T.G.I.Expiration – Commodities Rallying Nicely Into Expiry

November Scud Watch: Front and Center.

Rule #1. Never ignore your losers. That's hard spent education money and the last thing you should do is try to forget about them.

Rule #2. Try to learn from rule number #1. 

I had more than my usual number of scuds this month. A lot more than I like but rather than hide from them and rejoice in my win column (which is not the point of keeping a trading) I force myself to examine what went wrong and where appropriate what I should have done differently.

  • (COP) $85s. Had the chance to get out out down only 20% on three separate occasions. Sub prime pushed this to a new low after a warning and 3Q earnings. At that point it became a technical loser despite its valuation. I should have abandoned and ship and waited out the storm here. 
  • (EXM) Slammed by an exit of momentum players. Can't see where we were wrong on this on the fundamental side. Earnings matched the march higher and have only continued to improvewere  during the two week plummet from $80 to $45. I hate momentum stocks. I really do. Despite a fundamentally strong story, logic goes out the window over technical levels at a seconds notice. Lastly, an earnings miss, no matter how small is death in a stock that's up as much as this group (dry bulk shippers) is up, even taking the individual stocks sharp pullback into account.
  • (OII). Most disgusted here. Had the chance to sell for a triple only 2 days into the trade; like an idiot I chose to hold through a minor sell down into earnings. Lesson here, for more expensive stocks in the group, always take half off the table, especially when the move comes so quickly. Play with house money.
  • (HAL). No lesson here. Just a bad timing. Bought and sold the $37.50s for a nice gain in interim but it was risker than my usual trading. I had the opportunity to trade out of the $40s for a 20+% profit multiple times but simply mis-judged the stock's ability to weather the broader market downturn which was spawned recession fears as investors revisited the sub primed debacle in the second half of the month. 
  • WNR / FTO: WNR had a nice rounding chart, depressed multiple (for it) but it missed earnings badly and was taken to the woodshed immediately On the other hand, FTO another small refiner, was entered the same day for the same reasons, beat earnings and is still a scud despite a much stronger outlook than many of its peers. Lesson here is not to fight the group dynamic with short term options and again, to take profits when they unexpected go from loser to small % gain...before they go to scud.

Last lessons:

  • Take profits...no one ever went broke taking profits, and
  • Always scale in...while having more than my usual number of losers in the month is bothersome, none .
  • Set 50% stop losses in volatile markets. I don't normally set stops but when its the Fed and sub prime and not the price oil, gas , or coal that is determining stock price action all logic is thrown out the window. 


Commodity Watch:

  • Crude Oil plummeted yesterday on an unexpected build in inventories but cleaned up by the close to end the day down only $0.66 at $93.43 as traders started to look beneath the surface of the stock building seeing that the report was not as bearish as they initially thought.  In comments yesterday I railed against the initial steep decline in crude prices since the reason for the crude stock build was imports and not falling demand. Oil is erasing the decline from yesterday climbing a $1.80 on reasons I outline in the following section or if you care to read what the press has to say this morning because people are once again concerned about tightness.
  • Fair Weather Fans. Over the last week traders in print and on TV suddenly saw $100 oil as as likely an event as a mission to Mars by year end. All over one bloated import number. I say bahhhh to them. Tightness has been the buzzword and that tightness persists. The imports jump was responsble for a 5.8 mm barrel increase in week to week storage levels. Had it not been for increased demand from refineries that is the number you would have seen, not the 2.8mm barrel build we did see. One week of high imports (and they were high...see chart below) does not a trend establish. However one trend that can more reasonably be seen as starting is higher capacity utilization (and therefore oil demand) as we finally exit the Fall maintenance season.
  • Nigeria Watch: A pipeline feeding the Forcados export terminal was bombed yesterday. MEND is stepping up their activity.


  • Natural Gas fell $0.135 to $7.70 yesterday as the EIA reported NG stocks saw their first draw of the season. This morning gas is trading back up $0.16.

Oil Report Review: It was the imports silly market. Trends are for professionals.




Oil Volumes Supplied To Refineries Is Set To Rise. As I said in yesterday's post, utilization could outperform and it did, rising to 87.7% from 86.2%, much higher than the Street expected. I expect crude demand to increase by 1 mm bopd in coming weeks which will outstrip the ability of imports to keep up and again lead the talking heads to talk about tightness.



