[MrBill]

Just re-printing this here for completeness sake.

$this->bbcode_second_pass_quote('', 'Y')ou may want to read this paper by the Federal Reserve Bank of San Francisco appropriated titled Do Oil Futures Prices Help Predict Future Oil Prices?

Quote:
Conclusion
Oil futures prices contain important information about future oil price movements, especially for the near term. In particular, taking into account the relationship between current spot and futures prices instead of considering only the raw futures price can significantly improve forecasting accuracy. Prediction errors, however, are still substantial, and accurately predicting the future price of oil seems as elusive as ever.




My thanks to Policy Pete who spotted this article and posted it to his pages which are another excellent source of information on energy markets in general.

Good luck and have a nice weekend. Cheers.
_________________

[MrBill]

New compliments of Marex Financial

$this->bbcode_second_pass_quote('', '
')News:
· Nigerian president Olusegun Obasanjo refused to confirm whether a deal had been reached for the release of four hostages taken from a Shell platform.
· A Norwegian oil workers union threatened to go on strike June 1 if it received an adverse court ruling on the right to negotiate employment terms for 90 members. The action could have affected 1-mboed in oil and gas output. However the court ruled in the union’s favor so action was less likely.
· TNK-BP says the coldest Russian winter in 30 years is reducing oil output from some Siberian fields by up to 4%, thus reducing national output by as much as 1%. The cold weather began affecting operations Jan 6 and has been sporadic depending on the day.
· OPEC president Edmund Daukoru said he is comfortable with $60 oil and he believes the global economy can live with it. OPEC is committed to supplying the market “at a reasonable price.” But they can’t fix the price.
· Exxon Mobil Exploration president Tim Cejka expects global oil prices will fall because “the oil business is cyclic.”
· Petrologistics report Jan OPEC supply is unchanged from Dec at 29.6-mbpd with OPEC-10 supplies down 200,000-bpd to 27.9-mbpd due to problems in Nigeria and a dip in Iraq though a slight rise in Saudi output made up the shortfall.
· NYMEX has been authorized by UK regulators to start trading a mini Brent contract in London Feb 6. NYMEX also received approval from the US CFTC for electronic trading of European products.
· Intercontinental Exchange’s ICE futures received regulatory approval to list a WTI crude futures contract starting Feb 3.
· Statoil ASA’s Visund oil and gas field may be shut for up to six months following a major gas leak at the North Sea platform. 35,000-bpd in oil output was shut-in.
· Lukoil will cut fuel oil exports in February by a quarter or around 118,000-tons from 435,000-tons in January so as to meet local demand.
· Baker Hughes weekly rig count rose 15 from last week, up 231 year-on-year. Oil rigs down 10.

PERSPECTIVE: Political tensions in Nigeria and Iran as well as Hamas’ victory support crude oil in the upper-$60s while continued mild weather in the US tempers heating demand. US heating oil demand will remain below normal into early February and gasoline demand is flat while stocks are rising. Mar crude is supported at $66.95; resistance is at $68.10. Feb product expiry is on Tuesday. Mar heating oil is supported at $1.8200; resistance is at $1.8550. Mar gasoline is supported at $1.7750; resistance is at $1.8370.

[MrBill]

Hmm, no research today. Sorry about that.

As for tomorrow's inventory forecasts here are what I have

Crude f/c unch'd at 319 mio bbls vs. 3 yr ave 280 mio bbls

Distillates f/c +0.5 mio to 137 mio bbls vs. 3 yr ave 118 mio

Unleaded f/c -0.7 mio to 214 mio bbls vs. 3 yr ave 211 mio

Refinery Runs f/c -0.5% to 85.7% vs. last yr 91.6%

and Thursday's

Nat Gas draws of -70 to -90 bcf vs. -193 bcf last yr and a 5 yr ave of -172 bcf

So, all in all, given less than 1.0 mio bbls swings in forecasts, and given healthy inventories over last year and the 3 year averages, I cannot imagine that stocks data will drive this market forward if over shadowed with events in Iran or Nigeria. On the otherhand, this should reinforce comments from OPEC that they will continue to pump at near record levels to keep markets well supplied. Given this, stocks should comfortably continue to build.

