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Archive of Oil & Gas from 2008 - 2010   

2010.10.01 The fall of USD does not benefit gold but also oil; may be. Perhaps the real reason could be the understanding of China growth is real and the manipulation of the oil inventory. After a few weeks of increasing oil (adding up to 5M barrels) we have a drop of 5M barrels drop this week. What a coincidence.

2010.09.30 Association on Study of Peak Oil and Study USA on its Oil Notes today reports "Two reports from China this week show manufacturing activity continuing to grow. The official Saudi Press Agency says that Saudi exports to China will grow by 19 percent this year and that China will overtake the US as the largest purchaser of Saudi oil. The Asian Development Bank says China’s GDP will grow 9.6 percent this year and 9.1 percent in 2011. The news from China has analysts talking about oil breaking through the $80 ceiling. Oil briefly touched $93 in February, but has not been higher since the fall of 2008.". These are two important messages. The first is that the China's economy growth continues at least 9%. By implication, oil demand continues to mount. The second message is that China becomes the biggest oil customer of Saudi. This could means the oil trade payment could continue on U$ for China to get rid of the U$. As the result, U$ still reigns the business world. The second message confirms the first.

2010.09.17 Oil continues the volatility. NG recovers above U$4. Winter is coming. Both could use the help. We may want to pay special attention to the recovery of gas above U$4.

2010.09.11 Status quo. The prices of oil and gas are moving in a range for over a year now. If there is any break up or down, it could happen during the year end.

2010.09.03 The gas and oil fall rotation carries on. But the bottom of the low is getting higher and higher.

2010.08.27 The OBV is  turn to dive for last two weeks. From the EIA weekly inventory numbers, it shows tremendous accumulation of NG for this summer which is not cool at all. As the result NG should be down in light of increasing inventory. The question is where is the fuel coming from when oil consumption is down, bio-fuel is down and oil supply is down. The reaction to the number is genuine but is the number reliable?

2010.08.20 No matter how you cut it, oil and gas can be described by one word: weak. However, is this the truth or the result of fabrication.

2010.08.13 Oil and gas continue to react to the fabricated news of China slows down, demand tanks, etc.

2010.08.06 Oil is now broken the U$80 but does not break U$84 which is the resistance. NG is pulled back during the middle of summer. Oil is in better position than NG.

2010.07.30 It is is not just NG bounding up and down. Oil too. It bounds between U$72 to U$80. This is a health movement.

2010.07.16 Range bound act n+1. NG's amazing turnaround should not be mistaken as confirmation of new direction. It is just suppressed so much by news that single movement becomes meaningless. Oil has developed a very interesting situation. The 200MA is turning higher or at least flat. So the price from here could be violent before break up.

2010.07.09 Oil is in a great dip but rebounce. NG is doing its n-th times dip. So both are actually in range bound.

2010.07.03 The sky is falling. This is not Chicken Little. It only happens once in awhile. But this is real. The WTI and the USD falls at the same time. The Arabians are hurt with this double whammy. Is American the oil price supporter or the BRIC consumer. I would vote both. The American is very insensitive to the price because their livelihood is built with fossil fuel usage. House, car, travel and may luxurious spending are norm for most of them, not those at the lower echelon. The BRIC consumers are still mounting their spending because of the inflational income. American stats are losing the credit because they are in continuous flux of correction.

2010.06.25 The movement of oil and gas have just reversed this week. Oil fell first and rose later. Gas just continue to fall. NG is now resting just above the 200MA. If it does not recover, it may sink further. Oil is just the opposite that recovered nicely to U$78. From the chart below, we see USD precipitates seriously while oil inches up. Oil is toppy. It may run its correction if not it is forming a right shoulder which could cause serious damage.

2010.06.21 Japan and China have been actively pursuit oil deals in Middle East. Japan has non-Government operated oil companies drilling and producing for her country. China has been actively buying oil from Saudi. The most recent news was joint venture with BP in Iraq. Association of Peak Oil and Gas Study's June 21 Peak Oil Review quoted "The Saudis reported last week that during 2009 56 percent of their exports went to Asian markets. The US share of Saudi exports dropped from 20 to 14 percent between 2008 and 2009 while the EU’s share dropped from 12 to 10 percent." We have witness the declining of world oil production while American and European are not increasing the production. The Asian's demand form China and India is just start to ramp up, the supply and demand equation is definitely tilted to the demand side notwithstanding the short term fluctuation. This explains a very steep contango for oil future. To confirm this conjecture, we have to identify whether the reduction of the Saudi export to American and Europe are caused by the increase of Asian purchase.

2010.06.16 WTI continues the march. NG pulls back by 5% to drop below the U$5 mark. It is a psych barrier more than any material technical barrier now. During the thinly traded evening, NG climbs above the U$5 mark to U$5.039 or 0.6% compares to the end of day price at 17:00 EST. All these are noises and sparkles. The important technical event is both break above the 200MA. NG broke earlier, pulled back but hold high. WTI just did that today for its 200MA and 50MA. So we have seen an established major energy trend. If we take a look at the distillates such as heating oil and gasoline. Both also broke the 200MA last week. The trend is now lined up. Let see what is the NG inventory report can do to the NG price.

2010.06.15 WTI prices broke the tradition that falls before the Wednesday EIA report. It is not fall but up 3% by U$2.30 to U$77.05 for WTI at the end of the COMDEX price. Volume is not impressive. It is just the 200 day volume average. The jump is not necessary short covering but speculation. These speculation are rare. The price of oil is now entered a critical recovery position. If the oil inventory support such speculation, the price will start to build a plateau. There is a high probability that the price could hold because the OBV is rising with the RSI at 60 range. There could be room to go.

2010.06.12 WTI's 200MA continues to show the danger of becoming negative. Lets see what happen. NG show some resilience to the sell pressure and broke above the 200MA which is positive.

2010.06.05 WTI's 200MA is turning downward. Its upward momentum is really weakening. There is a chance to see WTI goes under U$70 while the GOM Deepwater BP fiasco continues. This is a strange combination with the strong rally of natural gas which made 6% and and 5% gain on the last two trading days of the week. The rally of NG will trigger more short covering if it does not level. This could be the reason for the selling of the WTI.

2010.05.28 Energy volatility could be at the best performance. WTI drops below U$70 and comes back in just a couple of days. Gold may gain 400% since 2000 but WTI gains 100% in one year. When the market is pounded down, the WTI and NG will be sold to cover the margin.

2010.05.21 There are no specific reason to have weak oil and gas price but we do have a strong price because the gas and oil was just overshoot. In a very panicky worldwide financial crisis, there is definitely wild swing.

2010.05.13 Technically, NG is much better than WTI. But the most strange thing is Brent holding up extraordinarily well. It is U$5 premium of WTI. So far WTI has dropped 18.5%. May be it is time to turnaround with the RSI hitting 23.

2010.05.13 Gold holds while the markets are in correction. Last time, gold followed the market to collect. If every time, gold follows the market, market maker will not make money easily. Brent is at U$80 and WTI is at $74. Brent is from North Sea which is basically closer to home (Europe) than to America. Nonetheless, the usual U$3 discount is now changes to U$6 premium. How can this happens? This is the quark of the market or the irregularity man-made because of no delivery. The no delivery does not reflect the real supply and demand. Gold bears the rumor of future buyers demand the delivery. This true or not does not matter because the market buys the story and nobody dares to sell short. On the other hand, as long as the super tanker holding millions of barrel of oil floating near shore is believable, it is good enough to benefit the short sellers.