Crude Imports: Increased 850,000 bopd Week to Week. These are "catch up" volumes from Mexico in the wake of storms there. They resulted in an additional 6 mm barrels of inventory relative to the prior week. As you can see from the chart below, crude imports are volatile but remain within a certain trading range like a channeling stock to borrow a phrase. It's unlikely that this level of imports is sustainable beyond this week. While the trend towards greater consumption on the part of refiners described in the preceding bullet will only continue into winter barring further unplanned outages. 


Therefore, Crude Stocks Increased By 2.8 Million Barrels As Unusually High Imports Offset Increased Refinery Demand. I think this is just another bump in the road and crude stocks will be headed lower again soon. Note that volumes at Cushing, the NYMEX pricing point remained at lowish levels despite the build in crude stocks.


Gasoline: Stocks Rise Slightly As Flattish Imports and Production More Than Offset  A Slight Dip In Demand

  • Production: flat with the prior week at 8.9 mm bpd. 
  • Imports: Slight dip but in line with year ago levels at 1.014 mm bpd.
  • Demand:  Off by 180,000 bpd but still 0.8% ahead of year ago levels which were the record for gasoline consumption at this time of year.


  • Retail Prices: At an average price of $3.11 per gallon last week, prices are up 39% YoY at the pump.
  • Stocks: Despite the small build, gasoline stocks remain mired near the low end of the historic range for this time of year. Refiners know that they must boost inventories here so that they can do a full maintenance cycle next Spring. If they run short in advance of Spring they could be caught flat footed, forced to either delay maintenance, which increases the likelihood of unplanned outages next year, and/or buy gasoline to fulfill commitments which can be very costly.  



Distillates: Bigger Than Expected Draw of 2.0 Million Barrels. More of this on the way as the Northeast suffers some unseasonably cool weather.




Natural Gas Review


For updated graphs on natural gas storage please click here

Holdings Watch:


  • APA - bought December $110s for $1.30. Last bid $0.95.


  • SU: Sold the SU December 95 trades for a minor profit (8%) at $3.20.  

Odds & Ends  

Analyst Watch: Deutsche Securities took (MRO), (CVX) and (COP) from sell to hold, (SUN) was upped to outperform at Bernstein, (EOG) cut to hold at Bernstein which may provide a nice opportunity to get back in. Cantor raises DRYS target to $133 from $114.

60 Responses to “T.G.I.Expiration – Commodities Rallying Nicely Into Expiry”

  1. 1
    Sambone Says:

    8:27 am Est

    Nymex Crude Rises $1 Despite Supply Build


    [Dow Jones] Nymex crude rebounds as traders consider jump in US crude stocks. A US Department of Energy report Thu showed a 2.8 million bbl rise in crude stocks. “Despite the fact that Thursday’s EIA data was broadly interpreted as bearish and that both the IEA and OPEC are downgrading their demand forecasts, we should not write off the upside just yet,” BMO Capital Markets analyst Bart Melek says in a note. Nymex Dec crude contracts expire at end of day, potentially stirring volatility. Nymex Dec crude +$1.02 at $94.45/bbl. (greg.meyer@dowjones.com)

    Reported Earlier:
    LONDON — ICE Brent crude climbed more than a dollar in London trade Friday as participants reviewed Thursday’s reaction to a build in U.S. crude stocks announced in the weekly Department of Energy inventory report.

    The majority of the builds in U.S crude stockpiles were attributed to the West Coast region, seen as largely autonomous in terms of the U.S. domestic oil market.

    And with crude oil inventories at Cushing, Okl. — the delivery point for Nymex light, sweet crude futures — staying near lows, the oil inventory data wasn’t as bearish as initially perceived, some analysts argued.

    “A lot of people focus on the headlines and forget the underlying picture,” said Harry Tchilinguirian of BNP Paribas. “In terms of low inventory stocks giving upward pressure to prompt prices, that’s going to remain.”

    At 1240 GMT, the front-month January Brent contract on London’s ICE futures exchange was up $0.73 at $90.96 a barrel.

