[CARVER]

Thanks for the lesson MrBill. I'm also curious if there are some great stories/myths of people that claim to have found the perfect (Technical) Analysis, one that defies the laws of the market. The point where greed takes over common sense, and even some of the properly educated professionals start to believe, because they want to believe it so much. Such stories exist in the field of physics and computer science/math for example. There must be one here too? (I vaguely remember hearing something about some belgium trader that claimed to have figured out the market?)

[ubercynicmeister]

$this->bbcode_second_pass_quote('tdrive', '')$this->bbcode_second_pass_quote('', 'T')hus we're all forced to prop up this rather odius way of a few people making obscene amounts of money

[tdrive]

$this->bbcode_second_pass_quote('', 'T')he problem is that the persons losing the money are the "ordinary Joes" at the fuel pump. That stockmarket where fortunes are won and lost really is supported at some point by someone actually buying some commodity they can pick up / pump / physically handle / touch / use in some way, shape or form. And hence has to purchased in some way, shape or form. The price that the Ordinary Joe pays is determined by the stockmarket, either directly or indirectly. It seems that we all need to wake up to that.

[tdrive]

From VALEATOR.COM:

$this->bbcode_second_pass_quote('', '.')..TOTAL 82.735 MBBL OF OIL AND 426.426 BCF OF GAS SHUT IN SO FAR. IN OTHER NEWS... COLD EAST COST WEATHER FORECAST AUGMENTED AND REITERATED FOR SECOND HALF OF NOVEMBER. OPEC OIL EXPORTS BY SEA EXPECTED TO RISE BY 140,000 BPD TO 25 MBPD IN THE FOUR WEEKS TO NOV. 26 COMPARED WITH 24.86 MBPD IN THE FOUR WEEKS TO OCT. 29 ACCORDING TO OIL MOVEMENTS. EXPORTS UP SEASONALLY AS WELL AS DUE TO RECOVERING U.S. REFINING CAPACITY. EASTBOUND SAILINGS ALSO INCREASE AS DEMAND RISES DURING WINTER. CHINA MAY IMPORT OIL FOR SPR AND ALSO BUILD COMMERCIAL PRODUCT STOCKS ACCORDING TO CHINESE OFFICIALS THUS REVERSING RECENT HOLD UP POLICIES. ALSO CHINA CUSTOMS ANNOUNCED 21.3% INCREASE IN CRUDE IMPORTS IN OCTOBER Y-O-Y SHARPLY REVERSING PREVIOUS TREND. ACCORDING TO IEA WORLD AND CHINESE DEMAND DESTRUCTION CLAIMS OVERSTATED.

[MrBill]

$this->bbcode_second_pass_quote('CARVER', 'T')hanks for the lesson MrBill. I'm also curious if there are some great stories/myths of people that claim to have found the perfect (Technical) Analysis, one that defies the laws of the market. The point where greed takes over common sense, and even some of the properly educated professionals start to believe, because they want to believe it so much. Such stories exist in the field of physics and computer science/math for example. There must be one here too? (I vaguely remember hearing something about some belgium trader that claimed to have figured out the market?)

[MrBill]

$this->bbcode_second_pass_quote('ubercynicmeister', '')$this->bbcode_second_pass_quote('tdrive', '')$this->bbcode_second_pass_quote('', 'T')hus we're all forced to prop up this rather odius way of a few people making obscene amounts of money

[MrBill]

$this->bbcode_second_pass_quote('tdrive', 'F')rom VALEATOR.COM:

