But overnight the price of oil rose 85¢ to $43.48 on the Lebanese attack on Israel

The Feb NYMEX oil contract closed at $42.63, down substantially from $48.58 the day before and under the 10-day and 20-day moving averages. The WSJ says the 12% drop is the biggest single-day drop in percentage terms since September 2001. One factor was the US dEpt of Energy report showing crude inventories rose 6.7 million barrels last week, many multiples of the forecast. The amount of oil stored at the Cushing,

OK delivery terminal rose to a record high, too, showing weak demand.

But overnight the price of oil rose 85¢ to $43.48 on the Lebanese attack on Israel, the fear starting to grow that a pan-Arab alliance could grow against Israel and ultimately get reflected in a 1983-style embargo for Israeli allies. We say the probability of such an outcome is low. The miscreants are fringe groups, even if they hold power or high influence in Gaza and Lebanon, neither of which is an oil producer and both of which are failed states The question is whether real states want to make trouble and join up with these losers.

Bye For Now

Barbara Rockefeller
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We get the Crude Inventory report tomorrow, probably a sizeable build.

The Dec Nymex Crude oil futures contract closed at $63.22 from $64.15 on Friday, but rose back to $64.89 and is trading at $63.86 a barrel at 9:50 am GMT on the news that OPEC may hold yet another production-cutting meeting in December. Also, the dollar exchange rate fell and Mexico has had to close two facilities due to weather.

We get the inventory report tomorrow, probably a sizeable build.

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Barbara Rockefeller
Forex Trading Reports

Oil traders think it will go well under $50

The Nov NYMEX Crude Oil futures contract rose to $71.85 at the close on Friday after $69.85 the day before, but events are racing ahead. OPEC will hold its meeting early on Oct 24 and announce a cut of 1-2 million barrels per day, according to OPEC Pres Khelil. This sounds like disarray. Fear of production cuts took the oil price up substantially to $74 overnight and $73.86 at 11:10 am GMT.

ING says that if oil goes to $50 next year, the GDP of the Gulf Cooperation Council (including Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar and Bahrain) would contract 25%. Bloomberg reports that put options on Dec NYMEX futures at $50 “soared 28- fold in the past two weeks,” meaning “Contracts that allow holders to sell 1,000 barrels of oil for $50 each by December closed at $280 on the Nymex on Oct. 17, up from $10 on Oct. 3.” This means some Oil traders think it will go well under $50. Deutsche Bank has a 2009 forecast of $60 on the possibility of a major world recession.

We may think that cheaper oil is a nice antidote to recessionary forces, but it’s also a disincentive to exploration and investment, not to mention investment in alternative energy.

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Barbara Rockefeller
Forex Trading Reports

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Crude oil futures contract fell $4.69, or 6.3%, on a good US crude inventory report,

The Nov Crude oil futures contract fell $4.69, or 6.3%, on a good US crude inventory report, to close at $69.85, which is the first close under $70 in over a year. OPEC is rattled, and will meet next week instead of November. Market observers now say OPEC will agree to a cut of one million barrel per day to get the price back up-and the market believed the story. The price rose sharply $73.02 before sinking back to $70.98 at 12:12 pm GMT, according to Bloomberg.

So now it’s a duel between producers determined to keep their budgets funded and a market that sees recession cutting demand by a great deal for a very long time. Mastercard said, for example, that demand for gas fell 9% in the latest week. Demand was not as inelastic as we all thought over the past year. The current thinking is that demand increases from booming economies like China will offset drops in the West for a net flat demand outcome.

Well, maybe. The US consumes 24% of the world’s oil. The US Energy Dept report yesterday that fuel demand averaged about 18.6 million barrels a day during the past four weeks, the lowest since June 1999. US oil supplies rose 5.6 million barrels to 308.2 million barrels last week, and crude inventories are set to rise another 2.6 million barrels, according to the Bloomberg survey.

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Barbara Rockefeller
Forex Trading Reports

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Oil Prices are down 18% from a year ago and have dropped 51% from the record $147.27 a barrel reached on July 11

The Nov NYMEX oil futures contract closed lower at $74.53 from $78.63 the day before. It is now firmly under the $80 key level. Today it fell further to $71.21, the lowest since Aug 2007, and is trading on the soft wide at $72.30 at 11:09 am GMT. Bloomberg says Prices are down 18% from a year ago and have dropped 51% from the record $147.27 a barrel reached on July 11.

So, OPEC can hold an emergency meeting in November but it may not have any effect on the price of oil-fear of recession and demand destruction are stronger. Even Hurricane Omar, which caused a Virgin Islands refinery to shut down, is not having the usual effect.

Gold Futures are soft, having fallen to $835.50 from $836.30 the day before. Some analysts say gold is not thriving because some futures traders are getting hit with margin calls or otherwise need to raise cash.