    The front-month December crude contract on the New York Mercantile Exchange was trading $0.77 higher at $94.20 a barrel.

    The ICE’s gasoil contract for December delivery was up $10.25 at $817.75 a metric ton, while Nymex gasoline for December delivery was up 178 points at 235.40 cents a gallon.

    The moves higher Friday were assisted by relatively modest trading volumes, particularly in the Nymex December light, sweet crude contract.

    The December product is due for expiry Friday and with open interest on the contract relatively large, the potential for a volatile day’s trading was anticipated, particularly following market open in the U.S.

    “Open interest on the expiring December futures remains higher than normal,” said Olivier Jakob of Petromatrix. “The flat price direction should remain dominated today by the management of the expiring contract.”

    Concerns over the tensions between Tehran and the West were cited as supportive of crude oil prices Thursday, and anticipation over further developments helped underpin price levels Friday.

    The U.S. announced that it would seek further sanctions against Tehran after an International Atomic Energy Agency report Thursday found that Iran had made “substantial progress” in revealing the nature and extent of its disputed nuclear program, but that it needs to be more pro-active in providing information.

    The U.S administration said the report shows Iran “continues to defy” world demands to suspend sensitive atomic work.

    —By Nick Heath, Dow Jones Newswires

  2. 2
    kaman Says:

    Good reminders Z…the toughest thing to learn, particularly in options(for me anyway) is the entry/exit discipline. Know you’re not much of a TA fan, but its a useful tool in that regard. Personally, I salvaged my crummy Nov calls in energy with an overnite play in GS 230 puts this week (bought at 1.30, sold at 6). Gotta protect your trading capital. Getting awful tempting to make a move on DRYS…serenity now, serenity now. Cheers-K

  3. 3
    zman Says:

    Thanks K – Not that I’m not a fan of TA, just that I’ve never been all that good at beyond the basic stuff, support/resist, MACD, RS etc… I figure people can make their own judgements on a chart and I’m mostly here to fill in the story.

    DRYS PT boost from Cantor. Like Bill and I have said, we can talk ourselves blue in the face but if the Crowd is exiting, the Crowd is exiting. Business just gets better and better for most of these guys. Oh well. I hate mo-mo stocks.

    Love the $1.75 crude rally this morning. I just love saying I told you so. It was the imports stupid. That’s for everyone who flip flop on oil yesterday.

    See the demand rising section of today’s post. I know some of you read cover to cover and some just come for comments but I think the argument I make for tighter crude on a weekly basis going forward is pretty compelling but of course I would since I wrote it.

  4. 4


    Good Morning. In 50 wds or less. What are the ramifications of low heating oil inventories?

    Which type of company benefits from a surge in heating oil demand relative to a low supply? Is this the refiners? Which ones?



  5. 5
    zman Says:

    Crude back over 95, up $1.88

    Q: Refiners. All of them. Favorites for HO play would be VLO, then FTO, then SUN.

  6. 6
    zman Says:


    Lots of volume in VLO in NOV and DEC 67.50 calls.

  7. 7
    Sambone Says:

    I’m estimating the overall market will be down today.

  8. 8
    Denise Says:

    Good morning
    Notes from various sources
    Rally camp-P/C ratio got to 134% -10 day p/c moving average should peak any day(usually coincides with rally)
    Fewer new lows- 18% good sign
    Abx index on BBB’s turned up
    Nasdaq oscillator turned up

    Bearish-too many looking for rally
    Gann/Wave man thinks low first wk in Dec

  9. 9


    Do you think I should complete a position in DEC 40s at this point (approx. 0.85)?

  10. 10
    Denise Says:

    S-my T/A lady is hoping for another good down day today and possibily Mon-says it would be perfect setup for year end rally

  11. 11
    Nicky Says:

    morning all – give me a mo and I will update some ta.

  12. 12
    Sambone Says:

    9:38 am EST

    Nymex Crude Up Nearly $2 As Dec Contract Expires

    By Gregory Meyer

    CHICAGO — Crude oil futures rose nearly $2 a barrel Friday as traders positioned themselves ahead of the expiration of the December contract on the New York Mercantile Exchange.

    The latest available data show 109,417 Nymex December crude contracts open as of Wednesday. The contracts expire at the end of the session. Because few traders are prepared to let Nymex contracts go to physical settlement, most contracts will have been closed by the end of the day.