$this->bbcode_second_pass_quote('', '.')..TOTAL 82.735 MBBL OF OIL AND 426.426 BCF OF GAS SHUT IN SO FAR. IN OTHER NEWS... COLD EAST COST WEATHER FORECAST AUGMENTED AND REITERATED FOR SECOND HALF OF NOVEMBER. OPEC OIL EXPORTS BY SEA EXPECTED TO RISE BY 140,000 BPD TO 25 MBPD IN THE FOUR WEEKS TO NOV. 26 COMPARED WITH 24.86 MBPD IN THE FOUR WEEKS TO OCT. 29 ACCORDING TO OIL MOVEMENTS. EXPORTS UP SEASONALLY AS WELL AS DUE TO RECOVERING U.S. REFINING CAPACITY. EASTBOUND SAILINGS ALSO INCREASE AS DEMAND RISES DURING WINTER. CHINA MAY IMPORT OIL FOR SPR AND ALSO BUILD COMMERCIAL PRODUCT STOCKS ACCORDING TO CHINESE OFFICIALS THUS REVERSING RECENT HOLD UP POLICIES. ALSO CHINA CUSTOMS ANNOUNCED 21.3% INCREASE IN CRUDE IMPORTS IN OCTOBER Y-O-Y SHARPLY REVERSING PREVIOUS TREND. ACCORDING TO IEA WORLD AND CHINESE DEMAND DESTRUCTION CLAIMS OVERSTATED.

[MrBill]

Today's news brought to you by Refco Overseas London (soon to be part of Man Financial).

$this->bbcode_second_pass_quote('', 'N')ews:
· Iraqi oil exports from two southern terminals were suspended for two days due to rough seas.

· Oil Movements report OPEC exports are seen up 140,000-bpd to 25-mbpd in the four weeks ending Nov 26 from 24.86-mbpd in the four weeks through Oct 29. The rise was attributed to a seasonal up tick as well as recovering US refining capacity.

· US House Republicans dropped a provision in the budget bill authorizing drilling in ANWR. However the Senate already passed such a measure last week so the bills will need to be reconciled.

· MMS update reports 736,279-bpd or 49.09% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 82.736 million barrels or 15.112% of annual Gulf output. There were also 190 platforms and 5 rigs evacuated, or 23.20% of 819 manned platforms and 3.73% of 134 rigs currently operating in the Gulf.

Refinery news:
· Exxon Mobil’s 350,000-bpd Beaumont TX refinery restored normal rates after restarting Oct 18. It shut Sep 23 ahead of Rita.

· Pasadena Refining shut a 56,000-bpd FCC unit at its 100,000-bpd Pasadena, TX refinery due to low lube oil pressure causing the wet gas compressor to trip off.

[cube]

$this->bbcode_second_pass_quote('MrBill', 'T')he problem with Average Joes is they never appreciate what they have.

[Typhoon]

This is just ridiculous. HUZ briefly fell below $1.48, and has been trading below $1.50 for almost the whole day. Is it the weather? As I have said, this mild weather is short-lived. Aren't traders paying attention to forecasts?

Could it be demand? The latest EIA report showed that the four-week moving average of gasoline demand is approaching the year-ago level. Meanwhile, I would have thought that the IEA report was bullish overall.

Do traders even realize that the shipments from Europe are ending, and that we won't be drawing down from the SPR forever? Stockpiles look healthy, but it just seems that could change quickly. Even when talking about normal crude imports, rumors have been that OPEC production has fallen, especially from Iran but also a bit from Iraq and Saudi Arabia. It takes awhile for these things to show up in inventory numbers. I'm also wondering whether there is good global inventory data -- so much attention is paid to the weekly EIA reports.

I sense a good opportunity to go long, although I don't know how one could confirm when prices have bottomed. One could cautiously wait, but risk missing out on a strong move upward. I guess that's the challenge of trading!

[tdrive]

$this->bbcode_second_pass_quote('', 'I') sense a good opportunity to go long, although I don't know how one could confirm when prices have bottomed. One could cautiously wait, but risk missing out on a strong move upward. I guess that's the challenge of trading!

[MrBill]

RE bottom picking

Most traders had expected some sort of bottom formation on Friday. After dropping 6-sessions in a row for $6 or 10% many expected a new low followed by a strong close on short-covering and taking profit which would have been a classic signal and sign of at least a short-term correction? A minimum short-term correction of 0.382 would have been about $59 in the DEC expiring tomorrow or $60 in the JAN. However, we did make a new low in all the products on Friday, but we did not have a strong rally. Not strong enough to indicate a correction. Therefore, it would be a high risk buy to go long at these levels until further confirmation. Maybe we see this today, but so far in European trading we have seen a tepid challenge of the daily highs, but no break through Friday's interday highs. Therefore the bears will be emboldened. They may still want to probe the downside targets before hibernating ahead of the next cold spell?