2010.05.13 The chart for American's natural gas inventory has indicated a significant deficit. This deficit is far more than most of the last few years but the NG price does not reflect this situation. Either the distributors are complacency or there are future contracts for the summer. The later is not true. If the situation continue, the NG price could explode during the hot summer months of August and September. With the most recent downward pressure on WTI (Brent remains above U$80) but NG can hold on above U$4.00, this is a bullish sign. Platinum has recovered during the beginning of evening trade (up U$28 or 1.6%). The volatility of commodities continues.

2010.05.07 NG and oil contradict each other at the beginning of the week following the trend of later part of last week. At the mid of this week, the role exchanged. Oil is down 20% while NG up slightly despite of the bad general market. No action is better than action. The base of NG continues to build. We may see some upside surprise for NG. WTI is not approaching the 200MA. Moves below it will be negative.

2010.04.30 NG and oil continue to move in concert at the beginning of the week. NG got wrack on Thursday as the increase in NG inventory increased. These number are not viewed week by week. It is better to week over week by its trend line. Many times, it had driven the price low due to excess inventory but only rallied the price in the following week by a major drop in inventory. Is this market manipulation or nature of statistics. There are too many retail investors that may be caught in panic by these volatility. This NG correction just before hurricane attack Louisiana has to be just too convenient and too suspecious.

2010.04.29 NG has a sudden drop of 7% today after the EIA announced the last week inventory. Is this pure speculation or actually this is creditable statistics. From the chart, we can see there is over production above the standard model but the actual figure is in deep deficit as shown by the surplus chart due to the progressive change of usage model. When fundamental does not change, the technical break down is not necessary 100% reliable.

2010.04.24 The technical feature of the week is the topping of the WTI/gas ratio and a small base of NG. In the last 10 year, every time, a top of the ratio will imply a higher NG price but not necessary a lower WTI price. The second important technical event is a small base formed by the NG. The previous base (not valley) was in the second half of 2003 which results a run up of NG to U$15 at the end of 2005. Other than the stubborn rebound of WTI back to the U$84 range, NG deserve more attention.

2010.04.16 WTI has become very volatile along side with the natural gas. One day we may find the evidence of data fabrication.

2010.04.09 When oil increase stockpile is good news, the market is at the hype of speculation. This week, the WTI did not tank even with an extra 1M barrel increase in stockpile to 2M barrel because people spreading the word saying people stockpile because expecting higher oil price. NG does not enjoy such prosperous rumour.

2010.04.02 Both oil and natural gas a surprise before the long weekend. Oil up 6% and natural gas up 5% by the week. These strong action before the weekend just indicate no body has a strong view on the up or down of the commodities. The current weekly closing price could be the fair market value of these two.

2010.03.26 WTI continues to hang around U$80. The hard resistance now really support the price. NG is getting weaker and weaker until April. If April cannot improve the situation, NG producers may have difficult to survive.

2010.03.13 WTI continues to build the support around U$80. Every time, it is beaten down, it rises at the end of the day. Natural gas has entered the weakest period of the year (March - May). The decline continues. Any reversal of the trend could be seen as bullish but so far it is bearish. However, the NG stocks are different. Many of them are recovering which could be an indicator for higher NG demand down the road. Will this be translated to price will remains to be proven. This is notwithstanding on actual usage has been reduced.

2010.03.06 WTI continues to gyrate at the U$80 level with wrenching pain. With the storms come and gone, natural gas continues to decline and may breakdown the 200MA. This should be watched.

2010.02.26 WTI is strong and willed to break above U$80. Everytime it is beaten down it rebounded quickly. Natural gas remains weak. No significant improvement in sight.

2010.02.19 We cannot underestimate the power of suggestion. It has been suggested that oil and natural gas are in excess. The prices can be down independent of any reality. Oil is continue to be the center of focus.

2010.02.12 Even with the snow storm in the States, the price of natty and WTI could not be stabilized. Rather, it gone through extreme volatility. It may be the new order of metastable due to the trader, government and reality.

2010.02.06 Oil and gas have rotated their roles. In the past few years, oil rises and gas falls. This week is the reverse. Natty holds the U$5.00 range very well but not without exciting moments. It is bouncing in a range of U$1.00 is about 25%. Oil is less volatile but not too tamed. The range is about 20%. Now WTI is resting on the 200MA with a falling RSI the 200MA may be difficult to hold. As the way going forward, investing in oil is not just investing on the demand of oil but also have to watch the market, not the world economy. Wave could be sent out without reason but perceptions.

2010.01.30 Oil and gas has been driven by fear and greed plus the misinformed situations. Commodities market forms another casino that the casino will win but not the gambler.

2010.01.22 Oil and gas have been ahead of themselves which lead to the backfilling. NG performs better even when warmer weather is forecasted. Oil's fall is much related to dumping of any commodities. The drop of oil is significant but has not violated the 200MA.

2010.01.15 Oil and gas are doing back filling. As long as it does not form H&S, situation remains positive.

2010.01.09 A very tough week for NG but a good week for the crude. NG touches U$6 and then pull back in the middle of intense cold chill globally which suppose to use more NG for heating. Crude has seen to be rising too fast and should have a pull back but has not. Market psychiatrists and traders are waging wars at the expense of retail investors who are coming the major source of wealth that could be collected for the big brokers.

2009.12.25 Every entertainyst is explaining the price recovery of oil and gas are caused by the cold weather. NG is becoming overbought and a correction will be coming. How will we explain a correction in the coldest months of the year when the demand is strong in next two months?

2009.12.19 Energy commodities are just as scary as the precious metals when the USD surge. Strangely, the excess / glut theory suddenly disappeared everywhere and replaced by the high consumption theory that explains the significant drawdown even before the cold weather kicks in. Expected to increase in demand can be anticipated but consumption cannot happen before the real usage. Anyhow, oil continue to form a significant base that could be used to attack the U$90. Natty at the same time, emerge above the U$5.23 resistance to challenge U$6.00. It may be better to form a strong base in this winter at around U$6.00 rather than jump above to U$8.00. Momentum is building but let see it one thing at a time. However, we may see a major surge as we see there is a significant deficit on NG production from the EIA NG surplus chart. This could have a quick attack to the U$8.00 target and retreats just as quick.

2009.12.12 The polarity of oil and gas has just change last week when oil dives and gas rises. Next week will be very interesting.

2009.12.04 Energy may seem weak but both WTI and NG show internal strength through stubborn support and continuous rebounce.

2009.11.28 Last week, NG was proud again when the NYMEX contracts swap from November to December. This effect is not new. For last couple of the year, this effect was either not shown or the price dropped quickly back to the level of previous month. For last few months, the positive effect is showing. Could this be the bottom. We have to wait and see. WTI continues to subject to downward pressure and remains quite resilient. The coming heating season and forecast of low sun spot activities (cooler sun) may help the WTI price if Dubai does not dump oil to raise money.

2009.11.20 Last week, NG was proud but it went down hill from there. WTI opens the week strong but also gone down hill. These could either be a big plateau or a hill top. When U$ falls, oil and gas will rally.

2009.11.13 WTI correction looks like finishing the correction at the beginning of week but returns the down direction. The NG is especially weak.