    Friday “could be a very volatile session,” said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn. “The outstanding open interest in the contract is significantly higher for expiration day than is usual.”

    Light, sweet crude for December delivery on the New York Mercantile Exchange was recently up $1.82, or 2%, at $95.25 a barrel. The January crude futures contract, which becomes the new front-month contract Monday, was trading at $93.74, up $1.67. January Brent crude on the ICE futures exchange rose $1.47 to $91.70 a barrel.

    The buying reversed the market direction’s Thursday, when the December contract fell 66 cents after the U.S. government reported an unexpected 2.8 million barrel build in domestic crude inventories, the first rise in four weeks.

    The surprise build followed a report earlier in the week in which the International Energy Agency cut its world oil demand forecast for 2007 and 2008. Also Thursday, the Organization of Petroleum Exporting Countries, whose heads of state are gathering in Saudi Arabia this weekend, cut its projection of world oil demand growth for the quarter due to a late North American winter and higher gasoline prices.

    But some analysts say a longer-term drop in U.S. oil inventories and other factors suggest continued price support.

    “Despite the fact that Thursday’s EIA data was broadly interpreted as bearish and that both the IEA and OPEC are downgrading their demand forecasts, we should not write off the upside just yet,” Bart Melek, an analyst at Toronto-based BMO Capital Markets said in a note.

    The market also seemed unshaken by comments by Federal Reserve Governor Randall Kroszner, who Friday signaled that the Fed is not inclined to cut interest rates further even if the economy hits a “rough patch” as he expects.

    “It seems the market is overpowering that right now,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “Normally, if the Fed is not going to cut rates it should signal to the oil market that demand may slow.”

    Front-month December reformulated gasoline blendstock, or RBOB, rose 5.30 cents, or 2.3% to $2.3892 a gallon. December heating oil rose 5.11 cents, or 2%, to $2.6098 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  13. 13
    zman Says:

    Q – I’m not adding just yet…still think we get some gas price weakness in next week or so and the energy stocks, after a drubbing yesterday, aren’t exactly blowing it away today even with oil back to $95…I plan to add to CHK next week but I’d rather add on quiet names like that with strength than try to pick a bottom. Broad market looks pathetic.

  14. 14
    zman Says:

    D: thanks

    Q: on the check, its a tough call. great stock great company, fast grower and cheap as you know but the group just looks tired today…lacks catalysts. If we get a reversal it could be up a buck in heartbeat…which is why I don’t give advice, just tell you what I’m doing, and right now I’m sitting on my hands there..

  15. 15
    zman Says:

    If you think the market has a chance at a rally today, RIG, VLO and APA would make nice close of November expiry trades.

  16. 16
    zman Says:

    ZTRADE: OUT COP 80 Nov Calls at $0.22, down 86%

  17. 17
    aitrader Says:

    T. Boone’s latest stock picks –

    New Purchases: CVX, FWLT, XOM
    Added Positions: FLR, IOC, KBR, OXY, RIG, SGR, SLB, SU, TIE, TLM
    Reduced Positions: DRC
    Sold Out: TSO, VLO


  18. 18
    Nicky Says:

    Broader market – this is getting very critical. We take out the lows put in on the 13th and the bull market is done.
    We stay above it and the picture is very bullish…

  19. 19

    FXI very weak. QQQQ very weak. XLF very weak. I’m leaving at noon and be back after T’giving.

    All I have is 40 or so VLO 72.5s

    I’ll give them an hour or so and dump ’em.

  20. 20
    zman Says:


    Out remaining Nov $67.50s for $0.75. taken with the first half sale at $5.50 I’m out for 18% gain here to my 2.65 average cost.

    Adding to Dec 72.50s for $1.40 brings average in these down to $1.75

  21. 21
    zman Says:

    Thanks AI

    Nicky – agreed re broader. Are you short distillates and NG now?

    Q – have a good holiday.

  22. 22
    bill Says:


  23. 23
    Nicky Says:

    No Z not short energy yet

  24. 24
    Nicky Says:

    Energy market will hold up today into futures expiration. Not sure whats to hold it up next week though! With broader market falling and consumer starting to fall apart energy should take a dive off a cliff.
    Anyone else seen the potential h & s pattern on the wti chart?

