Oil pulled lower by U.S. GDP data

NYMEX Crude Oil Futures for April delivery fell 0.80 to settle at 44.44 a barrel.

That is 11% higher than Monday`s opening price. Even though, many oil traders say there is little chance prices will hold in the current economic environment, which has led to an anemic demand for energy. The sentiment is still bearish for oil prices.

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Is USO under Investigation?

Today there is an article about a possible pending investigation in the United States Oil Fund in the Reuters Website:

United States Oil Fund LP is not under investigation, despite the massive futures position the firm's exchange-traded fund holds in the U.S. crude oil futures market, the U.S. Commodity Futures Trading Commission said on Thursday.

"There is no indication there is an investigation," CFTC spokesman R. David Gary said. He added, however, that the agency was monitoring USO's huge position as part of its normal surveillance activities.

The firm's exchange-traded fund is a passive investment vehicle traded on stock exchanges that allows non-oil trade participants exposure to oil futures movements.

USO's positions in crude have ballooned in recent months, and reached nearly a quarter of the March positions on the New York Mercantile Exchange at one point.

Gary said CFTC's monitoring of USO's positions was routine.

"We monitor all these markets ...," Gary said. "U.S. Oil, as an SEC registered-fund, has to release its postions so that everyone knows the size of its positions and the various contracts that it holds ... just normal surveillance activities from our standpoint in terms of discharging our responsibilities."

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Doug Casey is Bullish on Oil

Doug Casey, the famous investor and best-selling financial author and entrepreneur is bullish on oil.

He said in an interview that "I don`t think oil will stay where it is. I think oil`s eventually headed back to 150 dollars a barrel or more". Doug Casey added "I would say that oil is a good thing to own. Oil is a real buy now. It is as good a buy at 40 as gold is at 900 right now. Maybe a better buy"

Doug has written a monthly investment newsletter, The International Speculator since 1979.

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Oil near a Month High

Oil futures rose, trading near the highest in a month, as stronger equities markets and declining U.S. gasoline supplies increased speculation that fuel demand may improve. Yesterday, the contract rose 2.54 dollars a barrel, or 6.4%, to 42.50 a barrel, the highest settlement since January 26.

Word on the Trading Desks:

“The market is consolidating after last night’s gains on the back of a fairly bullish U.S. fuel inventories report” Andrey Kryuchenkov, VTB Capital, London

“Risk sentiment has improved, with gains in global equities also supporting the market” Andrey Kryuchenkov, VTB Capital, London

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Oil Rallies on Inventory Data

For the second week in a row the inventory data fuels a rally in the crude oil NYMEX futures. This is the time to get in this market as a long term bottom maybe already made.

"Crude oil futures jumped about 2.5% in New York after government inventory data showed a smaller-than-expected buildup in oil stocks, and a sizeable drawdown on gasoline stocks. That could be a sign of a tepid recovery in demand in the world’s biggest oil-consuming nation.

The restrained reaction was a contrast to last week, when an unexpected decline in U.S. oil stocks turbocharged crude prices, which leapt 14% in a day.

Data from the U.S. Energy Information Administration showed U.S. crude stockpiles rose just 717,000 barrels—about half as much as analysts were expecting. Gasoline stocks fell 3.3 million barrels, the largest weekly drop since hurricane season last September." in the Wall Street Journal

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Oil Rallies Over 4% and Trades along the Stock Markets

Crude oil was little changed this morning after rallying for the first time in 3 days as the U.S. stock market advanced. Oil futures climbed 4% yesterday.

This is the word on the oil traders desks:

“People do look at the Dow and the S&P for signs that the economy is recovering and if the economy picks up then oil demand will pick up” Clarence Chu, a trader at Hudson Capital Energy

"The equities rally is supporting the market" Tony Machacek, Bache Commodities Ltd.

What is driving oil sentiment at the present time is the appetite for risky assets like stocks and the australian dollar. If sentiment improves in the stock market we cabn have a rebound in oil, but longer term demand will be the main driver of oil prices.