Today was a day of selling the rallies after last night's rally on news that Iran would be refered to the IAEA for possible sanctions. I did manage to get short at 66.60 in the March Brent and take a few points out of the downwards correction to 65.80, but was also fairly unlucky as well as two of my sell orders did not get done. In one case by 1 pip at 66.74 when my order was 66.75, and in another when we fell 4 pips short of 66.39 a little later. That is hard when the price then drops another 50-60 pts. Oh well, did make a little and the ideas were good, if not the execution. Tomorrow is another chance to hang myself. ; - )

[Chaparral]

$this->bbcode_second_pass_quote('MrBill', ' ') Oh well, did make a little and the ideas were good, if not the execution. Tomorrow is another chance to hang myself. ; - )

[Dukat_Reloaded]

Yeah, don't short gold or silver, too risky, I said above, only go long, it's overbought and has been for along time, but it keeps going up. Shorting gold is trying to outsmart the market, going long is going with the market. What do you use to trade? are you using market makers CFD?

[MrBill]

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

· Iranian oil minister Kazem Vaziri-Hamaneh said oil exports wouldn’t be halted because of the dispute over its nuclear program. “We are not mixing politics with the economic decision on this issue.” The issue is expected to be referred to the UN Security Council now that Russia and China have agreed to join the US, UK, France and Germany in such a move at the Feb 2 meeting of the International Atomic Energy Agency.

· OPEC ministers agreed to maintain output quotas at 28-mbpd in a unanimous decision Tuesday. The next ministerial meeting will be March 8th, where a cut could be considered.

· Saudi oil minister Ali Naimi believes oil prices stabilizing around $50-$60 would be “satisfactory” to producers, consumers and investors. Markets are currently tense on account of psychological factors, but OPEC will work to mitigate price fluctuations “from $40, to $50 to $70.” Arabia is producing 9.5-mbpd and is committed to a policy of maintaining 1.5-mbpd in spare capacity. Capacity will rise from 11-mbdp to 12.5-mbpd by 2009. It is seen at 11.3-mbpd in April.

· Iraqi Deputy Prime Minister Ahmad Chalabi said oil output should average 1.57-mbpd this year and he expects $4 billion in investment in the oil industry. Production in the north is expected to rise by 350,000-bpd.

· Japan’s crude oil imports rose 7.6% in December to 22.05 million kiloliters following a 3.8% decline in November.

· Valero CEO Bill Klesse sees US supplies of refined products tight in Q2 due to heavy refinery maintenance. He said 6% of US refining capacity will be shut from Jan-Apr and 11% of US cat cracking capacity will be shutdown in March, tightening gasoline production. Valero plans throughput of around 3.1-mbpd at its 17 North American refineries in Q1. Refining news:

· Valero cut runs slightly at its 170,000-bpd Lima, OH refinery though the gasoline yield remains nearly the same. The high cost of incremental sweet crude was cited as the reason for the reduction.

· Shell is working to restart a 50,000-bpd catcracker at its 412,000-bpd Pernis refinery in Rotterdam that has been down for two weeks. Operations had to be reduced due to a fire on Jan 15.

[shakespear1]

Yes Mr. Bill, best to copy to Clipboard before posting.

[MrBill]

$this->bbcode_second_pass_quote('shakespear1', 'Y')es Mr. Bill, best to copy to Clipboard before posting.

[MrBill]

A huge move lower in the crude yesterday. I think a lot of bulls must have thrown in the towel. Will check the open interest story later. Mind you I feel like a dunce for missing the opportunity to sell not once, but twice. Rule number one should be 'in it to win it'. In otherwords, better to have a small position than none at all. My ideas were good, but completey useless if I put in sell orders above the market and they do not get filled. Better to sell some and add to the short on any rally. More discipline is needed. Oh well, at least the puts are worth a lot more now. I did a delta hedge on them this morning and will try to sell them later today when NY comes in. Not a bad result, but as usual it could have been better.

News compliments of Marex.

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

· The US won’t immediately seek sanctions against Iran following referral to the UN Security Council over the atomic program. US ambassador to the IAEA Greg Schulte said, “We are not now seeking sanctions or other punitive measures on Iran.”

· Iraqi oil exports fell to 1.09-mbpd in January, the lowest level since the post-war recovery because of bad weather, power interruptions and loading problems in the Persian Gulf. The State Oil Marketing Organization has had to defer 17.3 million barrels in crude from Jan to Feb in addition to the 32 million already scheduled for loading. Southern Iraqi output averaged 1.35-mbpd in Jan, down 100,000-bpd from December.

· Statoil won’t be ale to restart its 35,000-bpd Visund platform within the first quarter due to a design and material flaw in the gas flare tank.

· Oil Movements report OPEC exports rose 290,000-bpd to 25.22-mbpd in the four weeks through Feb 18. Typically at this time of year eastbound exports fall slightly, which hasn’t happened this year. Westbound shipments are rose.