  25. 25
    Nicky Says:

    Energy TA in particular wti. one option is that we are done and just tracing out an abc correction before moving lower. If we are not done then we are now in iii of v and so we are gonna be done soon! Minimum upside would be 98.62 under the latter.

  26. 26
    zman Says:

    Bill – It will zoom like a Chinese stock again but for now, there is still mo-mo money exiting the group. They could cure cancer, aids, make you quit smoking and look good and the stock won’t go up until

    Nicky : thanks. Just checking, I think NG falls to mid $7 soon then rebounds in second half December. Jury still out on whether imports from Canada will fall once again but they look threatening at present to go to new lows. As for LNG, wow , who would have thought that Japan and the subcontinent could soak up so many shipments. I don’t understand how LNG (the company) continues to ride so high given that they are building regassification capacity we don’t apparently need. They’d scream at me for saying that but I mean, less than 1 Bcfgpd imported after record highs this summer. We need prices well over 8 to get it here and our old capacity is now where near full.

    N: hear you on the H and S pattern. Do you think oil will head higher (not that it belongs where it is now) but head higher nonetheless if we get a resumption in the draw downs in crude stocks. Note Cushing did not rally yesterday…Refinery demand is finally picking up and imports will not stay up …they pretty much never do after a peak like this. So refiners going to ask for another 1 mm bopd in the coming weeks as they come out of maintenance, imports flat at best and domestic production looks like the EKG of a dead man. Do you think that the resumption puts us higher because I see several weeks of lower inventory ahead. As TSO put it yesterday, China is a blackhole for hydrocabons and they are sucking up everything they can get their hands on and rapidly expanding their refining capacity.

  27. 27
    redjack Says:

    re #17…Boone Pickens & IOC?????

  28. 28
    Nicky Says:

    Why would nat gas fall now when it is due to get cold in the next week and then bounce in December when it is due to be warmer?

  29. 29
    zman Says:

    Like to see him and not Icahn in TLM

    IOC – still have not seen a straight answer out of those guys on their second well.

  30. 30
    Nicky Says:

    Z – if as you say there continues to be draw downs in the inventory level that is just the excuse they need to continue the ramp.

    I have heard however others say that draw downs will NOT continue – then the bulls have a job on their hands.

  31. 31
    Sambone Says:

    Nicky’s bud


  32. 32
    Sambone Says:

    11:07 am EST

    Nymex Crude Rises As Dollar Weakens


    [Dow Jones] Crude prices are up again as the dollar weakens on slowing US industrial production. Industrial production dropped 0.5% last month, pushed lower by decreased output of cars and trucks and a decline in gas utilities, the Federal Reserve says. The data helped drive the dollar lower against the euro, which was at $1.4662 from $1.4616 late Thu. “If anything (the industrial production figures) should have been bearish,” says John Kilduff at MF Global. “But that translates into a weakening dollar. So it once again pushes up crude prices.” Nymex Dec crude +$1.67 at $95.10/bbl. (greg.meyer@dowjones.com)

  33. 33
    zman Says:

    N: think we could return to injection next week …it was pretty warm in gassy areas of the country.

    N: I imagine they’ve been saying that for awhile. See my bumps in the road chart of crude stocks. How does one come up with a rally in oil stocks unless 1) imports go well above the historic norm or 2) refineries fail to get back to higher utilization following maintenance season. If they do not recover soon that will keep HO prices up.

  34. 34
    aitrader Says:

    Z – in your opinion is the weak dollar or supply/demand the dominant factor in current oil prices?

  35. 35
    zman Says:

    AITrader – no. It doesn’t hurt obviously but the rally in the euro and other currencies pales in comparison to the rally in crude. Crude is up here on tightness which I laid out about two months ago in a nice little equation that simply comes down to demand exceeding supply in 4Q and into 1Q. Then you’ve got geo-political troubles of every kind weighing in for more than they are worth, then the dollar (which is probably also in for more than it’s worth).

    Also you’ve got some big project delays in the deepwater, and some moves on the part of Russia, the world’s largest producer at present, keeping more oil at home. I’m not Kilduff or Flynn because I believe in the tightness, not the trade and I don’t see the tightness easing for awhile.

