[goose]

WTi

In the US domestic cash aftermarket Friday, Dec WTI was bid up slowly from 20
cts under the settlement to 5 cts over. Offers were lowered from 20 cts
premium to the settlement to 9 cts over. Trades were repeated at plus 5 cts.
After the close of the assessment window, a deal was also reported at plus 8
cts. Nov/Dec was bid at plus 35 cts. Offesr were lowered from 60 cts to 58
cts. A deal was initially reported at plus 59 cts, then at plus 58cts twice
and then at plus 60 cts. After the close of the assessment window, a roll
trade was also reported at 65 cts. No other trades were reported done.

North Sea

Despite continued strength in gasoil-rich crudes such as Oseberg, prompt
availability of Brent pushed BFO values lower, weakening the market structure.
Totsa offered down a Brent cargo for prompt early November dates, starting at
Dec-20 and then moving down incrementally during MOC to Dec -60, with no
buying interest. The physical market flipped into contango as at the same time
later dates were bid by both Philbro and Vitol. Vitol bid up to Dec-25 for Nov
9-14 dates, and Philbro Dec-35 for Nov 9-11 dates. The differential between
the North Sea dated strip and dated Brent narrowed to 8cents Friday compared
to 22cents Thursday. Earlier in the day sources reported that the market felt
it looked like it had like it has "peaked" because the arbitrage to the US had
shut. There is still some strength in the Oseberg market with the gasoil and
diesel market driving the complex, market sources commented. Other North Sea
physical crude premiums remained steady Friday.

[MrBill]

Goose, is it lack of storage capacity driving the nearby months into contango? Thanks.

[goose]

Mr Bill....cheers matey....

you see the action in brent this morning....???

[MrBill]

Since I came in this morning Brent and WTI seem to be in a very narrow range ($57.40-57.80) and ($59.60-59.85) area. But the unleaded and the heating oil at their daily lows. $1.8318 and 1.6000. While nat gas looks like it wants to re-test the $12.16 area on a break down through 12.60? Still look soggy to say the least, but this might be deceptive until NY comes in and gives us some direction?

[MrBill]

News complimentary of Refco Overseas London

$this->bbcode_second_pass_quote('', 'N')ews:
· Nigerian labor unions said exports from the 300,000-bpd Eni-operated Brass River terminal have resumed though talks were still continuing.

· Iraqi Kirkuk crude flows to Ceyhan remain offline following an insurgent attack on the northern pipeline. They had reportedly resumed Wednesday for the first time since mid-September though oil ministry officials denied those reports. Meanwhile, southern Iraqi output has fallen to 1-mbpd due to foul weather and storage capacity limitations.

· Petrologistics lowered OPEC Sep oil supplies by 300,000-bpd to 30.3-mbpd from the preliminary 30.6-mbpd. Initial forecasts for October suggest supplies will remain at 30.3-mbpd. The September revision was due to lower Iranian output.

· The Centre for Global Energy Studies says non-OPEC supply and world demand growth in 2006 are overestimated. Downstream capacity constraints are likely to result in prices staying high throughout 2006. However, OPEC won’t want to see prices fall much below its $50 target and will cut output by Q2 to prevent a collapse.

· Algerian energy and mines minister Chakib Khelil said he expects oil to stay above $50 for the next six months due to limited refining capacity and strong economic growth.

· Canadian oil output rose by 66,000-bpd to 3.025-mbpd from a downward revision in July.

· Louisiana says 32.4% of oil production or 65,782-bpd has returned since Hurricanes Katrina and Rita.

· MMS update reports 1.018-mbpd or 67.90% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 67.517 million barrels or 12.33% of annual Gulf output. There were also 243 platforms and 14 rigs evacuated, or 29.67% of 819 manned platforms and 17.91% of 134 rigs currently operating in the Gulf.

Refinery news:
· Flint Hills Resources is restarting the gas oil hydrotreater at its 300,000-bpd Corpus Christi, TX refinery following shutdown for maintenance.

· Total’s 342,914-bpd Gonfreville refinery in France resumed operations Saturday following a month-long strike. The company lost 8 million barrels of oil in production.

· A fire in a 14,000-bpd alkylation unit at PDVSA’s 940,000-bpd Cardon refinery put the unit out of service but didn’t affect gasoline shipments from the plant.

[MrBill]

So frustrating trading something that barely moves and then only in a tight range. Where are those 5% daily moves we saw last summer. Summer doldrums my foot. Those were the halicon days of summer

WTI crude tested a little higher to $60.35 following nat gas higher above $13.00 so it looks like both support levels have held for the time being, perhaps setting us up for a correction higher, except heating oil and gasoline are still offered.

