[MicroHydro]

All my positions are 2008-2011, and I bought oil at $46, natural gas at $8, so I am in a good position to wait and see - no serious risk of margin calls.

The reason I consider an attack on Iran probable is that the USA recently delivered state of the art bunker buster bombs to Israel. Israel is the only nation to ever receive these, even Britain can't have them. Ariel Sharon has indicated he will act unilaterally against Iran if the US/EU/UN fails to do so. A situation has been set up where Israel can start the attack. Then Iran would attack Israel with missles and US/UK troops in southern Iraq. The US would have an excuse - self defence and the defence of Israel - to use strategic airpower against Iran's infrastructure. Napalm, cluster bombs, and nerve gas would be used against Iranian personnel. Then the 101st Airborne would occupy the oil province of SW Iran only. The plan is not to occupy Iran, merely to destroy and loot it. If things go really badly on the battlefield, the pentagon asserts the right to first use of nuclear weapons.

Yes, it sounds insane, but the neocons only care about destroying all the enemies of Israel. The fundamentalist christian rapture nuts still control the USAF. These people live in their own crazed world where armageddon is a good thing. The meaningless indictment of Scooter Libby was little more than a flea bite to them.

[MrBill]

Well, yes, in that case then the oil markets are not pricing in the likelihood of such an event occuring?

We just broke through $59 on the crude and nat gas busted its way through $12 support today as well. Not much follow through yet, but it is still early in NY. NY is in any case far too volatile on small volume at the moment. It is hard to trade. Big moves, but easy to get whipped about and stopped out if you try to carry large positions and really make some money. Still, I will likely go home short today looking for a test of $58 if not $56 eventually in the DEC WTi?

DOE numbers for tomorrow.

Crude +2.2 mio > 316.4 mio barrels
Distillate -0.8 mio > 121.1 mio
Gasoline +0.6 mio > 195.9 mio
Runs +1.8 pts. > 80.7%
Nat Gas storage -6 to +55 BCF build

but I have seen other forecasts that see

Crude +3.5 mio
Distillats unchanged
Gasoline -1.0 mio
Runs +2.5%

which would be more bearish to the complex at this particular point?

Imports are forecast around 10.3-10.5 mbpd

In my mind the numbers may disappoint given we are already at the low end of the ranges and spark a short covering rally? However, I remain committed to seeing where this move under $59 takes us until proven wrong (again).

[fossil_fuel]

i'm still long. i'm going to be hurting pretty bad if we get to 56. i'd like a mini-rally so i could cut and run before dec options expire.

[cube]

Not to get too far off topic. I have a question about trading, actually a question about gold. Is it true that in general when the fed raises interest rates --- the price of gold goes down? Gold in general moves opposite to the price of the dollar so my guess is yes, but I'd like a second opinion.

Gold futures dropped today and the fed also raised rates from 3.75 to 4.00% all in the same day.

[MicroHydro]

$this->bbcode_second_pass_quote('cube', 'N')ot to get too far off topic. I have a question about trading, actually a question about gold. Is it true that in general when the fed raises interest rates --- the price of gold goes down? Gold in general moves opposite to the price of the dollar so my guess is yes, but I'd like a second opinion.

Gold futures dropped today and the fed also raised rates from 3.75 to 4.00% all in the same day.

[MrBill]

$this->bbcode_second_pass_quote('cube', 'N')ot to get too far off topic. I have a question about trading, actually a question about gold. Is it true that in general when the fed raises interest rates --- the price of gold goes down? Gold in general moves opposite to the price of the dollar so my guess is yes, but I'd like a second opinion.

Gold futures dropped today and the fed also raised rates from 3.75 to 4.00% all in the same day.

[MrBill]

Today's news compliments of Refco Overseas London (or is it Man Financials?)

$this->bbcode_second_pass_quote('', 'N')ews:

· Libyan oil minister Fathi Shatwan said US oil prices are likely to remain in a $55-$60 range for the medium term notwithstanding concerns that global supplies might be insufficient for winter demand.

· China’s Logistics Information Center predicts crude oil imports will only rise by 3.5% in 2005 to 127 million metric tons vs. expected growth of 29% in crude exports to 7.1 million tons. Rising global demand for oil and soaring oil prices are blamed for the lower imports figure.

· An Iraqi oil official said crude oil exports fell 19% or 250,000-bpd to 1.33-mbpd in Oct from Sep due to a decline in northern exports from Kirkuk.

· Russian oil output may stagnate next year says Federal Energy Agency chief Sergei Oganesyan. Output is expected to average 9.54-mbpd this year vs. an initial forecast of 9.74-mbpd and vs. 9.19-mbpd pumped in 2004.

· MMS update reports 1.000-mbpd or 66.67% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 75.665 million barrels or 13.8207% of annual Gulf output. There were also 215 platforms and 5 rigs evacuated, or 26.25% of 819 manned platforms and 3.73% of 134 rigs currently operating in the Gulf.