Refinery news

· Conoco shut its 255,000-bpd Lake Charles, LA refinery following an explosion and fire late Wednesday.

[DantesPeak]

$this->bbcode_second_pass_quote('', 'H')ere Come the Energy Exchange Traded Funds (ETFs)
by Charles Mackay, Friday February 03 2006
Wall Street Examiner
posted Friday February 03, 12 12 AM ET

We are now more than three years into an energy bull market. It's therefore not surprising energy related investments are attracting more interest from investors. On Friday, February 3, one such new type of investment vehicle, DB Commodity Index Tracking Fund (DBC) will start trading on the American Stock Exchange.

The American Stock Exchange states that "The DB Commodity Index Tracking Fund is a commodity pool designed to track the performance of the Deutsche Bank Liquid Commodity Index-Excess Return." The index itself is formulated as follows: "The amount invested in each of the six commodity classes (the weighting) is pre-determined and reset annually as follows: 35% light, sweet crude oil, 20% heating oil, 12.5% aluminum, 11.25% corn, 11.25% wheat and 10% gold."

[MrBill]

Thanks for that head's up on the DB ETF. I had seen the headline, but not read the story. It looks interesting for me. I want to also compare it to the AIG commodity index future on the CME (I think) to see which one is better to trade.

I have never traded ETFs, so all new to me. However, I am test driving an electronic platform from Dresdner Bank called Gator and it would allow me access to most futures & options on the EUREX/IPE/CME/CBOT/LME, but as far as I know, not the AMEX? Also, found an interesting broker trading platform called interactivebrokers.com, which also looks good, but I have not tested it. It may allow access to other exchanges? Their fees are low and a wide variety of markets to choose from.

As for today's markets. They seem to be hugging the lows here this afternoon. No appreciable bounces and what we have seen in terms of a correction has been aggressively sold into. I am a little long the futures against the my puts, which I was unable to sell (the price is lower than I had hoped for), so don't really know what to do here? I guess another emergency meeting on Iran scheduled for tomorrow, so worth holding the futures in case there is an event over the weekend.

In any case, have a nice weekend and speak to you next week. Cheers.

[truecougarblue]

On the subject of ETFs, I like to use PXE. It has XOM as a major component with a bit more volatility.

[MicroHydro]

Looks like we are going into one of those damned periods that is neither a buying opportunity (too expensive) or a good profit taking opportunity (do you want to be out of the market if something extreme happens geopolitically?) So I guess I will have to sit out the declines like I did in the dreary bear months of October and November.

[drew]

Yeah, Micro, I'm squirming too. I sold my gold shares just after xmas, thinking it was overbought. Sucks to be wrong that's for sure. Like you I am now sitting on the fence wondering my next move. I am feeling decidedly unsure, unlike the last year where I had no doubt of the validity of PO and thus stayed in the market. Having sold my gold, and energy too, I'm sitting on a lot of cash, at least for now, but it doesn't do well as an investment. Everyday I feel the siren call of the yellow metal; what will it do if a recession happens? Any thoughts wise sages???

Drew

[threadbear]

$this->bbcode_second_pass_quote('Gang', 'Y')eah, don't short gold or silver, too risky, I said above, only go long, it's overbought and has been for along time, but it keeps going up. Shorting gold is trying to outsmart the market, going long is going with the market. What do you use to trade? are you using market makers CFD?

[drew]

Threadbear, I was being stupid trying to daytrade the fund I was in. I thought the fund was overbought relative to gold and silver. If you are interested it is called 'central fund of canada'; its symbol is cef.nv.a on the tsx. It is supposed to trade as a percent of its actual holdings of gold and silver, and does to a certain degree. Of course it fluctuates too, which is where I made my mistake.....

Waaaaaa

Yes, I was watching kitco too....

Drew

[MrBill]

$this->bbcode_second_pass_quote('truecougarblue', 'O')n the subject of ETFs, I like to use PXE. It has XOM as a major component with a bit more volatility.

[houlbt]

Good post today Bill with which I could not agree more. The fundamentals at the front are finally beginning to show - particularly evident in the weakening spreads and I've taken the view this morning that this is a rally to sell.

[Doly]

$this->bbcode_second_pass_quote('MrBill', '
')If you are unsure about short term factors, but dead sure about long term fundamentals, then I can only suggest long dated, out of the money calls to express that view.

[houlbt]

$this->bbcode_second_pass_quote('Doly', '')$this->bbcode_second_pass_quote('MrBill', '
')If you are unsure about short term factors, but dead sure about long term fundamentals, then I can only suggest long dated, out of the money calls to express that view.