2009.11.10 According to Association for the Study of Peak Oil and Gas USA's Weekly Report Published on November 9, 'Storage of crude on tankers in the US Gulf is now down to 7 tankers from a high of 20 in May as the spread between current and future crude prices has narrowed, making floating storage less attractive.' This is a rare report to reflect that oil tanker story is due to the contango of oil price not before of demand destruction. We know that the oil price has suffer significant damage just like gold price due to no real reason but the margin call. So the cat is out of the bag.

2009.11.06 Energy down correction may be close to end.

2009.10.30 WTI has retreated after the attack of U$82 while NG advances by another 10% for this week's close. NG has been in the U$5.00 range for the last few weeks but could not close above U$5.00. NG is definitely the star and the WTI is the dog (layman's thinking). Actually WTI and NG are stars because they have tremendous growth potential. WTI has been the cow for a few weeks but with the pull back it falls back to the star. With the OPEC considering moving away to use WTI as the standard reference oil price, oil price could potentially get higher. WTI reflects the American demand of the local produced oil rather than the American or world's demand of the world oil. It is well known that American promotes importing oil is to conserve the local reserve. When the world oil price reference moves away from WTI, the only one way is up rather than down because the demand of the BRIC and the African countries are rising.

2009.10.23 Are we seeing the rally of energy driven by the devaluation of the U$? This is a complex and compounded problem that exuberated by the disguising real demand with excess supply. With the strong and powerful propaganda machine, it can create mass influence. While a simple turning off a tab could fix the excess supply problem, it is dramatically described as filling up to the brim for all possible storage. There is a shut-in method better than storing. Arabian does that when they see the price is too low. According to the Wednesday EIA petroleum report, the oil is in excess and the gasoline is in shortage because the refinery is not at the high production capacity. Immediately, the oil price drops and the gasoline price rises. One day later, everything returns to up trend even with the USD Index bounced back above 75. Now, this morning, WTI returns to U$81 range while USD up 13 bps to 75.13. On one side of the mouth, the media says that Fed is holding down a weak U$ to create a competitive edge for American. At the same time, every entertainlyst says that all currencies are rushing to the bottom to competitively devaluate. If everyone is devaluating their currency, the commodity price will not rise. Exchange rate likes the buoyancy of the rubber ducks in a bath tub, if it we add more water to the tub, all ducks relatively at the same level. But the water level increases. The price of commodities in all these currencies go up; this is inflation.

There is a special note for the surplus inventory of natural gas. According to the chart, unless there is error, there is a spike on production while the price has hit U$5.00. This shows natural gas production is actually reduced and the excess problem is much less than advertised.

2009.10.16 Unbelievable strength of WTI and natural gas. If it is not true that WTI and natural gas are in excess, the demand has to show before the winter. With the sign of low sun spot activities, the coming winter is forecasted to be a cold one. Calgary has experienced the -16 degree C Thanks Giving. With the low supply of gasoline has been interpreted as high demand, the tune has changed. Nothing really changed.

2009.10.10 Energy prices are stabilizing for this winter.

2009.10.04 Natty is the star this week which nobody has any forecast and pronouncement. The importance is that when October contracts expires, the price of November contract does not fall. There is always a gap of U$1.00 - U$2.00 between the current and next month's contract. The gap should not be that huge for the first place. Second, when the current month contract going the expire, the next month's contact should adjust to very close to current month's contract. With all the excess theory flying all over the places, the natty can hold the gap and move forward at U$4.80 level is a hammer to those theorists. This is for the optimist. It could be just as possibly, based on the EIA number, speculator drives up the price. This strange situation could fit the first theory better because if no body wants to receive, those holding the delivery contracts has to dump it quick. November could prove to be a turning point for the natty. Technically, natty crosses all 200MA with a meaningful bullish indicators. WTI also demonstrated a lot of strength from multiple rebounds. But why did it fall? Shorties have been working on a lot of overtime lately.

2009.09.26 Oil is just not the favourite. Natty is taking up the position. With all these new NG discovery but there are high car demand. How does this translates to high NG demand is puzzling. The recovery of NG may be confirmed when the C$ price cross above the 200MA.

2009.09.22 While gold holding its breath and tries to stay put, the fall of the U$ creates a panic and something has to be sold to cover the margin for the fall of 50 bps. The effect as usual pushes the U$ back into the 76. The fight to maintain the position will be very ferocious. WTI is at the vulnerable position by choice without much real depending on fundamental. Tonight, the WTI starts to bottom out as USD falls. There is no real direction but market maker attempts to create one.

2009.09.20 Oil continues to be elastic to go back above U$70. This rubs the luck on NG. The rebound of NG is illogical and artificial just likes its fall.

2009.09.10 Whether oil inventory is up or down, the day EIA announces the inventory will push down the WTI. Today is an exception. Is this a sign? Speak of conspiracy theory, there is nothing short to talk about putting a lid on oil and gold prices. Oil has dipped and bounded violently. Gold is popping up and down along with USD Index. Any new theory?

2009.09.05 Oil has an unexpected meaningful decline. So does Natty while other commodities are hysteric. What's going on?

2009.08.30 You can always say NG is bottomed and it make a new low. NG made a 10% swing last week but the volatility may not stop there. Just like WTI, the swing continues but in a much steady trend.

2009.08.22 Your stomach may not able to hold back when the NG fall below U$3.00 to U$2.78 which is firming around U$3.00 during the weekend despite of many potential supply disruption.  On a reverse way, WTI continues to climb after Bill visited the Gulf. This could help the WTI to break up above the resistance at U$71.77. Is it too fast? May be but the RSI is only 57.

2009.08.14 Oil and gas has a very good week until Friday. Both have a flash drop. Is it a back off from the peak for a correction or is it turnaround of the energies.

2009.08.08 NG had one day glory. At the end of the week, it returns to the U$3.60 range. Oil is fighting the U$71.77 barrier. This creates a U$2.00 interday spread on Friday after it made the peak at U$72.84 which is the price 2 months ago. Traders are very nervous.

2009.07.31 The brown shoot of NG continues. WTI has the fearful drop and recover. It sounds like someone preventing oil from breaking the $70 or the more important is the U$71 limit.

2009.07.25 There was nothing to argue about the weakness of natty which may forming a base and then break down again. WTI shows strength in the strong recovery. Is it being pushed by the U$ or is it pushed by the paper oil?

2009.07.18 After hitting the U$73 high pole, WTI retreated to the low of U$58. The flip flop is building a base which is not the conventional small range; it is a cliff which could gap down any time. Very speculative time.

2009.07.04 A very bad week for energy. WTI and natty down by at least 10% even after China announced the filling of more strategic reserve. The volume of last 3 days was extremely thin. The big trader took vacation early?

2009.06.27 Both NG and WTI facing strong resistance head wind. WTI is at U$71 and NG is at U$4.40. If the resistance could be broken, the future target is bullish. WTI has a much better chance from the momentum created. The internal is steadily firming up a base without significant break down. NG is continuously hammered with volatility of 20-30%. This is either change the fundamental of NG or artificial. The usage of NG or replacement of NG or the supply does not change much. This could possibly due to the uncertainty created by the shale gas. When NG is analyzed, the cost of material, i.e. pipeline and labour, are referred to the old equation. If LNG is really able to display NG, NG will die soon because of price anemia. LNG is the by product of giant oil field. If the peak oil is true, LNG will be drying up. The NG generated from oil production could be injected back into the oil field to maintain pressure. Although CO2 can be used, but it requires special production. From another angle, NG is partially offset the peak oil by exporting it rather than back injected into oil field. But this is a temporary solution until NG production bankrupts. One point should be brought out is shale gas is far more expensive than the conventional NG gas due to depth (or thickness) of the overburden.