Heating oil tested below $1.8000 to $1.7950 in the NOV, but we have to be careful as this contract will mature this week. Gasoline continued to slide and tested $1.5700, well under our psychological $1.6000. So roughly we have tested important levels in crude $60, gasoline $1.6000 and heating oil $1.8000. Now what?

I still expect the crude to find support below here in the $58-59 range (low so far $59.10), so it is really about what happens then? The front months of the products are in contango again, so it makes it less likely that the market will shoot for $1.5000 in the gasoline in the DEC month if it was unsuccessful in the NOV which is lower to start with? Dunno? Maybe this is it and I should stop fooling around with my short and just start building a long for the correction higher?

Problem is it is hard to see from where the buying support is coming? Suggestions that both world demand and non-OPEC supply have been overstated and that supply bottlenecks (i.e. refining) may cause prices to stay high for the time being. Also, if 81% of oil industry chiefs think that oil prices will stay above $50 for the next 10-years then where is the risk:reward to try to sell at sub-$60, if you know they could just as easily bounce to $71.00 again if there are any problems this winter? That is not support for higher oil prices. I am just speculating on where the risk lies? Worse case they sell at or near $50. Best case something, somewhere goes wrong and we see a price spike higher. Okay, so you buy OTM puts at sub-$50 and leave your upside unhedged.

[MrBill]

So quite a strong correction today, but is it a reversal? We will need further follow through buying for confirmation.

The WTI jumped to $61.40, Brent to $59.15 before settling into a range. Nat gas jumped through the $13.20 area and tested $13.65. In my opinion it has been giving the strongest signal and lead the rally although it was overtaken by crude afterwards. Never the less nat gas leant support to the heating oil which managed new interday highs of $1.8900 in the DEC and that even helped unleaded to climb to $1.6600 (but it is still below the $1.6000 in the NOV and vulnerable to further selling ahead of maturity on Friday).

For me a mixed day. Took back my short in crude early and caught this last move up, but now I am flat again. No hits, no runs, no errors. Good night all.

[fossil_fuel]

my orders are NOT going through.... tried to sell a crude dec call option but it didn't go through today..... put the other through again to be executed tomorrow.... made sure it wasn't an error on my part.... if it isn't executed this time, i'm going to be seriously confused.

open outcry trading can be really frustrating. i like electronic trading where i know instantly whether my order went through or not

[MrBill]

I agree. I am working through a broker over the telephone, who is also linked to the floor via telephone, so there are two links, two places where a miscommunication or error can occur. I am not happy. Hopefully, in November my broker will get Access for afterhours trading, and I will get a second broker who has traders on the IPE. For the NYMEX I am hoping to get a floor broker on a give up basis. However, probably not until December. In the meantime, I am not happy with my fills, but since the demise of Refco it is the best I can do. At least I can trade.

Nat Gas up huge yesterday/overnight. Lead the crude in my opinion. I was too timid and took profit in the DEC brent too early. However, I am off today back next week, so I had to close my position any way. Better in plus than minus, although it does hurt to miss a nice move like that.

[SupaNova]

$this->bbcode_second_pass_quote('fossil_fuel', 'm')y orders are NOT going through.... tried to sell a crude dec call option but it didn't go through today..... put the other through again to be executed tomorrow.... made sure it wasn't an error on my part.... if it isn't executed this time, i'm going to be seriously confused.

open outcry trading can be really frustrating. i like electronic trading where i know instantly whether my order went through or not

[cube]

Oil has slipped today (wed) "after the US government released data showing an increase in crude oil and gasoline inventories". Hmm is it just me or does anyone else here think the gov. sometimes "fudge" their numbers? Or maybe the mainstream "news" media has absolutely no idea why a commodity price has gained or loss but they just have to make up something. Besides they are a "news" media.

Anyhow I still believe the long term trend for oil is up, but for now it seems the bears are "clawing" their way down on the bulls.

[fossil_fuel]

i'm not sure what happened to that first order, but it's okay because the option was sold this morning, just hours before the price fell sharply. assuming the price stays constant through the overnight, i'm going to buy it back tomorrow morning for much cheaper

[MrBill]

I am back. Moscow is always a good time. Money flowing like water these days. Conspicuous consumption everywhere you look.

Seems like the rally quickly ran out of steam after Wednesday's numbers? Bear trend still intact on the daily charts in any case. The weekly looks a bit more supportive, but just barely.

Any ideas going forward? Will take me a day to get back into this thing? Cheers.

