[MrBill]

Making hay while the sun is shining or pumping black gold while the price is high....
$this->bbcode_second_pass_quote('', 'R')ussia, the world's second-largest
oil supplier, boosted output and exports in August from the same
month of 2005, after prices jumped to a record in July.
Average daily oil output rose 2.8 percent to 9.76 million
barrels a day during the month, or 41.27 million tons, from 9.50
million barrels a day, compared with a year earlier, according to
the Energy and Industry Ministry's CDU-TEK unit.
Exports advanced to 5.40 million barrels a day, a 10 percent
jump from a year earlier, and up slightly from the 5.38 million
barrels a day shipped abroad in July.

[MrBill]

My models are in FULL short mode, with the possible exception of some bottom building in the NAT GAS, but that could quickly evaporate in the short-term. Not just my crude oil and products, but also power and coal futures as well. The weaker dollar is lending support to the base and precious metals, but hardly helping the crude complex out here. London took advantage of the Labor Day holiday in the US to push crude down another 100-150 pts. and sure enough WTI gapped lower at the Access open in Asia. There is really no reason to call for a correction at this point. Of course, traders may return from their long weekends and decide that September is a good month to buy now that we are below $70, but they will have to chew through a lot of resistance points on the way back up without any help from external factors like hurricanes and confrontations in the Strait of Hormuz.

This sums it up nicely.
$this->bbcode_second_pass_quote('', ' ') Traders appear to have grown weary of the Iran story as it now appears that any action or solution will be a process that could drag on for months. There have been no hurricanes to speak of. More importantly, the US economy appears to be slowing and traders are starting to turn attention to the actual supplies of crude in storage. And the more focus turns away from perceived threats to supply and keys on actual supply on hand, the lower prices are going to go.

While energy traders had expected a decline in US crude stocks this week, the DOE reported crude stocks increased 2.4 million barrels for the week ending August 25th, pegging US commercial crude oil inventories at 332.8 million barrels. This not only flies in the face of a seasonal tendency of stock declines for this time of year but also means current supplies are approximately 7% higher than the 14 year average for this time of year. Gasoline and distillate stocks also increased indicating that refinery snags are not to blame for excess crude.

While this is normally the time when distributors are accumulating crude oil supplies as heating oil production shifts into full swing, the tendency has not been as pronounced this year (as indicated by the last several DOE and API reports). An initial assumption for this could be to assume that gasoline demand had slackened, allowing crude inventories to build in August. But this is not the case. US Gasoline demand in August was 1.6% higher than August of 2005. Distillate demand was 2.8% higher than last year at this time.

Our inclination is to believe that distributors are postponing forward purchases of crude in the expectation that prices will be lower in September. This could be something for spec traders to take note of. Commercials generally follow core fundamentals and place less emphasis on news stories and emotion. With indications that the US economy is slowing, commercials could be anticipating a slowing of demand. And while speculators have been focusing on Iran, Lebanon and Ernesto, US crude stockpiles have quietly crept up to their highest levels in four years.

[MrBill]

Peak Oil? Not if you're willing to turn The Rocky Mountains into an open pit mine!

$this->bbcode_second_pass_quote('', 'A') report prepared last year for the U.S. Energy Department by the Rand think tank said that about 20 percent of all oil-shale deposits are shallow enough that they may be extracted by strip-mining. However, it said the cost of strip-mining production would be much higher than with in situ, requiring world oil prices of at least $70 to $95 per barrel.

The report also noted that all forms of oil-shale production could cause a big shift toward burning the region's abundant supplies of coal.

Under in situ methods, the report said, each 100,000 barrels produced daily would require about 1.2 gigawatts of electric-generating capacity -- the size of Colorado's largest power plant, a coal-fired facility in nearby Craig. The Energy Department has forecast oil-shale production of 2 million barrels a day by 2020 and eventually 10 million barrels a day.

As a result, the report said, the industry could become a major producer of the greenhouse gases that are linked to global warming.

"The spooky thing is how much power will be needed for the oil shale," said Cook, the county commissioner.

O'Connor said Shell estimates that the energy value of the oil produced would be about 3.5 times greater than the energy in the electricity used to produce it, though he declined to provide details. Udall said such a result would be achievable only with the most expensive, rarely used natural-gas generating technology. Conventional coal-fired power plants would reduce the net power return to about 2 to 1, he said.

[TheGiantWave]

Not much new to add... timing wise I think rallies are still a sell. Don't expect anything quick to come from the UN meeting later this week.

OPEC meeting on Sep-11th...

just playing with hosting some charts here.... below is Z6 Natgas



Thanks to ImageShack for Free Image Hosting

[MrBill]

$this->bbcode_second_pass_quote('TheGiantWave', 'N')ot much new to add... timing wise I think rallies are still a sell. Don't expect anything quick to come from the UN meeting later this week.