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Contango Impact on USO

I found a very good article on the contango in the oil market and its effect on the Oil ETF, United States Oil Fund or USO:

USO: Death by a Thousand Contango

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Interesting Article on Oil and USO

This is an interesting part of an article on Oil I have found in Seeking Alpha:

"Be a contrarian: Crude has fallen an unprecedented amount. This has caused USO to implode nearly 80% from last year's highs. It has simply dropped too much in too short of a timeframe. Those who have the risk tolerance to buy now, set themselves up for the biggest reward. To exploit an over-reactive market, prudent buyers hone in on unpopular ideas, and USO 's sentiment is so negative at this juncture, it is clearly near an important turning point. The game is merely about buying low and selling high, and to do so, the investor must buy when an equity is unpopular and conversely sell, when it is popular. How else are you supposed to buy low and sell high? Easy to say, hard to do." Mark Krieger, Trader

Mark Krieger is a Registered Investment Adviser and he has been active the past 20 years as a trader, portfolio manager, and shareholder activist.

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Oil Performs

Oil was the second best performing investment of last week, just behind Gold. I highlight the difference in performance between Gold and Oil during the last 52 Weeks. While oil is down 60%, Gold futures are up 6%. The contango has been brutally diminished and we are calling a bottom for the oil prices.



Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

Merrill Lynch calls a Bottom in Oil

Merrill Lynch's Gary Dugan told the British Newspaper Weekly Telegraph he expects oil prices to rise from these levels.

"We believe that oil will bottom out at around $30, and will average between $40 and $45 over the course of 2009" Gary Dugan, ML


Oil Traders Blog is a website for active online oil futures or ETF traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

A New Bull Market in Oil?

He had a huge rally yesterday in the crude oil futures markets propped by the fall in US oil inventories and the weakness of the US dollar. Is this the beginnning of a new bull move for oil?

Obviously it is to early to say, but people who will buy now will surely profit in a 6 to 12 months. Another very good thing for long term oil investors is that the contango in the futures markets has been greatly reduced. Now, it is not so expensive to hold oil for the long term.

I recall the Jeremy Grantham interview posted here this week, and this Jim Rogers`s article about oil prices. These are two very smart investors going long oil.

Oil Traders Blog is a website for active online oil futures traders. We provide research and relevant oil and energy related news for the oil trader or daytrader.

George Soros adds to Energy Stock

George Soros, the famous hedge-fund manager bought more stock of Petroleo Brasileiro SA and Potash Corp. of Saskatchewan Inc. in the fourth quarter, almost doubling its holdings.

Soros Fund Management LLC bought 16 million shares of Petrobras’ U.S.-traded stock, bringing its stake to 1.45 percent, according to a filing yesterday with the U.S. Securities and Exchange Commission. Petrobras and Potash are now the firm’s two biggest reported U.S. stocks.

George Soros is buying commodity related stocks. What we would like to know is his view on the futures oil prices. Is he buying oil through his futures brokers?

CNBC Commodities Page

CNBC now has a nice page where you can follow most commodity futures prices, like energy futures, agricultural futures, metals futures like gold and silver and commodities related ETF`s.

Beside the quotes CNBC also displays some basic commodity charts and futures charts.

A page to Bookmark if you are interested in commodity futures trading or online trading in general.

Supply Problems Ahead?

The International Energy Agency said on Monday there could be an oil market supply crunch from next year once global oil demand begins to recover.

The IEA's executive director, Nobuo Tanaka, told reporters on the sidelines of a conference in London that he expected world oil demand to resume growth from next year.

"Currently the demand is very low due to the very bad economic situation but when the economy starts growing, recovery comes again in 2010 and then onward, we may have another serious supply crunch if capital investment is not coming" ,Tanaka said.

Tanaka urged the Organization of the Petroleum Exporting Countries not to seek rapid rises in oil prices through further supply cuts.

If you do commodities futures trading you can benefit hugely from this website. The Oil Traders Blog is a good source for oil and commodities research. If you are thinking about investing in oil, this is the website for you.

Reuters/Jefferies CRB Index at a Five Year Low

An Energy Department report tomorrow will probably show U.S. crude oil inventories rose 3.2 million barrels last week, according to the median of 11 analyst responses in a Bloomberg News survey.

The Reuters/Jefferies CRB Index of 19 commodities prices fell yesterday to 203.25, the lowest since June 21, 2002, and has slipped 11 percent this year.

If you are considering commodities futures trading maybe its time to begin buying some commodity futures or commodity related stocks.

Bad Economic News in Asia sends Oil Lower

Following Monday's report that the japanese economy contracted by the most since 1973, a Reuters poll showed confidence among japanese manufacturers is near record lows and service sector sentiment fell to its worst levels ever.

