseeable future (slightly longer than tomorrow or perhaps end of the year . Where to invest? ... so although cash in the bank is nice, its gotta find a home somewhere?[/size][/color]

[MrBill]

Caved in

Bought 10 Brent at -2.75 to WTi not the -3.00 we saw last week, but my feeling is with more refining in Europe and product exports to USA, that Brent may outperform WTi and be less sensitive to the threat of SPR releases?


Still long unleaded and heating oil, which are posting modest gains today.

[MrBill]

No reversal today, we continue to test lower in the crude and the products. Hard not to see a test of $60 in the WTI now where long term support is? Market will likely go for it before the close.

[MrBill]

News today compliments of Refco Overseas London


$this->bbcode_second_pass_quote('', 'N')ews:
· EIA reports 2.1-mbpd in US refining capacity remains offline accounting for 900,000-bpd in lost gasoline production, 500,000-bpd in lost distillate output and 200,000-bpd in lost jet fuel output. Eight refineries on the Gulf Coast remained shut Friday night.

· EIA analyst Doug MacIntyre said the monthly global oil supply and demand forecast will lower the estimates for US and global oil demand when it’s released on Wednesday. He wouldn’t specify but did observe that US gasoline use was about 200,000-bpd less in September than previously forecast prior to Katrina.

· MMS update reports 1.163-mbpd or 77.53% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 50.106 million barrels or 9.152% of annual Gulf output. There were also 274 platforms and 6 rigs evacuated, or 33.46% of 819 manned platforms and 4.47% of 134 rigs currently operating in the Gulf.

Refinery news:
· Valero will restart two sulfur recovery units at its 250,000-bpd Port Arthur, TX refinery and expects to complete the process in a week.

· Shell’s 126,000-bpd Berre L-Etang refinery in Marseilles, France will start reducing rates if the port blockade extends beyond Thursday. However Port of Marseilles workers suspended their strike and will review the situation in two weeks.

· Workers at Total’s 328,000-bpd Gonfreville, France refinery voted to sustain a strike Monday until a meeting on Wednesday after a union representative said there had been no progress.

[MrBill]

$this->bbcode_second_pass_quote('', 'E')ighty-six percent of California households could not afford to buy a typical home with a traditional down-payment in August, when the state's median-home price stood at $568,890, according to the California Association of Realtors.

[MrBill]

Sold another 10 NOV WTi at 63.62 as the price moved below the moving average on the hourly chart despite the products still above their moving averages. However, they have disappointed to the topside and certainly have not generated significant stop loss buying, so the overall trend on the daily is still downwards. Maybe wait for tomorrow's supply no.s, but in the meantime, I will continue to be long the products, shorter the crude.

$this->bbcode_second_pass_quote('', 'S')INGAPORE (Reuters) - Oil moved higher on Wednesday, rebounding from heavy losses last week on concerns over tight supplies ahead of winter and after the International Energy Agency (IEA) forecast faster demand growth next year.

U.S crude oil futures edged up 17 cents to $63.70 a barrel, adding to the previous day's 2.8 percent rally from a 10-week low of $60.35 on Monday.

Oil had slid from an August 30 peak of $70.85 after an emergency oil stocks release by the IEA and on worries over weaker demand, after signs that high oil prices were taking a toll on major consumers.

The IEA, an adviser to 26 industrialized nations, trimmed its forecast for 2005's demand growth to 1.26 million barrels per day (bpd) after hurricanes knocked out U.S. rigs and sent fuel prices to record peaks.

But it said demand growth would rebound to 1.75 million bpd next year after the largely temporary impact of hurricanes Katrina and Rita and on a recovery in Chinese demand.

[MrBill]

An absolute ridiculous result today. Apparently there was a flood in NJ and many traders did not make it to work on the NYMEX today? Hard to believe, but okay the floor traders had a field day. In the opening minutes they managed to push the market up to 63.85 down to 63.40 and ran all the stop losses up to 64.50? Wicked movements on the floor. Very small volumes behind the price movement. The EIA predicts demand will pick-up in 2006 by 1.9 mbpd, but that aside I found most of the comments about US & world demand to be quite bearish? There you go. Efficient market theory hard at work again. Forget behavioral finance.

[elroy]

Whoa freakin whoa! a median home for over 560K ? That's insanely high! Over here the average home is something like 220K euros. (granted, average isn't the same as 'median' but still, median and average are often very close.. huge difference.)

[MrBill]

I was thinking about mean, median & mode. I am sure the California market is pretty skewed. Very little affordable housing and a few super mansions which skew the price upwards, but overall, most houses priced at the frontier between what's affordable and what is unrealistic. So, probably very few standard sized homes (larger & larger all the time so a moving target) under the mean, a huge numer clustered around the median price and a few outliers which likely distort the price higher than it really is for most homeowners. Still, only 14% of Californians of all stripes, including the super rich, could afford to buy an average home at the moment. That has to be the border zone between barely affordable and outta reach? Upside? From where?