Refinery news:
· Exxon Mobil’s 190,000-bpd Chalmette, LA refinery is restarting and should be at full capacity by mid-November.

· Valero cut rates at its 135,000-bpd Houston, TX refinery to minimize flared emissions. The flaring occurred due to the shutdown of a steam-driven compressor.

[MrBill]

As we speak WTI is breaking down to the $59.00 level but has yet to break. Never the less it is lower than yesterday's previous low of $59.05 and the low of $59.15 before that. What we need now is follow through selling to push us down to $57-58.

This follows a pretty bearish DOE stocks/inventory report which showed a build in crdue of 2.7 mio to 319.1 mio; gasoline build of 1.0 mio to 196.9 mio; and only a slight draw in distillates of 0.2 mio to 120.9 versus expectation of -0.8 mio. Imports were 10.06 mbpd vs. f/c of 10.3-10.5 so almost right on target. Total product demand was down 1.8% to 20.48 mbpd. Of that, diesel was down 1.5% and gasoline down 1.7%. That is a little firmer than the -2.8-3.0 decrease demand in previous reports. Creeping normalacy in energy markets as consumers resign themselves to higher pump prices or just greater supply and therefore a catch-up in demand? Stay tuned.

A very volatile response to the numbers. After initially pushing the market lower they popped up like a cork under water to test higher on the day. WTI pushed up to $60.40 before coming off, but not until it crossed the range several times. Unleaded touched $1.6220 before $1.5565 here. Heating oil hit $1.8180 before settling down to $1.7500. Nat gas has not shown much ability to break above $12.00 again and is probing the $11.70 area. Seeing support for the nat gas near the 50% retracement of $11.40.

Indications are that the market is nearing oversold territory. We will have to keep making new lows with subsequent lower tops or the market risks setting itself up for a rally, triggering weak stops. The dilemna remains whether to stay short looking for that last 100 pts. or get ready to buy the dips for a short-covering rally/reversal? Made some money range trading and taking a speculative short at the top today. That kind of luck is welcome, but it cannot last.

[MrBill]

$this->bbcode_second_pass_quote('', 'N')ews:
· The National Petrochemical and Refiners Association reports that US refining capacity continues to return following hurricane-related shut-ins, however curtailed Nat gas production raises concerns over heating oil supplies. High Nat gas prices could also mean high home heating oil prices given industrial switching.
· Louisiana reports 48.2% of oil production or 97,917-bpd has been restored
· MMS update reports 957,978-bpd or 63.86% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 76.622 million barrels or 13.995% of annual Gulf output. There were also 210 platforms and 5 rigs evacuated, or 25.64% of 819 manned platforms and 3.73% of 134 rigs currently operating in the Gulf.

Refinery news:
· Workers at Shell’s 416,000-bpd Pernis refinery in Rotterdam will suspend a strike for 24 hours after the company requested negotiations over proposed changes to the pension plan.

[MrBill]

It is like trying to force a cork underwater. No matter how hard you push it down, it pops back up to the surface. Crude and the products have tried for the past several sessions to push lower and they always bounce back up to previous levels. There is some buying going on in the market today. Maybe a test higher in a corrective rally? It is still early to say, but likely target $60.40 if not higher. In the unleaded a test of the $1.6000 resistance again and maybe a break through the $1.8000 in heating oil which would correspond to a re-test of $12.00 in the nat gas contract. Warm weather predictions are still keeping the heating energy complex under pressure, but the market overall has been in oversold territory and without fresh news it seems to want to self-correct. We'll try it from the long-side today after several days of selling into rallies.

Oh by the way, just so this is Peak Oil related and discusses the economic ramifications of hydrocarbon depletion, I should note here that as oil, gas, coal and other non-renewable sources of energy become harder to find and more expensive to extract this should put upward pressure on prices. However, beyond this simple explanation the economics surrounding hydrocarbon depletion depend on many related factors and cannot be studied in isolation. But, broadly they have to do with the price and technical feasibility of suitable alternatives; the rate of economic and population growth which uses energy; technological advances in how we use or do not use energy; and a myriad of other factors which will influence what effect peak oil the geoplogical event affects post-peak oil economies.

At this particular moment in time, 2010 crude is being traded at around $54, which is roughly $6 under today's spot price. This is not a prediction of where oil will be in 5-years time, but where the market is satisfied to buy and to sell today on a forward basis. Clearly the market is not discounting supply problems in the future, but they are also factoring the likelihood that new supply will be found and brought to market. Therefore, the likelihood of a peak oil related market crash in the next 5-years is being discounted by the collective knowledge of the market.

There is use in looking at markets today as the price signals often tell us a lot about what will happen in the future. The same as looking at interest rates, growth rates, unemployment trends and trade balances. Only by having a suitable frame of reference about where we are now can you judge how quickly we are moving towards the next event, be that Peak Oil or some other major market interuption.