Contango diminished Friday with the huge rally on ths front month future contract. If contango disappears, long term investors may begin to consider taking big long oil positions. But with this type of contango all long positions can`t be held for long because the contango, rolling yield over 15% per month will just kill you. Good for the conviction shorts, though.

Oil Traders Blog is a website for futures traders and people considering investing in oil.

Oil and Gasoline Price Divergence

The USA Today has an interesting article on this price divergence between NYMEX curde oil prices and gasoline retail prices, Low oil prices are not translating into low gas prices.

Bespoke Investment Group also performed a good analysis on this divergence:


And their respective Exchange Traded Funds performance year to date:



Last week in the Wall Street Journal, Mark Gongloff also focused on the fact that gasoline prices have stopped going down for the time being.

"This is highlighted perfectly by looking at the price charts of the oil and gasoline ETFs. In the first chart below, we provide a one-year chart of USO (oil ETF) and UGA (gasoline ETF). Even as oil prices have continued to fall in recent weeks, gasoline has diverged and gone higher. The second chart looks at the year to date change of the two commodity ETFs. As shown, USO is down 23% year to date, while UGA is up nearly 23%. This divergence is not what the consumer needs right now!" Bespoke Investment Group

Jeremy Grantham on Oil

In a recent interview Jeremy Grantham talked about the NYMEX Crude Oil Futures market and here is the transcript of the most important parts of that interview:

"(...) But what people underestimate, even in the oil industry, is how volatile the asset class is. In other words, if the trend is 65 dollars a barrel, it is fairly routine for oil to sell below half, say 30 dollars a barrel, and more than double, say 145.

And people never get that. So you don't want to be too quick to buy into weakness or sell into strength, necessarily. But it can go a long way. But below 40, I must say, I do get a bit interested. And below 30, I'm definitely a buyer." Jeremy Grantham

Watch the full Jeremy Grantham video interview with Steve Forbes here.

OPEC Cut? Probably Not.

Bloomberg News has an article on its front page about OPEC Cut Is ‘Strong Possibility’ With Oil Below $40

Most interesting parts:

“If the price is lower than $40 a barrel, then there will be a strong possibility of another cut” Mohammad Ali Khatibi, Iran’s OPEC governor.

“But if the price will improve -- the U.S. gasoline price is increasing now, which is a good signal that consumption is growing - then the possibility of a cut will be weak.” Mohammad Ali Khatibi, Iran’s OPEC governor.

In the International Herald Tribune there is an interesting article about Kuwait, LINK: Kuwaiti official: Oil to stay around $40 a barrel.

Most interesting part:

A top Kuwaiti oil official says crude oil prices are unlikely to rise above $40 per barrel, even if OPEC decides to enact a production cut of as much as 2 million barrels per day at its meeting next month.

The Associated Press also has posted a very good article about Oil and Gas Prices, Crude oil is getting cheaper. So why isn't gas?

Will the Contango keep diminishing this week? Is the oil market going to return to normal pricing soon? Its about time.

Major Short Covering Rally

NYMEX Crude Oil futures surged in the last trading day of the week, rallying more than 10%. A major short squeeze went through as investors bought the front month contract on the heels of 5 consecutive down days. Oil was at a 2 month low.

Some investors who had been shorting the March contract were also buying back the contract to cover their short positions before the contract expires.

Crude for March delivery ended up 3.53 dollars a barrel, or 10.4%, at $37.51 a barrel on the NYMEX.

Despite Friday's surge, the March Nymex Future contract lost 6.6 percent this week.

Is Oil Oversold? Watch China.

NYMEX oil futures rose to near 35 USD a barrel on GLOBEX electronic trading. Oil has been down in the last 5 sessions in a row.

Yesterday NYMEX Oil Futures settled at 33.98 USD, down 1.96 USD per barrel. Quite a drop.

The Brent March contract expired on Thursday at $44.65, extending its premium to U.S. NYMEX Crude Oil Futures to more than 10 USD.

Dollar is down today and equities are performing well, we might have a bounce today. Watch the signals from the Chinese Economy that is already picking up. There is a nice article about China in Bloomberg today. China might be the wild card in the Oil Futures Market.

IEA Warns of Possible Supply Problems Down the Road

World oil demand will contract in 2009 by the most since 1982 due to extreme economic weakness around the world, the International Energy Agency printed in their monthly energy report.

Supply will be lower than previously expected this year but underlining that the world economy is risking a new price surge when demand recovers.