[SupaNova]

for the record...

Brent Crude is off tomorrow, WTi is not off until Friday.

[MrBill]

$this->bbcode_second_pass_quote('SupaNova', 'f')or the record...

Brent Crude is off tomorrow, WTi is not off until Friday.

[Silverharp]

On financialsense.com newshour recently they did a few segements on oil, and they are forecasting much higher oil prices this winter based on severe winter in US, apparently years with extreme hurracaine seasons have had extreme winters (havnt had time to confirm this obserservation), has anyone come across this, and even if likely does this make an easy futures trade for 3 to 6 mths.
I like the technical situation for the COT reports, the dumb money is short and the commercials are long and given that non commercial shorts cant deliver to the market they will have to cash in

[MrBill]

$this->bbcode_second_pass_quote('', 'N')ews:
· Iraqi oil minister, Ibrahim Bahr al-Ulum, said that October crude oil exports fell to 1.345 mbd due to poor weather. He hoped that full export rates of 1.6 mbd would be reached by in November and by yearend he was aiming for exports to be 1.8 mbd. Bahr al-Ulum said that ports were unable to load for four days due to inclement weather.

· Venezuela’s Energy Minister Rafael Ramirez said that OPEC would probably need to discuss a cut in oil production as US output in the Gulf of Mexico comes back on line.

· MMS update reports 725,423-bpd or 48.36% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 86.395 million barrels or 15.780% of annual Gulf output. There were also 149 platforms and 5 rigs evacuated, or 18.19% of 819 manned platforms and 3.73% of 134 rigs currently operating in the Gulf.

· DOE estimates: Crude up 1.8 million barrels, Distillate up 600K barrels, Gasoline up 1.5 million barrel
Refinery news:

· Delek US Holdings will shut a FCC unit at its 55K bpd refinery in Tyler Texas on November 28th.

[Typhoon]

MrBill, if you're a professional oil and gas trader, you must trade frequently. Do you have any long or short positions right now?

Crude inventories are indeed about 12 percent above last year's level. However, it's an illusion created by the shutdowns of the refineries knocked out by the hurricanes. The refineries have been starting up just as the emergency European imports are ending. This means that there was never a sharp fall in refined product stockpiles, but it means that we are likely to have more crude draws like the one we saw this week. BP's huge Texas City refinery, which is still not running, can alone process over 3,000,000 barrels per week. I'm not very impressed by the crude builds we've had, given all the refineries that were knocked out.

As far as I see, the demand destruction is not as dramatic as the market perceives. The four-week moving averages of U.S. gasoline demand and distillate demand are now both above last year's levels. True, perhaps demand destruction has been more significant in other countries, but I just don't think $60-$70 crude will prove to be enough to close the gap when the supply squeeze becomes noticeable.

I think it's dangerous to assume that oil is headed below $50 by the end of the year. You know more about the oil market than I do, but I think I have a good grasp of the supply situation. I think there will be another run for the highs. The highs probably won't be exceeded the first time around, but I think they will be surpassed sometime in 2006.

Continue to pay attention to the weather! The pattern change that I said would take time is finally coming. There is a cold front moving through the Eastern U.S. this afternoon. Temperatures on the East Coast are mild, but look at temperatures behind the front. In places like Columbus, Ohio, the temperature barely got above freezing. The Upper Midwest is even chillier. There will be several cold fronts coming through as the trough digs deeper. A negative NAO will reinforce the cold air mass. It's hard to tell what the weather will be like past Thanksgiving, but it appears that a block will form northeast of Newfoundland to keep the cold air in the eastern U.S. in place until at least December 10th. A weather pattern can't last forever, so some parts of the winter will be very cold while others will be mild. Every winter has fluctuations like this. Overall, though, this winter will be colder than last winter, and there is a good chance that it will be colder than normal over much of the U.S.