2009.06.20 If the market is a single living organism, it may have a split personality. One day is bull another is bear. Oil swing, according to entertainyst, violently (a trading range of U$3.00 for a few weeks). This is only about 4%. For the meantime, NG is steadily rising. RSI for both is also fallen below 50; technically they are in accumulation phase.

2009.06.13 When ASPO could not persistently sing from the same song sheet, we see how difficult to gauge whether we are in economic recovery or not. Matt Simmons' early work show that higher oil prices does not proportionally drive down demand. We have been spoiled by the cheap oil. Consider the U$1 barrel at the beginning of the century to the U$72 a barrel nowadays, it is dirt cheap because of transportation, labour and material inflation. The social structure is built on oil. Alternative energy may sound attractive, it would be a long long time before they can make a dent. Many of them such as wind and solar is competing the other scarce resource, land and sea. Until the problem is recognized, we are just repeating another corn/ethanol power trip for nothing. With all the propaganda machine running, facts are hidden as usual. The proper price of oil may be somewhere between U$80-$100. Will higher oil price hurt the economy recovery? This question is to ask would the 60% of the cost factor (on credit for business) more influential or 10% of the cost factor more influential. The answer is obvious. NG has been suffered for the believe that demand is low. If you look at the sales of fertilizer, you can scratch your head to ask why? Technically, WTI is shooting for the U$83 target. If it happens, the next cliff of > U$100 will be interesting to watch. NG is in the traditionally rally for the summer season. So far any fall are quickly followed by a short and weak rally.

2009.06.06 Oil continues its upward 2 months march started in April even under the shadow of rumour that OPEC may increase output or members do not honour the quota seriously. It is simply a function of currency devaluation. NG is another story. It remains weak. How will this change? We have to wait and see.

2009.05.29 Car industry is in trouble but platinum and palladium gap up this week. Manufacturing is in trouble but NG also leaped this week. Entertainlysts still American centric. There is other part of the world doing well, say BRIC. Wake up.

2009.05.21 Car industry is in trouble. Manufacturing is in trouble. Oil and natty are on the extremes of polarity. Natty is for immediate consumption. But how can it run up 20-30% and pullback quickly. The trend to up is maintaining its momentum.

2009.05.17 NG still the big story for this week as it moved back another notch. The explanation for the fall in NG price was focus on the industrial use and the excess of LNG. By now we know the manufacturing still in the hole why NG has the sudden surge before the air conditioning season. NG's recovery will be rocky. WTI also deserves the front page story. It hits $60 and pulled back. The volume is moving higher. There may be some short covering but not much. Would it be the oil glut finishes?

2009.05.10 NG is the big story this week. If you think the WTI recovery is interesting, the jump from the low of U$3.155 last week to this Friday's U$4.337 in 9 days or 37% is an amazing story. The more amazing is that the level of production hugs the 5 year average curve and no story to explain the movement of NG. The surplus or should I say the deficit is fallen below the floor. Is this the real story. Would the story of deficit real? Only time can tell.

2009.05.02 NG suffer continues.  WTI continues to show the strength despite of the high inventory report. WTI is not in a range bound but edging upward, slowly, very slowly.

2009.04.24 NG suffer continues.  WTI is OK now. According to Don Coxe, if recovery is not showing next year this time, we may see U$30 range oil. I think it could be another scenario because U$40 oil has been years. That would be the baseline. With the destruction of production and decline of production, demand will be relatively higher. NG price in 2009 could be very volatile as everyone bet the NG price will be slump due to the slow down of manufacturing. This may be overreacted cut back.

2009.04.18 Another heart ranching week for the NG which keeps on staying low. Crude is more stable and stubbornly refuse to go below $50 on Friday close which is positive. WTI is at consolidation pattern and building a hopeful base. NG is also refusing to dive below U$3.60. It seems forming a temporary low before it rise for the Air Con season. While the convention wisdom is that when the stock goes high the price will go down. But the question beg to ask is why and who pumps more oil from the ground? Why not keeps it underground so you don't have to pay storage?

2009.04.10 Even without any news we know NG will be very soft before June. It is the situation. Oil's up trend challenged violently showed by the volatile up and down. Is it health? Nothing is for sure these days.

2009.04.04 Oil holds and NG also held low. One more month to see how the situation may change. Oil is trying a break up above U$54 but has resistance.

2009.03.28 WTI's strength has leg so does NG's weakness. The chart has turned to a continuation of the break down even it is oversold. In March, the decline of the demand for heating and the flattening of air condition demand coupled by all these manufacturing declines renders the weakness of NG.

2009.03.20 WTI has a surprise turnaround and broke up above U$50. Natty sank to U$3.60 and back in a flash above U$4. Everything are very volatile responding to the Fed's money flood.

2009.03.14 Natty's trouble continues. Nothing could be change until June. WTI does rise higher than Brent. The high volatility is amazing.

2009.03.07 Natty's trouble does not end this week. WTI is recovering nicely despite of all these surplus reports. It may advance above the Brent soon.

2009.03.01 Natty is in big trouble again because now is approaching the end of heating season before the air-con season. Oil is recovering nicely.

2009.02.21 Another episode of repeated history. NG is falling and oil is violently corrected up and down because the government published wrong numbers. More, when precious metals have a strong direction, the responsibility of sympathy for the financial falls on the energy. Price of NG is at the 2004 level. With the shrinking of available capital, many mid- and small- energy producer and services companies will be folded. The consolidation will create a temporary collapse of the share price but this becomes a winner takes all lottery. The survivor will be in pseudo-monopoly mode. One must be careful to checkout the book not the size. Size may be higher debt. It may not mean a heavy company. Debt is toxic.

2009.02.15 Energy bull may relax a bit last week when WTI sank to the 52 week low and rebounds strongly on Friday. The rebound is an indicator that a majority does not want to risk another shot up in WTI during the weekend. The end of winter is closing in. The energy commodity will enter a period of weakness soon. This could have a much heavy impact on NG rather than oil which has reverted to the price of 2002. One must note that the Horizon Beta for Crude oil fails miserable on Friday. The Bear ETF went up and the Bull ETF fell while the Crude went up 10%. This is a classic example on how paper commodity can detach from the physical commodity's price.

2009.02.09 Energy bull must be religious to their believe to survive this week. NG shows some sign of bottoming but continue to show weakness. Brent hold up well and continue leading WTI by U$6. WTI's superman dive has killed so many energy bull but one must be recognize that the market is telling another story. The CESI chart shows some new sign of life. The selling pressure may be subsiding (not vaporized).

2009.01.30 Oil's split behavior persist. There was one day the WTI and Brent were just $1/$2 difference and then bam, they went different way. If WTI does not go below $40, a base is forming. There is another possibility which has not been explored for the extra oil floating. People could not pay because of the high U$. Natty stabilized a bit. We still have a long way to go before this extra long winter is finish.

2009.01.23 Natty is unbelievable cheap. It continues to sink in the middle of a cold winter. Does people really turn down the heater to save money? I am pretty much doubt it. We are not that poor yet. Is it caused by some industry using a lot of NG? Which one? Oil is recovering and forming a double bottom. Is it really a bottom or messing our mind.