[CARVER]

The Unions have said that they are going to shutdown the Shell refineries (and chemical plants) in the Netherlands, starting today. It will take till the end of the week to reach minimal production. Among the refineries is the biggest refinery in Europe, at max capacity it consumes 416,000 bpd of crude oil.

I have no idea if this will have any impact at all, just wanted to let you know.

[MrBill]

Thanks Carver. Nat Gas & crude both start the week lower. My guess is the market is still digesting the demand destruction view from last week's numbers. I note with interest a recent headline from OPEC that they expect crude at $45-55 in 2006? That is the first sub-$50 forecast I have seen in quite sometime? Mind you they may be refering to the basket price they get FOB, which is $53.73 right now, so essentially forecasting that price in 2006 will look quite a bit like right now? For the time being I expect the price to close below $60 on the back of position squaring and taking profit ahead of year-end. Only a major rally starting in the products would change my mind at this point. It seems that not only the weather has cooled noticably since late-August

[SupaNova]

Deadline for the Pernis refinery malarky is 5pm GMT - Shell are apparently not prepared to make any further concessions on the pension situation.

A walkout looks the likely outcome at present

[MrBill]

Thanks. Quite simply in the wake of the French strikes, I see the market is unimpressed with labor stoppages in Europe? There does not seem to be a lack of crude and the market has so far taken refining glitches in stride. Of course, the market is now fully back in contango, so they are obviously pricing in a tighter market down the road. Never the less, no support for the front end of the market or for crude from the products.

[MicroHydro]

I view the cryptic Saudi statement that oil was near an 'acceptable' price for buyers and sellers as a subtle signal to the markets. In other words, the producers like a price in the high 50s, like $58-$59. Politically, $59.99 is so much more acceptable than $60 . Iran and Venezuela have previously made comments that they would cut production if the spot price dropped too much, now Saudi is indirectly saying the same thing.

US equity investors have recently thrived on unhedged long bets thanks to the 'Greenspan Put'. Easy Al has flooded the market with liquidity whenever necessary to keep the DJIA above 10,000.

I submit that we have entered the era of the 'OPEC Put'. People who believe there could be a NYMEX price of $45 next year are delusional. There is very little downside risk below $60, and an undefined but large upside potential. (For example, the markets have entirely ignored the risk of a US/Israeli attack on Iran. Personally, I believe there is at least a 50% chance of this event in 1Q 2006.) I am long NYMEX oil, long NYMEX natural gas, and expect the next few years to bring sweetness and light to my portfolio.

[MrBill]

$this->bbcode_second_pass_quote('', 'I') submit that we have entered the era of the 'OPEC Put'. People who believe there could be a NYMEX price of $45 next year are delusional. There is very little downside risk below $60, and an undefined but large upside potential. (For example, the markets have entirely ignored the risk of a US/Israeli attack on Iran. Personally, I believe there is at least a 50% chance of this event in 1Q 2006.) I am long NYMEX oil, long NYMEX natural gas, and expect the next few years to bring sweetness and light to my portfolio.

[MrBill]

Morning news supplied by Refco Overseas in London


$this->bbcode_second_pass_quote('', 'N')ews:
· OPEC secretary general Adnan Shihab-Eldin said members have “more than adequate” spare capacity, 2-mbpd, to cover expected global demand this winter. He expects OPEC to increase output by 12-mbpd over the next five years, exceeding expected demand growth of 7-8-mbpd. But refining bottlenecks should pressure prices higher for at least the next two years.

· Japan’s Sep crude oil imports fell by 3.0% on year to 4.18-mbpd coming on the heels of a 6.8% increase in August.

· Baker Hughes weekly rig count up 6, up 228 year-on-year. Oil rigs up 11.

· Louisiana reports 43.7% of oil output or 88,769-bpd has been restored since Hurricanes Katrina and Rita.

· MMS update reports 1.016-mbpd or 67.72% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 74.664 million barrels or 13.637% of annual Gulf output. There were also 223 platforms and 6 rigs evacuated, or 27.23% of 819 manned platforms and 4.48% of 134 rigs currently operating in the Gulf.

Refinery news:
· Citgo plans to restart a hydrocracker at its 156,000-bpd Corpus Christi, TX refinery on Nov 13 following maintenance that began Oct 29.

· Shell’s 418,000-bpd Pernis, Rotterdam refinery was expected to be shut due to a strike Monday in a dispute over pensions.

· Saudi Aramco plans to restart the 44,000-bpd Ras Tanura hydrocracker Nov 10 after shutting Sep 30 for repairs.