[MrBill]

New this morning from Refco Overseas in London


$this->bbcode_second_pass_quote('', 'N')ews:
· Louisiana reports 30.7% of Nat gas and 22.7% of oil production or 686.8-MMcfd and 46,174-bpd had been restored as of Wednesday.

· EIA forecasts US crude price to average $58 in 2005 and $64-$65 in 2006 with one-third of crude oil and 21% of Nat gas output in the Gulf of Mexico remaining shut-in through December. During December, an average 1.7% of US refining capacity is seen remaining shutdown. Gasoline inventories should improve through the heating season though an unusually cold winter could discourage output and tighten supplies for the spring. EIA foresees US Gulf refinery shutdowns over by the end of December and oil and gas output normal by the end of March.

· The National Oceanic and Atmospheric Administration predicts an equal chance of above, below or near-normal winter temperatures in the Northeast and Midwest US. The rest of the US should see warmer-than-normal conditions. Heating degree-days are seen 0.4% colder than normal this winter and 3.2% colder than last winter.

· MMS update reports 1.046-mbpd or 69.76% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 55.602 million barrels or 10.156% of annual Gulf output. There were also 256 platforms and 3 rigs evacuated, or 31.26% of 819 manned platforms and 2.24% of 134 rigs currently operating in the Gulf.

[MrBill]

$this->bbcode_second_pass_quote('', '=')==============================================================
REUTERS FORECAST FOR ACTUAL FOR WEEK (EIA) YR-AGO CHANGE
WEEK ENDED 10/7/05 ENDED 9/30/05 ENDED 10/8/04
CRUDE UP 2.1 MLN 305.4 MLN DN 0.3 MLN UP 4.2 MLN
DISTILLATE DN 1.7 MLN 128.0 MLN DN 5.6 MLN DN 2.5 MLN
GASOLINE DN 1.6 MLN 195.5 MLN DN 4.3 MLN UP 1.2 MLN
RUNS UP 4.6 PTS 69.8 PCT DN 16.9 PTS DN 2.0 PTS
EARLY NATGAS STORAGE ESTIMATE: 45 TO 65 BCF BUILD

[MrBill]

Morning commentary by Refco Overseas London

$this->bbcode_second_pass_quote('', 'N')ews:
· Oil Movements report OPEC exports rose 430,000-bpd to 24.91-mbpd in the four weeks ending Oct 29 with most of the crude heading west to refineries in the US and Europe.

· Louisiana reports 30.9% of Nat gas and 23.5% of oil output has been restored with 691.7-MMcfd of gas and 47,735-bpd of oil output back.

· MMS update reports 1.031-mbpd or 68.75% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 56.633 million barrels or 10.344% of annual Gulf output. There were also 236 platforms and 2 rigs evacuated, or 28.81% of 819 manned platforms and 1.49% of 134 rigs currently operating in the Gulf.

[MrBill]

Today's news from the firm formerly known as Refco

$this->bbcode_second_pass_quote('', 'N')ews:
· Saudi King Abdullah said the kingdom is working to slow the rapid rise in oil prices. “We believe that the damage to other countries is tremendous, and we don’t believe that the prices should be at these levels.” To address rising demand, Abdullah says Saudi oil production has risen to more than 10-mbpd.

· Alaskan oil producers will increase output by around 10,000-bpd over the next few weeks to offset lost Gulf of Mexico production per a request from Governor Murkowski.

· Baker Hughes weekly rig count up one, up 257 year-on-year. Oil rigs up 6.

· MMS update reports 706,847-bpd or 67.26% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 57.642 million barrels or 10.528% of annual Gulf output. There were also 232 platforms and 2 rigs evacuated, or 28.33% of 819 manned platforms and 1.49% of 134 rigs currently operating in the Gulf.

Refinery news:

· Citgo CEO Felix Rodriguez said Gulf Coast refineries are ramping up and should be back to normal within weeks. The 425,000-bpd Lake Charles, LA refinery is running at about 50% of capacity and should be at 100% in “one or two weeks.” The 270,000-bpd Houston refinery should reach full capacity in four days from 50% run cuts. No major refinery turnarounds are planned in the coming months. Venezuela is sending 1.6 million barrels of gasoline to help stabilize the US market.

