Weekly Price Review

NYMEX Crude Oil
NYMEX Gasoline
NYMEX Heating Oil

NYMEX Natural Gas

Crude oil and products put in choppy declining price profiles for the week ended Feb 26, with RBOB and heating oil showing relatively more weakness than WTI. The ~8025 region represented consistent resistance for WTI, technical commentary indicates that a break above this level will see 8080 represent next resistance - a break of which could represent resumption of the recent bull run. That being said, the Percent R oscillator implies WTI is overbought.

The NYMEX natural gas parallel declining channel is well entrenched. This week saw a fall to the trend line support level which suggests a technical bounce may be seen next week. The end to winter demand; mediocre industrial demand and a strong supply outlook are not supportive of Henry Hub prices near-term.

CFTC Commitment of Traders 23-Feb-10

Source: U.S. Commodity Futures Trading Commission

Trading in the News

White House recommits to "Volcker rule" bank trade ban

Feb. 23 WASHINGTON (Reuters) - The Obama administration said on Tuesday it is still committed to the "Volcker rule" to ban risky trading by banks, although Congress looks increasingly unlikely to adopt the rule as proposed.

The White House's forceful support for the rule came after the Treasury Department said earlier in the day that it backed "mandatory limits" on banks trading for their own account.

Read more: http://www.reuters.com/article/idUSTRE61L3UL20100224

Baker Hughes N.A. Rotary Rig Count 26-Feb-10

Source: Baker Hughes, Inc.

Oilfield Service in the News

Schlumberger to Aquire Smith

Feb. 22 NEW YORK (Dow Jones)--Shares of Smith International Inc. (SII) rose as investors were pleased about the hefty premium offered by Schlumberger Ltd. (SLB) in its $11 billion takeover offer. Schlumberger's shares, meanwhile, fell on the deal.

The all-stock transaction, the year's largest acquisition, will make Schlumberger by far the world's biggest oilfield services company. Smith shareholders will get 0.6966 Schlumberger share for each Smith share they own - a 37.5% premium over Smith's share price Thursday, when news of the potential deal was first reported. The deal values Smith at $44.51 a share based on Friday's close.

Read more: http://online.wsj.com/article/BT-CO-20100222-709938.html?mod=WSJ_Deals_LEFTLatestHeadlines

USDX and S&P500 Technical Analysis

USDX

S&P500

A look at the fibonacci retracement levels on the USDX gives a view on where the USD may be headed near-term. The 50 SMA is now trading well above the 200 SMA, implying that the reversal is well supported. The fib .236 of the Mar/09 - Dec/09 decline represented first resistance level, after which the .382 saw congested choppy trade. Having cleared this consolidation, the USDX is now trading at horizontal resistance associated with Jun/Jul of last year. A break of this level could see USDX rise to the .500 fib at ~8200, followed by ~8400 which represents the .618 fib.

The S&P500 traded lower after hitting the 50 SMA, seemingly respecting the Old-Support-Becomes-New-Resistance rule. Although the Percent R has rolled over, there is support around the -60 region suggesting there may be a retest of the 50 SMA resistance near-term. On the bearish side, the 200 SMA could represent the downside risk level.

EIA Weekly NatGas Storage Report 19-Feb-10

NYMEX Natural Gas 15-min Intra-day Price Profile

Summary

"Working gas in storage was 1,853 Bcf as of Friday, February 19, 2010, according to EIA estimates. This represents a net decline of 172 Bcf from the previous week. Stocks were 56 Bcf less than last year at this time and 13 Bcf above the 5-year average of 1,840 Bcf. In the East Region, stocks were 23 Bcf below the 5-year average following net withdrawals of 95 Bcf. Stocks in the Producing Region were 20 Bcf below the 5-year average of 627 Bcf after a net withdrawal of 66 Bcf. Stocks in the West Region were 56 Bcf above the 5-year average after a net drawdown of 11 Bcf. At 1,853 Bcf, total working gas is within the 5-year historical range."

Source: U.S. Energy Information Administration; NOAA

EIA Weekly Petroleum Status Report 19-Feb-10

NYMEX Crude Oil 60-min Intra-day Price ProfileEIA gasoline data were interpreted as bullish given the larger than expected inventory draw and the relatively large increase in demand. As a result, RBOB lead the crude complex higher, even though crude oil and distillate EIA data were not supportive; although, refinery rates were considerably higher. Crude oil has been moving in lock-step with equities; and higher on selective bullish fundamental news, while discounting neutral/bearish near-term supply/demand data. This author believes prices are moving disproportionately at the whim of speculators. On an hourly basis, WTI continues to be overbought.

Stocks mmbbls
Crude: 337.5 (+3.0)
- Cushing: 29.9 (-0.7)
Gasoline: 231.2 (-0.9)
Distillates: 152.7 (-0.6)
Total Products: 709.4 (-1.6)

Supplied mmbbls/d
Gasoline: 9.1 (+0.5)
Distillates: 3.7 (-0.1)
Total Products: 19.3 (+0.2)

Refinery Utilization: 81.17% (+1.42)

Source: U.S. Energy Information Administration

API Stocks 19-Feb-10

mmbbls
Crude: -3.1 (vs. +2.0 fcst)
Gasoline: +1.7 (vs. +0.4 fcst)
Distillates: -0.8 (vs. -1.6 fcst)

New York Feb. 23 (Reuters) "The API's big crude stock drawdown is a surprise, but remember that last week, their data showing a drawdown was not borne out by the EIA's large increase," said Peter Beutel, president of trading consultants Cameron Hanover, in New Canaan, Connecticut.