[MrBill]

Read an article yesterday on Reuters. They predicted that there would be some end of the year liquidation of inventory longs in order to avoid income taxes under LIFO accounting standards which state that any inventory at year-end over and above inventory levels at the start of the year are taxed at 35% of the price difference.

If I have not gotten that mixed up it would mean that a) we have a large price difference between January 1st, 2005 and now, b) a lot of shut-in inventory due to hurricanes & lack of refining capacity, and c) increased inventory positions in expectations of higher prices during the winter months of 2006.

Therefore, any spare inventory may be sold prior to year-end in order to reduce the tax burden and this may put pressure on the JAN futures month, which expires in mid-DEC, as physical supply comes onto the market, fills-up storage and depresses nearby physical prices.

If we are already in a bear market leading up to year-end then this may exacerbate the downward price movement, pusing crude below $50 on profit taking and position squaring. If we are in an upswing due to colder weather than this effect may less pronounced as traders gamble on future price appreciation. It is simply another factor to be mindful of and may cause the nearby months to trade at a deeper discount to 2006 future months going into late December?

[MrBill]

So as I write this, we are up about $1.00 in the WTI & Brent crudes while heating oil is up 220 pts. and gasoline up 360 pts. Quite a good rally. Enough to propell heating oil above 1.8200 and unleaded above 1.6000. Natural gas is not quite as strong. It took a run at $12.00, but good inventory build nos. meant it stopped short at $11.90 and is now $11.70, but still up on the day. Is this a reversal or just a correction? On the daily charts we are still in a downtrend, but you cannot rule out a spike higher. However, to reverse we need fresh inputs. No news out there on the horizon, but I would be grateful to anyone who catches wind of an Arctic front headed for the NE to let me know. That may be the catalyst which sends commercials scrambling for cover to fulfill winter heating obligations.

Mr. Greenspan said today that Americans may be surprised by their heating bills this winter? Yes indeed Alan. And thanks to your easy money policies they built large homes, far from work, so the pain is double. At least you have all those FOMC minutes to roll-up and burn in your fireplace this winter. Hubris burns well I am told?

[fossil_fuel]

CLZ05 61.78 +2.03

a HUGE rally. i want to sell my dec calls NOW before the price corrects, but open outcry trading is closed for the day! i can't stand this inflexibility, i'm not sure i'm ever going to trade any contract that is open-outcry only again. it's so retarded that they don't keep the options market open whenever the futures market is.

pissed that i'm gonna lose money over this

[Typhoon]

I'm paper trading to see how successful I can be. Yesterday, my decisions were:

Buy CLZ at 6010 -- stop 5905.
Buy NGZ at 1170 -- stop 1150.
Buy HOZ at 17900 -- stop 17525.
Buy HUZ at 15900 -- stop 15600.

Today:

Long CLZ from apprx 6010 -- raise stop to 5955.
Long NGZ from 1170 -- leave stop at 1150.
Long HOZ from 17900 -- raise stop to 17830.
Long HUZ from 15900 -- raise stop to 15710.

How about going long on CLG6 (February crude) and short the 7100 call? 7085 could prove to be resistance...it's the all-time high. I don't care if I get called out since that would still be a huge profit, with a bit of downside protection equal to the premium collected.

On the other hand, I'm quite serious that crude could go through the roof, testing $80 and eventually $100, so why bother selling calls to squeeze out some additional profit and downside protection at the risk of losing out on big profits?

[Typhoon]

$this->bbcode_second_pass_quote('MrBill', 'I') would be grateful to anyone who catches wind of an Arctic front headed for the NE to let me know. That may be the catalyst which sends commercials scrambling for cover to fulfill winter heating obligations.

[MrBill]

$this->bbcode_second_pass_quote('Typhoon', '')$this->bbcode_second_pass_quote('MrBill', 'I') would be grateful to anyone who catches wind of an Arctic front headed for the NE to let me know. That may be the catalyst which sends commercials scrambling for cover to fulfill winter heating obligations.

[fossil_fuel]

well, we are off yesterday's highs and down over a dollar. probably even lower by the time open-outcry trading begins at 10. most frustrating.

[rkerver]

Buy on rumor, sell on news! Buy now - Wentworth Energy, Inc. (WNWG)

[SupaNova]

$this->bbcode_second_pass_quote('fossil_fuel', 'C')LZ05 61.78 +2.03

a HUGE rally. i want to sell my dec calls NOW before the price corrects, but open outcry trading is closed for the day! i can't stand this inflexibility, i'm not sure i'm ever going to trade any contract that is open-outcry only again. it's so retarded that they don't keep the options market open whenever the futures market is.

pissed that i'm gonna lose money over this

[Typhoon]

A major ridge will set up over the eastern U.S. in mid-November. Most ensembles show the NAO going extremely positive, along with a negative PDO. A few days ago, I was discussing the possibility that winter weather might not come for awhile. The situation looks even more clear now. There could potentially be RECORD warmth in the Northeast. Longs beware! I have been bullish for the short-term. Now, I'm not.