    The consumer will conserve a little on the gasoline side but TSO made another good point, this only goes so far and this with gasoline prices up 40% you are seeing demand up almost 1% YoY in the states. I would not call that extreme price elasticity, would you?! Anyway, TSO management pointed that while a recession would certainly impact demand its not as big a factor as people think unless it leads to severe negative job growth. Unless Joe gets fired, Joe still has to drive to work. He may take a few less leisure trips in the car but that is a tiny slice of consumption. Their words not mine but it was their economist saying it.

  36. 36
    aitrader Says:

    Interesting – thx. So OPEC is simply ignoring the supply/demand crunch and using the “speculators and weak dollar” argument for convenience’ sake.

  37. 37
    zman Says:

    aitrader: to some extent yes, but they (and I’m speaking of Saudi Arabia, Kuwait and the more responsible, less rash players in OPEC) have other, long term concerns that allow them to look through the valley more readily than the West would like.

    1) they manage their reserves with a 100 plus year focus. No kidding. Sure you can produce a reservoir faster but there are reasons why you don’t want to, chief among these being ultimate recovery, so prices be damned if they are going to increase production to please us at the expense of their reservoirs.

    2) Saudi is not an endless carafe of oil like IHOP coffee. They are planning some field extensions and additions but in the last 3 years, spare capacity, is up by 0 barrels according to some people much smarter than myself, the guys at CLB among them, who examine cores over there and help them with the management of the reservoirs. They have water coning issues as well so its not like these new additions are dropped on top of a flat decline curvewi – wyoming can speak to this better than I.

    3) It’s a CARTEL. They will try to maximize price vs production by definition. If they think the GLOBE is in danger of recession, they will boost production. Right now I think they are considering a boost (probably another 500 mbopd to bring prices in a little so that this balance stays the same. There’s cheating going on to be sure and the next few weeks of tanker tracker data should be pretty interesting as it will show volumes post the Nov 1 production hike.

  38. 38
    Nicky Says:

    Energy coming off fast – expiration related?

  39. 39
    zman Says:

    N: they did have a lot of contracts in December to close…but the out months aren’t off even more which I would guess means people aren’t rolling forward yet.

    NG surprising strong. Just checked the degree day forecast for gas weighted weather. 100 for this week vs 123 for the week we just got the 9 Bcf withdrawal report on. The week before last was 114 HDDs so I’d say next week is back to building which is why I think gas should be falling soon. Today’s rally looks like a near term forecast of cold in the northeast so what do I know, lol.

  40. 40
    zman Says:


    sold the remaining RIG 120s for a dime to some daring wizard of trade. This was the second half of a position so the average here was just slightly positive (up 17%).

    FTO: out of the 45s for a near complete loss.

  41. 41
    scoop006 Says:

    Z Any thoughts on the volume in TSOXK =
    TSO Dec 55P 2800+ contracts

  42. 42
    Nicky Says:

    SPZ (ie Dec spx) important level is 1457.50

  43. 43
    zman Says:

    Scoop – someone’s taking a bet that TSO tells KK to jump off a cliff next week. They have until Wednesday or maybe Thursday. Bet they say something Monday. I have no December or longer contracts there.

  44. 44
    rkbos Says:

    Z – knowing you favor certan names, such as CHK,I tought I’d pass along this headline i just saw. Noteworthy or no?
    I expect that you may already have seen this.

    CHK Chesapeake execs enter into Rule 10b5-1 Trading Plan

  45. 45
    zman Says:

    Re CHK. Thanks, I had not seen but unless Aubrey joins I won’t be concerned.

    N: if the SPZ holds that level it’s positive for the broad market?

  46. 46
    Nicky Says:

    Short term Z – yes

  47. 47
    Sambone Says:

    Wow, is it getting bad out there?


  48. 48

    ZEB Clan:

    Don’t forget VMC if it dips down to 78 range next week. It’s a TRADE at that point.


  49. 49
    zman Says:

    Sambone: funny if it weren’t so pitiful

    Q: thanks and watching.