Global demand is expected to diminish by 980,000 barrels per day to 84,700,000 bpd in 2009 while lsat month the IEA forecasted demand to contract only by 500,000 bpd.

Supply Impact

The IEA also said that future oil supply growth has come under threat from the collapse in prices because new projects are being canceled (members of the Organization of the Petroleum Exporting Countries (OPEC) have delayed 35 new oil projects).

Since oil topped in July, the IEA has cut its estimate of potential supply in 2009 from oil producers by 1 million bpd.

"The danger is that if too much investment slips now, the scale of the price response to resurgent demand could again destabilize the global economy." David Fyfe, head of the IEA's Oil Industry and Markets Division.

Oil trading has been dominated by the bears with futures prices collapsing and the market is in deep contango, which harms Long Oil Exchange Traded Funds like United States Oil Fund.

IEA cuts Demand Forecasts for OIL

"The International Energy Agency on Wednesday subtracted 570,000 barrels a day off its 2009 world oil consumption forecast due to weak global economic activity and warned that increasing trade protectionism could further damage energy consumption.

In its latest downward demand revision, the IEA forecast world oil consumption to slow to 84.7 million barrels a day, representing a drop of one million barrels a day, or 1.1%, from 2008 and the biggest annual drop in 27 years.

Economic recession in the U.S. and many other developed nations is expected to rollback world oil consumption to 2006 levels.

In another sign of how weak demand is, total crude oil consumption in the U.S., the world's biggest consumer, is expected to fall to 1998 levels. U.S. consumption is projected at 19 million barrels a day, a 2.9% drop from last year when demand fell by more than 5%.

"We seem to be on a downward escalator we can't get off of. Until we see a bottoming out and a degree of stability on the financial and economic side, energy market weakness is going be with us for some time" said David Fyfe, editor of the IEA report." in the Wall Street Journal

Demand keeps falling and the Contango is wider again. Conditions are still favouring the bears.

Oil Down on Bank Rescue Plan

Crude Oil NYMEX futures dropped to a 3 week low on skepticism about the U.S. government’s bank rescue plan.

Oil dropped as much as 5.6% after Treasury Secretary Timothy Geithner said he is exploring a range of different structures to bail out lenders.

Later today, a U.S. government report will probably show that crude oil stockpiles increased 2.75 mln barrels last week, according to the median of 14 analyst forecasts in a Bloomberg News survey.

A Big Explosive Move Coming?

Contrary to early 2008, oil and the stock market are now marching in lock-step. As the stock market's trading range tightened, oil's has done likewiseand volatility is down.

Can we have an explosive move, up or down from these levels? A tight consolodation like this is a technical sign that a big move might occur soon. Oil is currently trading between 40 and 50 dollars a barrel. These are the support and resistance areas oil traders are watching right now. Over the last two weeks the range in oil trading has become extremely narrow.

However, in which direction this move will occur is difficult to say at this time, but I will think it will be on the upside because risky assets like the Australian Dollar and Stocks have been performing rather well lately.

Much like the stock market indexes, oil must also contend with its 50 day moving average. The first test failed, but we might test again in the next few days.

As for the ETF, USO, the price actually sits below the support area. Its trading range is between 29 and 40 dollars a barrel with an huge surge in volume over the last several weeks. Are long term buyers beginning to accumulate?

OPEC is Cutting But Not Fast Enough

OPEC is cutting but not fast ebnough to catch up with the US demand destruction:

"The Organization of Petroleum Exporting Countries cut crude-oil output by nearly 1.3 million barrels a day in January in an attempt to tame the supply glut that is anchoring prices near 40 a barrel.

But as the cartel tightened the taps, crude-oil inventories in the U.S. were increasing by 700,000 to 900,000 barrels a day. That growth rate, the most seen in the month of January in 85 years and the highest in any month since at least October 2002, is a setback to OPEC's efforts." in the Wall Street Journal



Oil futures are trading higher today with the USO (United States Oil Fund), the most liquid oil ETF rising 3%.

Inflation Adjusted Record Low for Oil is 18.90 USD in 1986

Some analysts predict oil prices could fall to as low as 25 dollars a barrel in the second quarter comparing to the inflation-adjusted record low for Nymex oil is at 18.90 dollars a barrel, hit on April 1, 1986.

In non-adjusted dollar terms, that low was 9.75 dollars a barrel, the only time in NYMEX history that oil fell below 10 dollars a barrel.

