Energy / Oil Prices

• Why Oil Prices Are About to Collapse

  All is not as it appears in the global oil markets, which have become entirely dysfunctional and no longer fit for its purpose, in my view. I believe that the market price is about to collapse as it did in 2008, and that this will mark the end of an era in which the market has been run by and on behalf of trading and financial intermediaries. In this post I forecast the imminent death of the crude oil market and I identify the killers; the re-birth of the global market in crude oil in new form will be the…

• Crude Oil Analysis for the Week of January 9, 2011

  February Crude Oil closed higher last week despite the stronger U.S. Dollar and a general aversion to risky assets. This only proves what traders have known for weeks that crude oil has decoupled from the rest of the market. Technically, weekly crude oil is in an uptrend. As long as the newly formed main bottom at $92.70 remains intact, the trend will remain up. Last week the market poked through the previous main top at $103.28 without much fanfare. The lack of volatility came as a surprise; however, this may have been caused by the stronger Dollar and weaker Euro.…

• Crude Oil Analysis for the Week of January 2, 2011

  February Crude Oil had a weak follow-through to the upside after a powerful rally the week before. The thin holiday trade was probably the biggest reason for the lack of follow-through. From a technical perspective, the feeble rally suggests that the strong rally from the week before was likely heavy short-covering rather than new buying. Buyers have been scarce lately because of the financial turmoil in Europe and the strength of the U.S. Dollar. Commodities priced in dollars tend to weaken when the greenback strengthens. Not only was last week’s rally pathetic, but the market also closed lower for the…

• War Imminent in Straits of Hormuz? $200 a Barrel Oil?

  The pieces and policies for potential conflict in the Persian Gulf are seemingly drawing inexorably together. Since 24 December the Iranian Navy has been holding its ten-day Velayat 90 naval exercises, covering an area in the Arabian Sea stretching from east of the Strait of Hormuz entrance to the Persian Gulf to the Gulf of Aden. The day the maneuvers opened Iranian Navy Commander Rear Admiral Habibollah Sayyari told a press conference that the exercises were intended to show "Iran's military prowess and defense capabilities in international waters, convey a message of peace and friendship to regional countries, and test the…

• Crude Oil Analysis for the Week of December 26, 2011

  Last week the fundamentals clashed with the technicals in the February Crude Oil futures market and by week’s end the fundamentals clearly won. Even though the contract did not take out any significant price levels, the strong upside momentum probably gave bullish traders the incentive to continue to buy while putting fear into the short-traders and encouraging them to continue to cover their positions. Technically, the main trend on the weekly chart remains up although momentum was clearly beginning to shift to the downside after 4 weeks of consolidation. Even the penetration of a key 50 percent price level at…

• How Oil Prices Affect the Price of Food

  The current global food system is highly fuel- and transport-dependent. Fuels will almost certainly become less affordable in the near and medium term, making the current, highly fuel-dependent agricultural production system less secure and food less affordable. It is therefore necessary to promote food self-sufficiency and reduce the need for fuel inputs to the food system at all levels. The connection between food and oil is systemic, and the prices of both food and fuel have risen and fallen more or less in tandem in recent years (figure 1). Modern agriculture uses oil products to fuel farm machinery, to transport other…

• Crude Oil Analysis for the Week of December 19, 2011

  February Crude Oil confirmed its weekly closing price top at $103.28 with its sell-off through the last minor bottom at $95.16 and a key 50 percent level at $95.15. In addition, the penetration and subsequent close under the uptrending Gann angle at $97.73 this week is also a sign of impending weakness. Finally, the market closed on the bearish side of a downtrending Gann angle at $98.07. All of these factors indicate the crude oil market is poised to move lower. The current chart pattern suggests a trade down to a combination uptrending Gann angle/50 percent level at $89.51 is…

• Price of Oil to Remain High as OPEC Limits World Production

  The results of OPEC’s latest meeting to set oil production quotas were on Thursday last week. Instead of production targets for individual countries, a group production ceiling of 30 million barrels a day was set. This amount is a bit less than OPEC produced in November 2011 (actual 30.367 mbd), according to its reckoning, and less than it would have produced most of 2011, if Libyan production had stayed on line, based on the amounts shown in its November Oil Market Report. A recent history of oil production from the November Oil Market Report, both for OPEC and in total,…

• Crude Oil Analysis for the Week of December 12, 2011

  January Crude Oil futures had a strong surge on Friday, but still managed to close lower for the week. Renewed buying helped prices rise for the first time after three consecutive lower-lows. News that the European Union was close to reaching a possible solution to the Euro Zone crisis triggered the turnaround in prices. Brent Crude Oil in London finished 53 cents higher, but West Texas Intermediate rose a lofty $1.07. Despite the strong showing on the daily chart, the weekly chart indicated a slightly lower trade. This was not enough, however, to reverse the market’s course. Based on the…

• Crude Oil Analysis for the Week of December 5, 2011

  January crude oil finished sharply higher last week. The rally was primarily driven by greater demand for risky assets fueled by a weaker Dollar and stronger equity markets. The market started out weak, but at mid-week the U.S. Federal Reserve and other major central banks joined in a coordinated effort to flood the financial markets with Dollars. The added liquidity wasn’t the only factor driving the crude oil market higher. Increased tensions in the Middle East caught the interest of traders as events continue to draw the global community closer to implementing economic sanctions against Iran. Some traders are also…