Energy / Oil Prices

• Crude Oil Analysis for the Week of November 28, 2011

  January Crude Oil closed lower for the second consecutive week but losses could have been worse if not for a strong comeback on Friday. The primary reason for the weakness throughout the week was concern that the European debt crisis would trigger the start of a global recession. As bearish conditions spread throughout the Euro Region, traders pressured the Euro, driving up the U.S. Dollar and lowering demand for the dollar-based crude oil market. The soft crude oil market firmed up on Friday on the news that violence had erupted in Saudi Arabia. With unrest already taking place in Egypt…

• What is Happening with Brent and WTI Oil Prices and what Can We Expect

  Back in February, I wrote a post called Why are WTI and Brent Prices so Different? In it, I talked about a number of issues, including pipeline issues, contributing to the differential between Brent oil prices (high) and West Texas Intermediate oil prices (low). Recently, I have had some additional insights into what is happening that I would like to share with others. These include: 1. The WTI / Brent oil price differential has, in fact, led to lower prices on oil products in the United States than the rest of the world, and has helped (at least a little)…

• Why I Would Approve the Keystone XL Pipeline Despite Environmental Concerns

  The following is a lengthy essay explaining why I would approve the Keystone pipeline despite finding myself on the side of those concerned over the negative environmental impact of tar sands development. I will debunk much of the misinformation going on in the pipeline debate and ultimately lay out my conclusions. I intend for this to be an alternative to the administration’s announcement to punt the decision for a later time I have to hand it to Bill McKibben. Whether or not you agree with his position, take a look at what he accomplished. McKibben, an environmentalist and journalist, has…

• Implications of the Recent Rise in Oil Prices

  The price of West Texas Intermediate has risen almost $10 a barrel since the start of September, and briefly bumped back above $100 a barrel this week. Here's why I think that development may not be as worrisome for the U.S. economy as it might sound. The first point to be clear about is what we mean by the price of oil. Two of the most popular benchmarks are West Texas Intermediate, which is a light sweet crude whose price is quoted for delivery in Cushing, Oklahoma, and Brent, which comes from the North Sea. The crudes are similar in…

• Crude Oil Analysis for the Week of November 21, 2011

  January Crude Oil futures succumbed to selling pressure last week, reaching a high at $103.37 and forming a closing price reversal top. Once confirmed, this pattern often leads to a minimum 50% correction of the most recent rally. Although a sell-off is likely, it doesn’t mean the trend has changed to down. What this pattern may be doing is giving long traders a reason to take profits before a correction takes place. Aggressive counter-trend traders may be interested in the short-side. Based on the main range from the May top at $115.22 to the October bottom at $75.36, crude oil…

• Crude Oil Analysis for the Week of November 14, 2011

  January Crude Oil finished sharply higher for the week, settling well above a key 50% support at $95.29, but below 61.8% resistance at $99.99. Additional Gann angle support is at $99.36 this week. The next important upside target is a downtrending Gann angle at $101.23. The $99.36 to $99.99 combination should act as a pivot zone, controlling the market’s short-term direction. Since the steep Gann angle moves up at a rate of $4.00 per week. This market is going to have to close above $103.36 on a weekly basis in order for it to maintain its torrid upward pace. Bullish…

• Economic Growth Being Choked by High Oil Prices and Falling Supply

  I gave a talk on expected financial implications of the oil limits that we are now reaching at a recent meeting of the Association for the Study of Peak Oil-USA. My talk consisted of two parts: 1. Why the impact of oil supply limits is expected to be more severe than simply a reduction in oil supply would imply. I believe we are really reaching a more general “limits to growth” because of the impact of high oil prices, interconnectedness of all of the systems, and the short-term inability to substitute one fuel for another. (Slides 2-11)2. What the short-term financial impacts…

• Crude Oil Analysis for the Week of November 7, 2011

  Crude oil reached a three-month high on Friday after the U.S. Labor Department reported that the unemployment rate declined to 9 percent in October, less than the 9.1 percent median estimate of economists. The rally meant the market was able to keep alive its longest streak of weekly gains in more than two years. It also signaled that speculators are looking for increased demand despite the lingering issues in the Euro Zone. With the jobs report putting a positive spin on the economy by revealing a small sign of recovery, traders were able to shrug off the negative news regarding…

• Oil Prices and IMF Growth Forecasts

  The International Monetary Fund released its most recent World Economic Outlook in September 2011. The economic growth forecasts in this outlook, like any other of its past outlooks, are used by all prominent institutions as a crucial input for making oil demand forecasts. For instance, in early October, the IMF’s downward revision of GDP forecasts was interpreted by traders as a sign of a slowdown in oil demand growth. IMF uses its own interpretation of oil prices for making its economic growth forecasts. Note that throughout its World Economic Outlook with oil price the IMF means “simple average of spot…

• Crude Oil Analysis for the Week of October 31, 2011

  December Crude Oil futures posted a huge gain last week. The rare combination of technical factors and strong fundamentals helped to drive the market higher. Based on the strong close, the rally is expected to continue this week although oversold conditions on the daily chart could trigger a short-term correction. Last week the main trend turned up on the weekly chart on a move through the swing top at $90.96. This triggered an acceleration to the upside because of stop losses and momentum buying. In addition, the market broke out above a downtrending Gann angle that had been holding down…