OPEC meeting on Sep-11th...

just playing with hosting some charts here.... below is Z6 Natgas



Thanks to ImageShack for Free Image Hosting

[cube]

hmmm....a closing price of $67.55

I've got a strong urge to go long. However what's the old saying? Tyring to pick tops and bottoms can be hazardous to your financial health.

I'm going to wait for now before taking action. If today was indeed the bottom I'll jump in after ~3 weeks. I'd rather pay a little more $$$ and have confidence that the bottom has indeed been hit rather then try to catch the absolute bottom price.

[MrBill]

$this->bbcode_second_pass_quote('cube', 'h')mmm....a closing price of $67.55

I've got a strong urge to go long. However what's the old saying? Tyring to pick tops and bottoms can be hazardous to your financial health.

I'm going to wait for now before taking action. If today was indeed the bottom I'll jump in after ~3 weeks. I'd rather pay a little more $$$ and have confidence that the bottom has indeed been hit rather then try to catch the absolute bottom price.

[cube]

There's a 101 different ways to play the game.

As for me, I'm not here to go rabbit hunting. I'm waiting for the big elephant. Maybe 4 times out of the year a commodity will make a very strong movement. For crude this "strong movement" will translate to about $10. That's what I'm waiting for.

I'm not saying it's the best strategy...it's just the one that fits my personality the most. Some people can't stand this. They want constant action! If they're not opening or closing a contract on a weekly basis they get bored to death. I have a friend who day trades stocks and I asked him what's your definition of a "long term" contract. He replied "10 seconds"!

I guess there's more then 1 way to skin a cat.

[drew]

Will I be bragging a couple of months from now about my Nexen 3-peat, or crying? As many here know, I've made free money on Nexen twice trading it in the 60 to 70 dollar range. I am sooo tempted to pick it up again...it is near 62....


Hmmmmm

Drew

[MrBill]

$this->bbcode_second_pass_quote('drew', 'W')ill I be bragging a couple of months from now about my Nexen 3-peat, or crying? As many here know, I've made free money on Nexen twice trading it in the 60 to 70 dollar range. I am sooo tempted to pick it up again...it is near 62....


Hmmmmm

Drew

[drew]

Good to see you've completely lost your mind today, Mr Bill!

What did someone steal your password and login?



Took awhile to find what you were refering to!


Oh, that Nexen is singing at me with her siren song-61, and I think maybe going down some more.

I didn't know stocks could sing till today.

Drew

[cube]

All the variables have conspired against crude to push it down:
1) hurricane season all huff but no puff
2) Iran drama plays like a broken record that nobody cares for
3) A lack of oil workers getting kidnapped in Nigeria
4) Prudhoe bay will be back online sooner
5) a "mega" oil find in gulf of Mexico
6) Israel invasion of Lebanon halted....ceasefire results
7) OPEC will probably keep the output on full bore
8 ) new report suggests housing slump in USA == economic slowdown
9) Hugo Chavez plays where's Waldo.......btw where did he go?

Did I miss anything?

[firestarter]

$this->bbcode_second_pass_quote('cube', 'A')ll the variables have conspired against crude to push it down:
1) hurricane season all huff but no puff
2) Iran drama plays like a broken record that nobody cares for
3) A lack of oil workers getting kidnapped in Nigeria
4) Prudhoe bay will be back online sooner
5) a "mega" oil find in gulf of Mexico
6) Israel invasion of Lebanon halted....ceasefire results
7) OPEC will probably keep the output on full bore
8 ) new report suggests housing slump in USA == economic slowdown
9) Hugo Chavez plays where's Waldo.......btw where did he go?

Did I miss anything?

[MrBill]

Probing sub-$65 here in Brent at stops gave way to late selling in NYC with WTI as low as $65.65 this morning. Will go out on a limb here and suggest the whole complex will remain weak until at least the OCT contracts start maturing this week and next. Anecdotally, have seen a lot of turning points AFTER the front-month matures usually pushing the roll-over spread to either extremely wide or very narrow levels, in this case likely to be wide.

A strong dollar and weak metals are sapping any cross-commodity support for the complex. However, -16% is starting to look like a real pullback, and not just taking the foot off the accelorator ahead of year-end, so if there are to be bullish inputs per your list above they better start to reassert themselves soon before the great stampede out of commodities as an asset class gets fully underway in Q4'06!

Makes a close at or near $60 for year-end look more likely, which a month ago would have been considered extremely bearish given the long check-list of any number of reasons we might take out $80 and target $100. Ah, it is a truism, the fundamentals are always the clearest at the highs and at the lows.