2009.01.17 Finally, oil and gas breaks down to multi-year low in the middle of a frigid winter that is not seen many years and comparable to the economic winter we are having now. One would ask Why? Should we follow the market or the fundamental? The short term market is horrible but the contango tells another story. In mid and long term, the market story jives with the fundamental. What missing is a strong stomach. There may be hope here. According my study, both indicators hit an unconfirmed bottom. NG has a slide of 65% in 140 days while WTI has the turnaround after 7 days 34% down. My indicator would confirm this as a turnaround if next trading day is another up day according to the study's calculation. It has a 90% successful rate record in a normal market.

2009.01.02 Gas under tremendous down pressure but yet coming back. WTI takes advantage of Israel's attack of Gaza recovers above U$40 in just two days. This short covering and the volume is about 30% of 200 days average. The support is low. Next week could be vital to judge this recovery. This may be a rally for meantime until more financial trouble break out which is another wave of trouble in April when more mortgage reset. The problem is not the interest rate which has been suppressed artificially. The trouble will be that the banks do not have money to lend even they are hoarding the cash.

2008.12.26 Oil/Gas ratio has coming back to 6. This is really unexpected. On Friday, the unexpected level off of WTI is strange. Brent remains higher than WTI shows the market is irrational.

2008.12.20 Cold winter sinks in. Oil to gas ratio falls to the traditional 6-8. Brent is higher than WTI. All these indicates a very non-traditional situation. Like Murray Pollitt says these are all head fake. We have to be extreme caution and trust macro trend only.

2008.12.14 Cold winter seems coming early. This may help OPEC to restore the price but only the margin clerk cooperates. The hope for crude lies on the RSI which is trending up.

2008.12.07 Forget supply and demand. It is a mad-mad-mad world. The panic driven world. Oil has sunken to near wellhead price. How the oil companies survive?  If they don't, the world will face the oil supply problem very soon. The OPEC and non-OPEC will create a major social unrest which should have a huge price premium which is not showing anywhere. Severe cold weather has arrived in the North America yet the NG price continues its sympathy with crude price. EIA shows reduction of usage and increasing of storage which is not logical. Some historian could tell the true story in the future.

2008.11.30 NG in C$ has been sustained at $8. Companies selling at U$ could be beneficial to the lower C$. Oil price has a triple waterfall pattern. Are we at the bottom? Two years ago when the cost of production and exploration exploded, exploration and production where shutdown. Now the price is so low that profit is an unfamiliar word. But the price is not driven by the producer. It is driven by the seller who has to liquidate the contract. Analysis using the conventional wisdom does not cover the full picture.

2008.09.26 After the U$40 jump from below U$100 to U$130, oil comes down to the earth but not beneath it. According to ASOPUSA Gulf production and peers were frozen and no production of crude or refinery. The recovery has just begun. The demand does not drop because of the shipment stat from EIA does not drop but miraculously inventory does not drop. Now OPEC has a major concern the price is below U$120. All are confused and disjoin. Market is not functioning in the simple supply and demand mode.

2008.09.25 The US NG inventory continues to decline below the normal level as expected due to the seized up Gulf production. According to EIA, the impact is significant, over 25%, but the inventory decline is low.  In comparison to last year, the production only decline by 5%. There is inconsistent.

2008.09.20 The number published by EIA is very lumpy. In a few weeks, it could be little change and then a huge drop. Entertainysts continue to adopt the story of benign supply shortage and significant demand destruction in the States. It is fine to me for them to ignore the increase in global demand, geopolitic tension and decline in production. But as a profession they should have the basic skill to see things are declining but not relying on the government's interpretation. They should do the basic home work on how come in some weeks the supply could increase by 2M barrel per day. Where on earth could some one horde enough transportation or shipping truck or pipeline capacity to do that?

2008.09.14 When the reality does not fit the should be, we have to be caution. NG is basing. Oil still falling even when the Gulf production and refinery is completely paralyzed. Reserve is shrinking but it could be talked up as if the reserve is swelling to the heaven. It is not the physical delivery that drives the market. It is the future contract that drives the market. There is no limit on shorting them so hard to call the bottom.

2008.09.12 Three years ago, I wrote a piece on Katrina quoting whether the oil price jump justify because the Gulf only accounts for 10% of the oil production. Most recently, the number has jumped to 25%. I don't have the exact number to compare a rise or actually a decrease in total. But the EIA reports inventory is comparable. This means the American production has been dropped and import increased.

2008.09.07 Oil and gas completely perform in irradical  way that ignoring all the geopolitic risk and other signs of demand. So sit tight.

2008.08.30 Oil and gas are forming a base. Does it help by Gustav? I think not. The price still discounted the potential damage of the Gustav. This is a real good stock to confirm the bottoming of the energy. However, there are too many human factor and financial engineering activities that could sink the energy commodities.

2008.08.28 Natty has gone through a very rough patch. At the end of the September contract, there was a jump of U$0.80 from U$7.80 to U$8.60. You may argue it is the Gastuv effect but the really is just reverse. While Gastuv is strength and entering the Gulf of Mexico, NG drops to U$8.40 today. Money has been moved from the energy to the financial. This is a strong indicator for a irrational market and very misled market by stock promoters because nothing has improved the financial sector. Rather it is deteriorating.

2008.08.24 Oil, like precious metal, had a brief broke up before being hammered down again. It is important to see the contango remains and the energy stocks have a very sticky retreat. Some gain is held back.

2008.08.22 Natty inventory level is now leveling to the normal but still below. The price drops precipitately in a disproportionally. The price could be part of the commodity exodus but natty looks like has form a bottom above U$8.00. Now is the time to have natty build up which which could accelerate the price recovery.

2008.08.20 This may be the beginning of a new era on oil future market. Every Wednesday, oil future traders tune to the EIA station for the inventory statistics. The market will move up if the inventory drops which signals a higher demand. The market falls if the inventory climb. Right after the announcement, the future market just responded like the old days and dropped couple of dollars to U$112.60. About few hours later, the situation reversed. WTI ends the day AT U$115.56 up U$1.03. American consumes 25% of the world energy. Their consumption definitely deserves the domination. What happens today? There are two possibilities. The first is commonly believed that the future (even near future i.e. next month) is dominated by the rest of the world not American only. The rest of world demands oil and the supply is tight plus a lot of risk so the price may be bottoming or bottom out. The second could be a little bit controversial. EIA keeps on publishing extremely fluctuated inventories back to back. In some drastic situation, additional shipping of 2M barrels per day. Understanding the shipping and production of oil is tight, the sudden increase of oil by 2M barrel per day sounds like miracle. Or, some of the inventory was not accounted for a few previous weeks. If that is the situation, the credibility would be in doubt so the information will be less value. The consequence of both scenarios comes to a new trend. The future price will be much less influenced by the EIA statistics. On top of this, EIA traditionally under-estimate in their forecast significantly. We may have to give a huge discount on the reduction of demand claimed by EIA but pay more attention to the actual development of the rest of the world. For example, the world's energy demand reduced with the Beijing Olympics' energy curfew. After this, the drivers resume their driving and the factories get back to catch up the production. Will the demand from China be cut back?

2008.08.18 Please read the section 2 “Oil from the Caspian”and 3 “Chinese Demand” of the Peak Oil Review issued today. My view is that risk for oil supply is getting higher so will be the risk premium. As for China, the demand on oil and base metal is just getting begin not end.

2008.08.17 Russian may rebuild the iron curtain. Just this time is not iron; it is oil and gas. This starts with Georgia, a West befriended ex-Soviet republic. Under the pressure continuous pounding shrouded by a cease fire, Georgia may get the message to disassociate herself with the West. The Globe and Mail article, Moscow transforms real-world game of RISK, dissect the situation for you.