I find it very odd that the market has already decided in mid-November that there is no reason to worry. If that's the case, traders might be in for a shock.

[MrBill]

$this->bbcode_second_pass_quote('', 'N')ews:
· OPEC’s monthly oil market report raised its estimate for US demand growth to 83.3-mbpd this year and 84.8-mbpd next year. This ended six months of downward revisions to world oil demand expectations. Members need to pump 30.32-mbpd this quarter, up 276,000-bpd from last month’s forecast and above the October production level of 30-mbpd. OPEC disputes demand destruction following the US hurricanes and rising energy prices, pointing to “vigorous preliminary growth data from developing countries, a brighter outlook for the world economy particularly for the USA and OECD Pacific countries, and a rebound in Chinese apparent demand.”

· Iraq resumed Basra crude exports following bad weather and a pipeline leak that caused a four-day delay last week. However the flow rate at Basra remains at 1.44-mbpd, down from 1.68-mbpd before the latest problems.

· Chinese oil product exports rose by 33.3% on year to 12.11 million metric tons in the first 10 months of the year.

· Workers at Petrobras accepted a wage offer and averted a potential strike

· MMS update reports 725,423-bpd or 48.35% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 87.119 million barrels or 15.912% of annual Gulf output. There were also 149 platforms and 5 rigs evacuated, or 18.19% of 819 manned platforms and 3.73% of 134 rigs currently operating in the Gulf.

[MrBill]

Hello Typhoon, thanks for those great comments. It is so much appreciated. Here I am on my island exile and my only contact to the outside world is through shreds of information fed to me by kind souls like yourself. Helps a lot.

Well, indeed we did see a short reversal yesterday after what appeared to be a superficially bearish report. Heating oil inventory was up 2.6 mio bbls vs. a f/c of 700K, but the market chose instead to focus on crude surprise draw of 2.2 mio bbls vs. a f/c increase of 2.0 mio and the 900K bbl decrease in unleaded gasoline vs. an add f/c of at least 1.5 mio bbls. That plus colder weather forecasts seemed to draw a line under the free fall in the crude and products, but realistically, one up day does not a reversal make, so we will need to see follow through buying outta NYC before we can claim we have seen the lows ahead of Christmas?

Yes, I am long. I have been defending a long since last Friday at least. Missed some key sell areas, sometimes by as little at 3-8 pts. only to see the market drop 50-100 pts. afterwards, so have spent most of my time coming back from a loss position. A couple of times I got faked out and bought into a bogus rally only to see it reverse early in NY trading. Yesterday, I cut part of my long ahead of the nos. as EVERYONE was bearish and I thought I might be able to pick some up 50 bps. lower after the expected stock build? I was wrong so ended up long, but at a worse average than I would have liked. At the moment, I am long Brent and heating oil. I will try to keep this long and improve my average by day trading, but key is today and what kind of follow through buying we see?

I think you are spot on with your demand destruction comments. Some cash traders have been waiting in the wings for better levels to buy inventory ahead of winter. The Chinese may double their buying of heating oil from 500K tonnes per month to 1 mio tonnes in the next month to stockpile ahead of Lunar New Year in January. That might stick some fire under this rally. Seems to be the same story everywhere. No pressing need to buy, so traders were taking their time, hoping for lower levels? Now if they all rush to pick the bottom now it might alleviate the surplus sloshing around the physical market and we'll see the futures firm up?

However, I try not to have a strong view on price. It can be too dangerous if you convince yourself you are right and the market is wrong. Last summer I just could not believe the rally we were in so I fought against it like a salmon swimming against the current only to die exhausted having reach their goal. I prefer to be a seashell in the surf. Just go with the flow instead of resisting it. But, it is not easy as I am by nature a contrarian. Therefore, only through discipline can I follow my technicals and know when I am wrong and it is time to get out! I wish I was smarter than the market, but I am not

Thanks again for your comments. Take care.

[Typhoon]

There was quite a large NG injection of 53 bcf.