I am starting the week on my backfoot. Last week was a wash-out with some stops at the absolute daily highs taking me out of short positions. I did sell into Friday afternoon's rally, but was too quick to take profit (at my support level, so at least disciplined), and missed this move from $66 to $65 on the breakdown. At these levels we start to get into oversold territory on the technicals, and therefore are vulnerable to a correction, BUT.... what could trigger it? A list of sanctions against Iran? I dunno if that is enough any more? We'll see?

Here is what Goldie Sachs has to say...

$this->bbcode_second_pass_quote('', 'E')nergy Weekly
Commodities
Price risk sharply biased to the upside

Much of the downside price risk has been priced into the market

Just as Brent led the market up in August, overshooting to the upside, Brent has led the market lower over the past several weeks, overshooting to the downside, as concerns over potential supply disruptions continued to ease. Not only did tensions around Iran’s nuclear dispute continue to ease following a growing opposition to the calls for sanctions against the Teheran government, but the hurricane season in the US Gulf Coast was downgraded once again this past week. Further, the announcement that BP would likely fully restore production in Alaska by the end of October and the approaching autumn refinery maintenance schedule, which was likely brought forward and made larger with the sharp decline in gasoline cracks, contributed to put additional pressure to oil prices.

We believe this pullback in prices is overdone and risks are to the upside

However, we believe that the recent sell-off in both crude oil and gasoline cracks has been overdone to the downside, as the market has already priced in much of the downside threats – political calm in the Middle East, the end of the hurricane season, a large refinery turnaround season, and a slowdown in economic activity. Going forward, we believe that the risks are now biased on the upside and are maintaining our 4Q2006 WTI price forecast of $75/bbl.

Current fundamentals remain supportive, but risks have increased

Despite the recent evidence of an economic slowdown, which was mostly in line with expectations and our underlying economic forecasts, oil demand in the United States and Asia continues to remain very robust. However, confirmation of the expected economic slowdown underscores the need for a cautious outlook on demand, as the risk rises that a sharper-than expected
deceleration could materialize, in particular because of the steep decline in the US housing market and the increasingly hawkish comments from Chinese policy makers.

Oil demand price effects have overwhelmed the income effects

In addition, the recent sell-off in prices has pushed retail prices down on a year-over-year basis and to their lowest levels since March of this year. Over the past year, the price effects have overwhelmed the income effects on demand growth. As a result, the sharp decline in retail prices will likely continue to support demand even as economic activity slows.

[truecougarblue]

I'm back at cash for my speculative piece of the pie. I made some bucks on TOL shorting and miner shorting.

I'll be interested in the trade balance report tommorow. I'm really at a point that I'm seeing much more indecision in the market so I hesitate to make a strong commitment.

US housing market is toast, and to the extent that the economy is being propped up (totally) by bubble dollars I see a big old recession coming down the line. I'm beginning to wonder if we won't really see peak any time soon due to demand destruction.

[cube]

$this->bbcode_second_pass_quote('firestarter', '')$this->bbcode_second_pass_quote('cube', 'A')ll the variables have conspired against crude to push it down:
.....
Did I miss anything?

[Micki]

Perhaps extremly short term view, but it looks as if both gold and oil are in reasonably (intermidiate) strong support area right now.
Just by watching the market action off and on the last couple of days it looks as if oil may have stabilized just on 65$.
Gold is too early to say after last nights stomp but coinsidently it also ended up in a support area. In OZ today we are seing some sell off of resource stocks. Thinking it may be time to get a few long (short term) shares again and stop loss if oil/gold fails support. (The grief doing that here in Oz is that commodities tend to get spanked in the US market and the shares then open with down gaps).

[MrBill]

$this->bbcode_second_pass_quote('Micki', 'P')erhaps extremly short term view, but it looks as if both gold and oil are in reasonably (intermidiate) strong support area right now.
Just by watching the market action off and on the last couple of days it looks as if oil may have stabilized just on 65$.
Gold is too early to say after last nights stomp but coinsidently it also ended up in a support area. In OZ today we are seing some sell off of resource stocks. Thinking it may be time to get a few long (short term) shares again and stop loss if oil/gold fails support. (The grief doing that here in Oz is that commodities tend to get spanked in the US market and the shares then open with down gaps).

[teemu]

$this->bbcode_second_pass_quote('MrBill', 'B')y the way, anyone know of any new refineries anywhere that have actually come online and are producing in 2006?

[MrBill]

$this->bbcode_second_pass_quote('teemu', '')$this->bbcode_second_pass_quote('MrBill', 'B')y the way, anyone know of any new refineries anywhere that have actually come online and are producing in 2006?