2008.08.16 Another depressing week for the energy. Is it the bear or the bull? Both. The papa bear is sweeping so everything is down. Long term bear market is hard to identify because the fall is illusive. Can this be just a V gorge trip? Conventional wisdom cannot apply because there are extreme powerful dark force moving the market from behind the scene; at least for short term.

2008.08.14 Unwind of commodities continues to put pressure on natty.

2008.08.11 No change in fundamental so the faith in commodities becomes religious in such situations. It used to say when America has a sneeze the world has a cold. Now the table has turned. When China diet on petro, the world has the illusion of flood of oil. Nothing further from the true.

2008.08.07 NG has been undergone a very severe correction. From the data published by the EIA there is no shortage of demand and not pileup of stock. Real inventory is low and production is low. Since EIA does not publish consumption but the decrease in inventory prematurely before the winter season can only have one explanation: the price does not reflect the demand.

2008.08.04 Oil drops more than U$4.00 during the day and recover above U$121 at the end of the day shown in this chart. Technically, WTI does not touch the oversold until recently. Last time the RSI was around 20 before rebounded. It was the time everyone thought oil would go back to U$40. Negative sentiment is building on oil. Is it negative enough?

2008.08.04 Geology survey, unless it is 100% sure, they qualify the finding on the probability of reserve based on the sample they collect either from rock grab or drilling core sample. The most recent report by the American media regarding the Arctic petroleum reserve provide by the US Geology Society seems a little more than deviated from the normal practice. According the the ASPO-USA's August 4, 2008 newsletter, the total reserve is calculated by summing up all the samples discarding the probability. To understand why this could potentially provide big surprise, please read the commentary at the end of the newsletter.

2008.08.03 Entertainysts continues their tireless effort to explain the fluctuation of energy commodity prices. When inventory goes up it could be high demand for future. When Inventory goes down, it could be either no demand or high demand to draw down. The credibility of EIA is not in question because the number they publish are estimates not the real number. The change between weeks could be 5-10% of the inventory. I just wonder which shipping pipeline companies have the ability to handle such wide swing of shipment? For example, the week ending July 18 is 9.806 but the week ending July 25 is 10.005 million barrels per day. This means someone deliver 14 millions barrel in a week extra. Is this suspicious? If you focus on the stock level, the days of supply has dropped to 19.3 days last week from 21.8 days last year. If you manages the inventory, would you concern about this 10% drop? Perhaps not because the American cut back their consumption by 4%. There is still 6% reduction.

2008.07.026 After precipitate fall during the week, energy halts its descend and the energy stocks lead the level off on Friday. The fall may not be done but certainly qualify the name of correction. Demand does not change, supply reduces. So the fall looks like more artificial than demand and supply.

2008.07.025 Inventory of natty continues to decline slightly but the price drops like a stone precipitately.

2008.07.021 Energy got hit. Profit taking and allow the bull to take a breath.

2008.07.017 Although the inventory is slightly above the normal level, the price precipitates considerably.

2008.07.012 We should ask ourselves a question: does the Iran missile testing that significant for the oil supply? The corallary is that does Iraq invite Big Oils to produce at Iraq not important. It was explained by entertainysts that oil supply is now secured because Iraq open the oil fields to the Big Oils. But I do not understand how would this increases the reserve and the daily production because some one has to be expelled. For example, Total may not be very happy. A even more interesting development is the natty price: a sudden drop of more than U$1.50 when the demand is approaching the high and hurricane developing at the Gulf.

2008.07.010 Yesterday, the EIA published the petroleum inventory report. We should focus on the Days of Crude Supply has been dropped from last year's 22.9 days to 19.1 days for the same period ended last week. Consumption has not been dropped. This is increase of consumption. Although the gasoline supply has been increased from 21.4 days to 22.7 days it cannot be considered as consumption reduction. The tell-tale sign is the decrease of the inventory from above the 5 year average to the low end then backed up to the mid-point. Statistically, the consumption is on an increasing trend. Similarly, natty fails to build up the expected level of inventory. We have a more than U$1.00 NG price volatility this week. Don't not get use to the lower price. Just like the crude oil, it could pop up back to the up trend in no time. At the time of writing, oil has popped up by U$5.00 traded above U$141.00 when some entertainysts start start to sing from the U$100 song sheet again.

2008.07.06 As the energy price moves up in a choppy mode to break record by record, people start to formula to theory. The first is that recession will reduce the demand which implies price will come down. The other theory simply say it is top it has to come down. I was watching the 1981 movie On Golden Pond. A scene has a close up on the price on the gas pump when Henry Fonda fill up the boat: 67 3/4 cents a gallon. Now it is U$3.60 a gallon. So how much oil should be when abundant is only a illusion and supply is very tight. Recession is usually national bounded with impact to the world with different degree to different countries in the past. This especially true when American consume more than 50% of the world's manufacturing and very low consumption or low quality merchandize consumption in the Asia, Africa and South America. Energy price has artificially boost but I believe it is caused by the use of food to create fuel: sugar and corn. Will electricity replaces the fossil fuel, unless electricity is generated all from wind, solar, hydro and tide, you still rely on fossil fuel. The law of thermal dynamic says you waist energy when converting from one form to another.

2008.06.29 Just remember one thing: the price is a big number. A small percentage change means a very huge jump or drop. But this is nothing compares to what we have seen. The only trend is that inventory is down before the driving or air-conditioning season so don't expect the inventory goes back to normal soon. So does the price.

2008.06.26 US NG inventory continues to decline; price continues to climb. No remedy. NG stocks are beaten up today like the gold share beaten up when the American financials are beaten up. It is not decline-in-sympathy. The shortie just has to sell some good stocks to cover the margin. There will be one day the energy stock moves like the gold stock.

2008.06.22 Energy prices like their counterparts had big swing this week which is undiscerning to the news. It demonstrates fear, greed, and speculation floating in the air but the strong influence of supply and demand also chime in to the unharmonious choir. Trend lines show oil and NG are now quite far from their 200MA.

2008.06.20 The US natty inventory charts are updated. There is a observable deviation of the inventory level to the standard model yet the price dipped last Friday. This should not be alarmed as change of course. The is most probably due to the expiry of the future contract. In fact natty high the target of U$13.20 before backed off. This is a very good side of avoiding blowing off. In next week, the U$13.20 could start to become the support for the record high target of U$15.40.

2008.06.20 Yesterday at New York, WTI future dropped U$4.75 and China has been blamed. The prices increase for one litre of gasoline and diesel will be 0.8 and 0.92 yuan. It is explained that the raise of fuel prices could dampen the booming nation's oil consumption. Putting oil into the fire is another announcement by Iraqi's signing supply agreement with several major Western big oils. The trader may be freaked out but certainly the market magician is at work to make wave. This morning, the future has recovered half of the loss and it is a very good possibility to recover all in coming week if not higher which has become a pattern: big drop and new high. Other than the real demand that pushes the long term price (confirmed by the 200MA of oil future sitting above U$100) we also know a certain pocket of speculation in a very tight spot market. When the speculator does not willing to deliver by the time contract expires the price will drop as they have to dump it. Yesterday was the first trading day of July future which means delivery has to be made soon. When the shortie covers the deliverym the price will be high. The reasonable thing to do is watch the 50MA. Now lets look at the fact. PetroChina has reported that their profit has dropped 30% in the first quarter of 2008. The reason is the government controls fuel price. The more the Chinese companies sell through the Chinese retail, the more they lost. All China oil companies bear the same pain. What China government doing is to move forward to a autonomous economy slowly. It takes time for a young market to be efficient.  Although this could increase the CPI there is a price for everything. Will the demand dampen, only time will tell but with the forecast of number of cars in China to be doubled in coming years, you better not believing it.