  50. 50
    Sambone Says:

    Dow Jones

    Deutsche Bank raised its oil-price forecast and upgraded Marathon Oil, Chevron and ConocoPhillips. “Excess re-investment in oil supply is not possible, either because of governments, geology or over-crowding,” the brokerage said. All three names were up more than 1%.

  51. 51
    Sambone Says:

    1:46 pm EST

    TECHNICALLY SPEAKING Format For Printing

    Crude, ExxonMobil Are Technical Twins

    A Dow Jones Newswires Column

    NEW YORK — Stock traders are necessarily preoccupied with the long-term uptrend in crude oil futures, which are crowding the $100-a-barrel target. Charts seem to indicate that a hit on the target is likely soon.

    If not, however, then the crude price will set up for a correction. And it’s not surprising that the technical situation of shares of energy giant ExxonMobil Corp. (XOM) is very similar.

    Nymex December crude oil on Nov. 7 hit the current high for its record-setting long-term uptrend, at $98.62. Charts suggest that the nearby contract is pointed up to $100.50-$101.10 resistance by the end of this year. However, a test of resistance may be deferred until next year if the contract moves decisively below $91.51.

    In any case, long-term corrections would probably be contained by $83.05 support, charts say.

    ExxonMobil Shares Also Near $100
    Shares of ExxonMobil, now near $86, have been trending higher on the long-term charts since they put in a bottom at $29.75 in July 2002. The high for that uptrend, $95.27, was recorded last month. Shares’ failure to extend the uptrend in the meantime may be the technical signal that the rate of uptrend is slowing, and that means new highs may be limited.

    If shares move above $95.27, to new uptrend highs, then a potential interim top quickly would appear at $97.98 resistance, which is a logical profit-taking point for buyers. Trading above $97.98 would point shares up to $103.65.

    The risk for long-term buyers would be a decisive move of the shares below $76.41, which is now the nearest stop for trades based on the long-term charts. That development would be the signal for a test of $70.74 support. Even lower trading ultimately would be targeting the $54.84-$49.17 support band.

    (Stephen Cox, a chartered market technician, is chief technician for Dow Jones Newswires.)

    —By Stephen Cox, Dow Jones Newswires

  52. 52
    zman Says:

    like watching paint dry, at least its green paint though.

    Ok, so now we’re back to $100 oil is in sight stories. Such fair weather fans, lol

  53. 53
    Wyoming Says:

    Real quick, I have to run an errand. The water coning is big medicine for a reservoir. Unconsolidated sands will basically come apart and cut out surface equipment, bridge and stop flow. Sand blasting in high velocity or gas wells. Big pain to workover. Most important is the change in the sand grains from being water wet to oil wet. Not sure the mechanism, been a while from my reservoir class. From the CLB call and what I know oil wet is a reservoir killer.

    Off the subject comment, read somewhere that when looking at the declines of OPEC countries, their growing consumption is becoming a factor. They will export less.

    Feeling blabby and want to give a run down on Service providers but I have to go.

  54. 54
    zman Says:

    For those of you who don’t know, Wyoming spends his days on rigs for mid-cap E&P.

  55. 55
    Sambone Says:

    Z – When are you going to post your free November post. Don’t you do that once a month?

  56. 56
    zman Says:

    beer thirty

  57. 57
    Sambone Says:

    2:40 pm EST

    Nymex Crude Rises As Dollar Weakens


    [Dow Jones] Crude prices are up again as the dollar weakens on slowing US industrial production. Industrial production dropped 0.5% last month, pushed lower by decreased output of cars and trucks and a decline in gas utilities, the Federal Reserve says. The data helped drive the dollar lower against the euro, which was at $1.4662 from $1.4616 late Thu. “If anything (the industrial production figures) should have been bearish,” says John Kilduff at MF Global. “But that translates into a weakening dollar. So it once again pushes up crude prices.” Nymex Dec crude +$1.67 at $95.10/bbl. (greg.meyer@dowjones.com)

  58. 58
    Sambone Says:

    20 minutes to “Tini time”. Slow day, eh?

  59. 59
    zman Says:

    Have a good weekend. Bear Thirty is on. Will be around on Sunday. I assume the market holding today was a good thing. Nice moves in several names today on the longer options but nothing to write home about. See ya …

  60. 60
    aaatest Says:


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