When trading crude oil futures or oil ETF`s always look to trade with very low comissions and spreads, otherwise you will completely deplet your trading account.

United States Oil Fund reaches Record Investment Levels

Retail investors have poured record amounts of money into oil ETFs.

Investment Data showed investment in oil ETFs like USO, DBO and OIL, a easy way to invest in oil for retail investors, has reached record levels. The number of crude futures contracts held by the United States Oil Fund the largest oil ETF, hit a record high near 80,000 recently.

Oil Has Its Biggest Annual Fall Ever in 2008

Last year, the commodity proved one of the best ways to earn a lot of money - and then, to lose it all. After hitting a record high of 147 a barrel in July, oil fell more than 100 bucks, or 70% by year-end. It closed 2008 down 54%, its biggest loss ever and more than the stock market's enormous slide.

Oil is Down 10% Year to Date

Trading in the first months of this year also didn't bode well for oil bulls. Crude has lost 10% so far this year, compared with a 5% loss in the Reuters/Jefferies CRB commodities index, and a 4% gain in gold prices. Oil is clearly underperforming other commodities and risky assets.

On Friday, crude oil futures fell more than 2 percent on the NYMEX after the U.S. reported a 16-year high unemployment rate and the biggest loss in non farm payrolls in decades.

Inflation Adjusted Record Low for Oil is 18.90 USD in 1986

Some analysts predict oil prices could fall to as low as 25 dollars a barrel in the second quarter comparing to the inflation-adjusted record low for Nymex oil is at 18.90 dollars a barrel, hit on April 1, 1986. In non-adjusted dollar terms, that low was 9.75 dollars a barrel, the only time in NYMEX history that oil fell below 10 dollars a barrel.

USO Oil ETF still Below 10 Day EMA

The most active oil ETF is still trading below its 10 day Exponencial moving average. I am looking forward to buy on the crossover. Risky assets like the australian dollar, stocks, copper are being bought in the last few trading sessions.

The stage is set for an Oil Rally.

Is Oil in a Trading Range?

This is today`s word on the trading desks. Traders think oil futures are forming a short term trading range.

"Crude-oil markets still seem to be trapped within a trading range, as market anticipation about OPEC cuts -- both current and pending-- is keeping something of a floor below prices, while the upside is capped by lingering concerns over the macro situation" Edward Meir, an analyst at MF Global

“Oil traders are likely to wait for non-farm payroll data release tomorrow as a leading indicator of underlying oil demand” said Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group Ltd. in London

“The market is stuck in a sideways range as the impact of the OPEC production cuts conflicts with high stock levels and weak demand” said Christopher Bellew, senior broker with Bache Commodities Ltd. in London

Crude oil has been trading at about 40 a barrel in the past three days. Short term technical indicators keep indicating lower prices.

Oil Traders is a website for NYMEX Crude Oil Futures traders and Oil ETF`s traders around the world.

OPEC may Cut Further on March 15

OPEC may cut its production further at the next meeting being held on March 15.

Former OPEC President Chakib Khelil said that if present output cuts don’t result in higher oil prices OPEC must cut production again.

The OPEC countries need crude oil prices above 70 a barrel to invest and develop new oilfields, Khelil said today.

Trading Maxim

This is one of the best quotes I have ever read about trading:

"There is no such thing as being right or beating the market. If you make money, is because you understood the same thing the market did. If you lose money, it is simply because you got it wrong. There is no other way of looking at it"

I think this is an useful piece for every trader out there.

Is OPEC cutting Production?

OPEC production averaged 28565 mln barrels/day in January, down 3.5% from December (Bloomberg News).

“Compliance by OPEC is better than in the past” said Sinte Diek, an analyst at HSH Nordbank in Hamburg, Germany. Current oil prices “are really disturbing the budget deficits,” of many OPEC member countries.

Crude oil was gaining 2%, to 40.87 a barrel in after-hours NYMEX Futures Trading. Oil is down 9.1% year to date and down 55% from last year.

Speculators Increased Their Long Positions

Hedge-fund managers and other large speculators increased their net-long position in NYMEX OIL futures last week, according to U.S. Commodity Futures Trading Commission.

Speculative long positions outnumbered short positions by 51,652 contracts on the NYMEX, the Commitments of Traders report showed. Net-long positions rose by 5518 contracts, or 12%, from last week.

Today all risky assets are being sold again, and within this context we may hit new lows on the NYMEX Oil Futures in the next few days.