2008.06.015 The high volatility for oil is not really a matter of supply and demand any more because demand could not be change in such a short period but rumor can. The speculation may kill the crude market. For the meantime, natty is just chunking along nicely to the U$15 direction.

2008.06.012 Oil price has been extremely volatile while natty has been much stable. I have updated the oil and NG chart one day ahead to compare with the EIA NG inventory data. Oil is stubbornly refuses to stay lower. Natty is just the same. No matter what negative news coming up on economy or IEA's demand reduction, nothing has really materially change the trend. Of course it will be for the meantime but the momentum is so strong that it proves to be a tough bull. One thing I would like to bring out is the natty's price. Comparing the current surplus level with 2005 pre-Katrina months, they are at the same level and same price. Could this mean the inflation is discounted for natty and only the supply is included in the equation? The most important point is the inventory built-up continues to fail. This could lead to an inventory level even lower during the Katrina time so U$16 natty is very possible during the hot summer months.

2008.06.07 Oil price continues to explode after a brief rest. Is this the run up Richard Russell saying before the commodity retreat. The advice is sound and true. Look at the U$850 gold in the 1980. I was there. I can tell you it could happen. Could history repeat itself? Only history can answer this. With the American not cutting back the consumption  because the cost is not high enough (i.e. not a very high percentage of their disposable income yet), the demand from the American continues with the exponent increase in demand from the BRIC and African (yes the African either from the people or from the resource producers) and the energy production around the world, it would be hard to reduce the demand. When the commodity goes to vertical, not even parabolic, we really have to watch out. The whole energy market is now into a territory no one has seen before.

2008.06.06 ** Not all oil stocks created equal. Exxon is down U$2.52 or 2.82% today while Oilexco gains C$0.69 or 4.17%. You just have to patience. Timing does not really exists. In such a energy rally day, you can have the oil giant loss ground due to many factors. **

2008.06.06 At the end of the Second World War, the pivotal point was the Invasion of Normandy by the Allies on June 6, 1944. Oil price jumped U$10 today.  Is this the invasion of inflation? John Budden on his Budden Minute indicates that Israel may enter Iran, the second biggest oil producer. Such move has been reported by many sources. Combine today and yesterday, oil goes up by U$16 in just two days. This may be a combination of the coming of a black swan event and the short covering. The shorties get squeeze because of yesterday's gain. The squeeze got intensified creates the cascade effect of getting more margin call. The more the short sold the harder the squeeze and as the word squeeze implies when you squeeze the ball attached to a tube filled with water, the water level gone parabolic.  Today is a dangerous day because no trading tomorrow so they try to balance the book before weekend. By the end of the day the oil gone mad. During the first oil shock in the '70, oil consumption (i.e. Americans) was cut back by 8% but this time, according to http://ASPO-USA.org/, EIA report that American is only cut back 1%. On the positive side, the consumer as still very resilient to the high price (in the '70 the energy expense was 10% of the income which is much higher than today because the energy price has not caught up with the inflation). On the negative side, commodity tends to falter after a jump. Both scenarios are possible. Gold rubbed some squeeze in sympathy with the oil because of the weaken U$ (When did it get stronger? It was just got unreasonable expensive without fundamental.) and gone up U$24 to U$902.20 at the Spot market and the June Future for Gold closed at U$895 for the week. The future after hour market peaks at U$902. The more important point is that RSI for daily is only around 50. No overbought. The run may continue.

2008.06.05 Every body is saying that the high energy price will curb the demand. This is North America-centric thinking. When the world says only the Americans have a massive demand on NG, the price of NG dipped when LNG is heavily imported by Americans. However the LNG is shipped to China et al now with natty going to record high. When the oil price is holding up at $133 and drops to $122 entertainyst says the oil barges are circling the harbour to wait for better price but due to high barge rent they have to dump at much cheaper price. With all these in the backdrop, the NYMEX oil price jumped U$5.49 when the ECB declares no rate cut to fight inflation. If there is no demand for oil the price should stay put. Just use the talk to keep the oil down does not work. Gold price may be released from it shackle soon because my gold stock indices jump 6 points or 3% today. This could translate to U$30 jump in gold price while the gold future price has been held at U$875.50 today.

2008.06.05 EIA has published the NG inventory report today as of 30th May. How to read it? The inventory level is pretty much hugging the 5 years average model. However, if you check out the surplus chart, you can tell an important action is missing: there suppose to be a built-up starting March as every previous years. No, not this year. It is diving slowly downward. The built-up is for the summer consumption. Now that the LNG is not going to the American, there is no more excuse to have low NG price. You can also see the price is wiggling downward. This will be a hot dry summer for the energy.

2008.06.01 Oil has its official correction of $10. Could it go further down? It is possible but if so the buyer will come in and scoop it up. This is what happens to LNG. When the American does not want to pay the higher price, Chinese comes and buy them out. The result pushes the NG high. John Mauldin has a very good explanation on why the oil price drop with the American inventory falls. He explains that there are tankers holding the oil which speculating high oil price. At the same time, flight price is squeezed much higher because of the demand. Tanker has to unload or pay high rent. This is the reason why the American inventory drops and so does the price because of dumping. I don't think this scenario will drive the price down. Let's give it another week.

2008.05.23 Oil is at a high pole pattern and NG is going to be soon. WTI hangs around U$133 is amazing. Under the current circumstances, it is difficult to have a severe oil correction during the driving season. The demand of oil continues to show up. Even a correction no matter how severe will be quick. NG has peak U$12 on May 23 and close with 2 pennies shine from the peak. Oil and NG futures are in contango which is unarguably strong.

2008.05.22 The EIA number for NG continues to fall short in comparison to last year. The news pushes the natty up another 10 cents while the crude sinking slightly on the consensus correction thesis. Natty is just not catching up fast enough recently. The hard evident may help NG to continue its upward trend.

2008.05.16 Oil price surprises entertainysts by another record when OPEC announces the 300K bpd increase after the sudden drop of the oil price on Wednesday which explained by them as oil glute. Oil and NG are in parabolic mode. Any movement of 3-5% could be simply regarded as short selling and short covering because of the news. Why this market is not for retailers, as Dr. Michael Berry, it will scare out all those investors who are not investing OPM (other people's money). The trend is there any drop is just a health correction. The WTI has pulled way above the trend which could mean a short term correction. But how could you forecast a correction when the driving season is about to start?

2008.05.15 American NG reserve build-up continues to be slower than average. There could be further advancing of natty.

2008.05.09 Oil breaks up again. Natty continue it rise. Although there is no sign of falling, we have to mitigate the risk. If there is any geopolitics flashes, energy will go up. However, what could make it go down even after EIA announces the inventory builds up?