[MrBill]

[/QUOTE]
Expectations/Week ending 14-10-05/year ago/3 year average
Distillates Dn 1.5 (123) Dn 1.9 (119) 126
Gasoline Dn 1.8 (191) Dn 0.7 (200) 197
Crude Up 1.5 (308) Up 1.2 (279) 285
Refinery runs Up 3.5 (78.4%) Up 1.3 (88.2)
Distillate stocks should post a modest decline. Although both production and imports could show smallincreases, demand will likely recover enough to force another stock draw. Gasoline stocks are also likely to
post a moderate decline with expected demand improvement more than offsetting further anticipatedstrength in production. Some expected slippage in imports should also facilitate a draw. Also, gasoline
seasonal tendencies strongly favor a decline for this particular week. Crude stocks should show a smallincrease as an expected further recovery in imports more than negates the impact of additional refinery
restarts. Refinery runs are expected to show another significant increase with the bulk of the anticipatedupswing developing in the Gulf coast area where additional units are coming back on stream following the
hurricane disruptions.
[/QUOTE]

[MrBill]

No real comments on trading this week as the market has been very choppy, but bound within a range this week. Perhaps today's inventory numbers will shed some light, but until they do we WTI crude is literally in a $62.70 to $64.30 trading range. At the heart of the matter is lack of refining capacity on one hand verus demand destruction due to high prices on the other. Certainly, unleaded prices would support the idea that some demand has dissipated in the face of higher pump prices, while heating oil remains better supported on the back of strong natural gas prices. However, with the crack spread between crude and unleaded at just $9.25 today it is hardly supportive of a broader rally. As we near the end of the hurricane season, all eyes will be focussing on winter demand for the heating complex for direction.

$this->bbcode_second_pass_quote('', ' ') News:
· OPEC president Sheik Ahmad Fahad al-Ahmad al-Sabah said global oil demand should rebound next year when the oil industry recovers from this year’s hurricanes and refining capacity returns to normal levels.

· OPEC secretary general Adnan Shihab-Eldin predicts spare production capacity is likely to rise next year to 2.5-3.5-mbpd with the call on OPEC not seen rising while output does. Demand for OPEC crude is seen at 28.7-mbpd in 2006. OPEC members will add 2-mbpd in 3-4 years. He believes an oil price of $40-$60 is reasonable and not harmful to economic growth or consumption.

· MMS update reports 982,011-bpd or 65.47% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 61.629 million barrels or 11.256% of annual Gulf output. There were also 216 platforms and 2 rigs evacuated, or 26.37% of 819 manned platforms and 1.49% of 134 rigs currently operating in the Gulf.

[MrBill]

The inventory/stocks/demand numbers were very bearish.

Crude stocks up 2.9 mio vs. 1.5 expected
Distillates down 1.9 mio vs. 1.5 expected which is slightly supportive
Gasoline stocks up 2.p mio vs. +1.8 expected (very bearish)
Refinery runs up 4.2% vs. 3.5% expected

Overall demand down 3.2%
gasoline demand down 2.2%
distillate demand down 4.0%

gasoline imports up 1.5 mbps (3rd straight record)
crude imports up 588K bpd

the crude and products are down across the board with crude breaking through support to touch $62.00 in the NOV, gasoline 1.6850 low, heating oil 1.9100 low. Some short covering on profit taking of short positions, but no discernable bounce, yet. Given the daily technicals were pointing lower it may be expected to test channel support before end of the week buying and position squaring ahead of the weekend and Hurricane Wilma.

I am short small DEC crude with no position in the products. Will wait to see if we see any follow through after this initial move down. Cheers.

[SupaNova]

I return ... with a slightly different username.


Good luck... on the crude, I sold pre stats and am happy to take a dollar here at support. Have a small punt on the long side for a bounce.

I'm trying to build into Gasoil spreads as I see euro stocks as lacking.

think the spread shape on crude will give in eventually and am maintaining a bearish structure here... lets see how it unwinds once Nov Wti goes off.

Cracks.... ugh, horrible and I'm glad I have some cover. Let some my small remainder of gas cracks goes on Monday when it bounced - wish I'd binned the lot now.

All fun and games.

[MrBill]

welcome back! fun & games here.

RE back trading. you can see why I was keen to go short now, too bad got whipped on the way up to 64.75, but fell short of my orders to sell at 64.95? drat & double drat.

just looking at the daily and see some downside still, however, it has been so choppy this past few days. each day between 17.00 and 18.00 my time when NY comes in was a test of both ends of the range just to see what was there. hard to trade that (well except in hindsight)

trying to protect myself against higher US interest rates and the possibility of a falling dollar? I wanted to buy some Swiss franc, but my multi-currency acct. no longer allows switches into C$ or CHF therefore I am not sure how to express my view? any suggestions?

bought some GE & Citibank to spread my global risk away from the USA, but won't help me if there is a general bear market, which I am affraid may happen with higher interest rates and higher energy prices? someone suggested inflation indexed bonds? I have never traded them, so I am not familar with their characteristics?