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Oil Prices are down 18% from a year ago and have dropped 51% from the record $147.27 a barrel reached on July 11

The Nov NYMEX oil futures contract closed lower at $74.53 from $78.63 the day before. It is now firmly under the $80 key level. Today it fell further to $71.21, the lowest since Aug 2007, and is trading on the soft wide at $72.30 at 11:09 am GMT. Bloomberg says “Prices are down 18% from a year ago and have dropped 51% from the record $147.27 a barrel reached on July 11.”

So, OPEC can hold an emergency meeting in November but it may not have any effect on the price of oil-fear of recession and “demand destruction” are stronger. Even Hurricane Omar, which caused a Virgin Islands refinery to shut down, is not having the usual effect.

Gold Futures are soft, having fallen to $835.50 from $836.30 the day before. Some analysts say gold is not thriving because some futures traders are getting hit with margin calls or otherwise need to raise cash.

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Barbara Rockefeller
Forex Trading Reports

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NYMEX Crude Oil futures contract made a new low of $86.05 yesterday

The NYMEX Crude Oil futures contract made a new low of $86.05 yesterday, but followed stocks up to close at $88.95. Overnight it went further to $89.82, and is trading at $89.49 at 10:20 am GMT. This is something like a vote of confidence in governments’ ability to fix the situation and perhaps avert the worst of recessions. Alas, with US rates already near all-time lows, monetary policy is running out of room to cheer stock markets.

Late yesterday, according to the FT, the hawkish group in OPEC (Iran, Libya, Nigeria, Iraq, Venezuela and Ecuador) are pressing for an emergency meeting to cut production on Nov 18. The regular meeting is scheduled for December 17. Oil is not that far from $85, the same level as December last year. Wait a minute-Iraq?

The US Crude inventory report was pretty good (for lower prices). Bloomberg reports that US fuel demand averaged about 18.7 million barrels a day during the past four weeks, the lowest since June 1999 and down 8.6% y/y. Gasoline supplies rose 7.18 million barrels, up 4% for the biggest gain in 7 years, and refinery capacity rose 8.7% to 80.9%, the biggest increase in refinery utilization in records that go back to 1989. Demand is not as inelastic as we thought.

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Barbara Rockefeller - Forex Trading Reports

Crude Oil falling global recession arrives

The Nov NYMEX Crude oil futures contract closed three cents over the open at $93.88 from $93.85, but made a new low. On the chart, the red line denotes a price of $80, which is certainly attainable if the technical trend continues. The contract crashed to $89.07 before recovering to $90.43 at 10:56 am GMT. This is the lowest since Feb and a 5% drop in a single session. The universal sentiment is the “demand destruction” is really occurring as global recession arrives. Over the weekend, Iranian Oil Minister Nozari said the market is oversupplied.

Aramco cut its official selling prices for exports to Asia and the US, according to Bloomberg (a cut of 30¢ to a discount of $3.40 a barrel below the West Texas Intermediate benchmark). Bloomberg also points out that crude oil prices are now down 39% from the record $147.27 reached on July 11. Oil fell 12% last week alone.

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Barbara Rockefeller - Forex Trading Reports

US Dollar exchange rate 1.7385

Nymex Crude Oil Futures contract failed to put in a higher high

The Nov Nymex Crude Oil Futures contract failed to put in a higher high and did put in a lower low, but closed up at $100.64-a bar that sends conflicting trading signals. So far today it has reached a new high of $102.84, over yesterday’s high of $102.46, but at 11:24 am GMT, it’s back down to $100.64, yesterday’s close.

We get the usual Wednesday US Energy Dept report today, probably showing a rise in crude stockpiles and a drop in gasoline because of storm-related refinery shutdowns and pipeline problems. Bloomberg says “gasoline stockpiles probably fell 2.05 million barrels in the week ended Sept. 26 from 178.7 million barrels in the previous week, according to the median of 13 analyst estimates before an Energy Department report today. Supplies in the week ended Sept. 19 were the lowest since 1967.”

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Barbara Rockefeller - Forex Trading Forex

Higher Crude Oil Prices ahead unless recession story geta a grip

The Nov Nymex crude oil futures contract opened at $108.98, hit a high of $109.58 but closed down at $106.61. It was fairly tame in Asia overnight, helping equities, but this morning in London, it’s rising again to a high of $109.50 and is near that at 7:30 am ET. Reasons include a fire in Texas, the upcoming crude oil inventory report today from the US Energy Dept (sure to be a drop in just about every category because of the hurricanes), and genral uncertainty about the bailout and resulting economic outlook. We say the chart is very discouraging—it looks like an upside breakout really did form and higher prices are ahead.

This could be reversed if the recession story gets a grip again.

Bye For Now

Barbara Rockefeller

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