2008.05.08 Yesterday, EIA announces the continuous increase in inventory of crude but distillates are decreasing. This is a classic over supply scenario. In a perfect elastic environment, the supply (i.e. crude) to generate the distillate will have to reduce the price to stimulate the consumption. Sorry no such luck. The WTI hit U$123 again and again. Today EIA announce the natty inventory continues to climb. There you go, natty drop 20 cents. But hold your breath. This is most probably natty has jumped too much and needs a breath. Last year, the more expensive LNG was blamed to cause natty's price drop. This year the entertainysts say the LNG is shipped to countries who are willing to pay more (i.e. China). Manipulation or lie? Someone is messing our mind.

2008.05.06 WTI has made the historical high at U$122.73 and closed at U$121.84. Strangely it is not at overbought; RSI is only 63. Rather the previous high at U$119.90 (closed at U$119.37) was at the overbought RSI 87. From fundamental perspective it tells us new high would correct quickly. But this is counter intuitive  because the new high was made when the RSI falls from 87. In another word, when the momentum is reduced the price still increase. This could be an incredible strong sign. Warning sign should be put up because when the momentum is high the volatility is also high which means short term fluctuation could be very high.

2008.04.28 Middle East situation changes and shutdown of North Sea oil production jack up the oil price. It may mask out the true story which is the emerge of the BRIC demand. NG's low price was not recognized. It was further suppress by the American's import of the much higher LNG which is ridiculous. Now the LNG is shipped to China because China pays a higher price. The weather will help the continue climb of NG price. The fall of the NG inventory at States finally shows up and the price adjusted as well.

2008.04.23 We may want to set up two trend lines to reflect a shorter trend and a longer trend. The shorter on starts January 2007 when the rampant of oil demand. The second one is from July 2003 which reflect a much longer term run. The second one can now serve as the lower bound of the volatility. If it is the situation, we are going to see  tens of dollar swing. This has been shown with the new charts. This brings out another interesting feature of the PV chart which is just below the comments. This chart does not need two tend lines to show the direction and the ranges because it ignores the time like P&F. The PV chart is just my lazy version of P&F. So I have to thank you for the intelligence of the PV chart.

2008.04.20 This week is very interesting. Oil makes record high almost daily when all entertainysts continue their trance of lower oil price. The incidence at Nigeria is not new but a regular fare. How could it push oil to record high? Apparently this is the short squeeze. Shorties have to cover. In another word, they have to sell something to cover their margin. This could very possibly the precious metal. The more interesting situation is NG which has a huge come back after two and a half year of depression even before the air-conditioning season. This time it is shooting U$10.80 short term and U$13.20 intermediate term. If oil continue to climb, say to U$120, and the oil/NG ratio improves to 8-10, we are going to look at U$12-U$15 which is a very possible target. The future price for Henry Hub is July 2008 U$10.80 and Jan 2009 is already U$11.80 which is close to the U$12 range. Looking at the US NG inventory chart, one could draw the conclusion that the level of inventory is in deficit in comparison with all previous year which supports a high NG price. The current price also agree with the trend.

2008.04.13 Oil's come back is nothing short of spectacular. NG has tried the fourth time to break up. None has shown the topping as the surprise of American inventory shrinking is shocking. One should ask why there is a sudden shortage while strong supply and pileup happened last few months. Why in a week, they were gone especially before the driving and air con season which traditionally the lowest consumption month. Can we call this creative accounting?

2008.04.05 Oil is moving ahead of the trend line but above U$100 rather than as some envision a try below U$80. The trendline has been very honest and the oil may be in trading range until the driving season. So does NG which may not hit the high demand until this summer.

2008.03.30 When US bombs Iraq started Friday, no stimulation to the gold and oil. In fact they were depressed. Why? Counter-intuitive? You bet. This means when the law of supply and demand does not work will mean this is not a free market. Supply and demand are either showing false signs or the actual supply is not really care the demand. This sounds like the communist's planned economy which we all know the outcome. We cannot read the short future just like we cannot determine the position of an electron's speed and position at a precise time and space. But we know the electron will not go to the nucleus when it is stimulated. sooner of later, it will jump to higher state. We investor unlike the atomic physicist at the CERN; wait and observe and device next action. One strike cannot guarantee a hit.

2008.03.22 WTI broke down below U$100. Let's watch whether it is breaking down below the resistance. NG is the same story. It did not close firm above U$10.10 so if fell. Compare with last year's NG low U$5, it is over 100% gain. 20/20 hindsight would say what is the problem.

2008.03.14 Well now what? WTI is north of U$100 and closed at U$110. I'll adjust the scale next week. EIA and IEA have denied and ignored the energy demand outside the America. Now EIA admits that demand from China will be strong. Where is it coming from? Did China born yesterday? Geopolitics could not explain all these. Let prepare to empty our wallet at the gas bar. NG's price is also unconventional. With all the glute of LNG and the weather warming up the price suppose to go down traditionally. Why is it heading down so early? Could all the surplus NG statistics require revision because all of them are estimation only not real?

2008.03.10 WTI shots up north of U$107 when the USD is rally a bit just south of 73. The picture does not jive. NG also takes the benefit of surging WTI to hit U$10.024 and hangs around the same level after the NYMEX closes for the afternoon. NG may break the resistance of U$10.10. Gold fell U$12.00 and recovers just about U$2.00 below the Friday close. The market has incredible under current to prevent the commodities to move up but the underlying demands is so strong that it will overcome the down draft. However, volatility would not be minimal.

2008.03.07 Oil is continuously pushing higher and higher with each day giving the hint may fall. At the end, it closed historic high again. The price may get help from the geopolitics but as time goes by more data has been reviewed on higher demand. NG price has been explained as suppressed by the LNG and gluted supply and warm weather. However they are just fantasy someone created. These fantasy has almost kill the industry. Now the price is going to match the historic ratio with oil: 1 to 6. Perhaps there will be a stop from now to 1:8 first.

2008.03.06 We may be heading towards an above U$10.00 NG. Please refer to the "Seasonal NG Inventory Surplus vs Price" chart.

2008.03.01 Oil has been closed above U$100 this week first time in history and just slightly below from the historic high of U$102.59 which is consistent with historic trend. But the message we need to decipher would be: is the up trend is steady enough to support a long term rise? Technically yes. On the other front, NG is hitting the trend line the second time after numerous attempts. This is not consistent with the historic trend. Where is the LNG to cool off the NG demand?

2008.02.23 Natural gas peeked above the U$9.00  resistance and closed at U$9.14 first time in months. The trend could be steady and on the way to U$10.00 in next few weeks which is a major breakup. I just wonder where are the LNG which could scuttle the NG price. Oil price remain stubbornly hanging around U$100. Now the choir is getting more patron to sing the BRIC energy demand fill the American gap. Actually I don't think the American is slowing down the consumption. The consumer may be helping but the ethanol production is not.

2008.02.02 When OPEC holds the production but the oil price falls when demand has no material change in near term, can we call it conspiracy? Contract for the demand in 6 or 12 months could fall because of the recession but next month?

2008.01.26 Oil price has recovered to above U$90 and NG continues its dance above and below U$8.00. The real demand has been masked by the government statistics.

2008.01.11 Natural gas is in great shortage in the States as show at the bottom of this page. The price has react accordingly this time. I just wonder where is the LNG. Oil price has been moving in a channel while entertainyst explains that the fear of worldwide recession will reduce demand on oil. Perhaps these entertainysts just read American newspapers' entertainment section and overlook the statement made by Tata when it introduce Nano. There will be millions of Nano coming out. Even at the gas milage of the SmartCar, it still a hugh demand.

2008.01.06 NG price may be on a more steady upward trend than before but this has to be determined by the price of LNG.

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