"With the API reporting a larger-than-expected build in gasoline and lower-than-forecast drawdown in distillate supplies, you may see traders buy crude and sell refined products," he added.

Crude Oil Technical Analysis in the News

Fibonacci forecaster weekly review for Feb. 16

Feb. 16 (Futuresmag) This is not an easy environment because I know many of you were just getting used to being short and then you had to turn around and deal with a change of direction. As I work with a lot of traders one of the biggest problems for people who play the short side is they don’t recognize the selling phase as being intense but short. Historically, it’s the bear that takes up about 35% of the time that a bull does. Why? Hope drifts along and dies hard. Fear drops like a rock.

Read more: http://www.futuresmag.com/News/2010/2/Pages/Fibonacci-forecaster-weekly-review-for-Feb-16.aspx

CFTC Commitment of Traders 16-Feb-10

Source: U.S. Commodity Futures Trading Commission

Baker Hughes N.A. Rotary Rig Count 19-Feb-10

Source: Baker Hughes, Inc.

Natural Gas in the News

Natural gas big and growing part of Canadian economy: study

Feb. 18 (Financial Post) CALGARY -- The natural gas industry employs almost 600,000 people in Canada, a number that could grow as Canada increases production of the cleaner burning fuel, a new report said Tuesday.

According to the study prepared by IHS Global Insight for the America's Natural Gas Alliance, gas accounted for about $106-billion of Canada's gross domestic product in 2008 -- a little less than 7% -- including $73-billion in direct contributions and another $33-billion in indirect benefits.

Read more: http://www.financialpost.com/news-sectors/energy/story.html?id=2572758#ixzz0fuLxem5U

EIA Weekly Petroleum Status Report 12-Feb-10

Stocks mmbbls

Crude: 334.5 (+3.1)

- Cushing: 30.6 (-0.7)

Gasoline: 232.1 (+1.6)

Distillates: 153.3 (-2.9)

Total Products: 711.0 (-5.5)

Supplied mmbbls/d

Gasoline: 8.5 (-0.2)

Distillates: 3.8 (+0.1)

Total Products: 19.1 (-0.2)

Refinery Utilization: 79.75% (+0.64)

Source: U.S. Energy Information Administration

EIA Wkly Natural Gas Storage Report 12-Feb-10

Summary

"Working gas in storage was 2,025 Bcf as of Friday, February 12, 2010, according to EIA estimates. This represents a net decline of 190 Bcf from the previous week. Stocks were 26 Bcf higher than last year at this time and 53 Bcf above the 5-year average of 1,972 Bcf. In the East Region, stocks were 18 Bcf below the 5-year average following net withdrawals of 105 Bcf. Stocks in the Producing Region were 18 Bcf above the 5-year average of 655 Bcf after a net withdrawal of 63 Bcf. Stocks in the West Region were 52 Bcf above the 5-year average after a net drawdown of 22 Bcf. At 2,025 Bcf, total working gas is within the 5-year historical range."

Source: U.S. Energy Information Administration; NOAA

USDX 50 SMA v. 200 SMA Update

The USDX 50 Simple Moving Average (SMA) is now 0.002 below it's 200 SMA. US Fed discussions regarding shrinking their balance sheet and recent weakness in the EURO have been supportive for the USD. A breakout above ~80.8 would be bullish for the dollar. Technically, the USDX has moved out of an overbought condition.

API Stocks 12-Feb-10

mmbbls
Crude: -0.1 (vs. +2.2 fcst)
Gasoline: +1.4 (vs. fcst +1.5)
Distillates: +1.3 (vs. fcst -1.5)

NEW YORK Feb. 17 (Reuters) "The API data showed crude imports were down a lot and crude runs were up, resulting in a crude stock drawdown," said Phil Flynn, analyst at PFGBest Research in Chicago.

"Distillates stocks .... were up instead of down as many had expected, and that may have been due to temperatures not really being cold enough to raise demand. It looked like the expectation of higher oil demand was overplayed," he added.

Earlier, crude futures ended higher for the second day in a row, helped by positive economic data, but gains were limited by caution ahead of weekly inventory reports. Trading was choppy and front-month crude ended well off the day's high as traders saw the dollar bounce on improved data on U.S. housing and industrial output.

Weekly Price Review

NYMEX Crude Oil (CLH0) Weekly S&P 500 Weekly
USDX Weekly

Commodities and equities found support last week following declines during the prior consecutive four weeks. European indication of conditional support for Greece provided the bulk of the positive general sentiment, while bullish energy demand outlooks by the EIA, IEA and OPEC provided support for crude oil. However, all was not entirely bullish last week. China's actions on Fri to control inflation and asset bubbles skewed the markets lower; and, the API and EIA weekly petroleum data last week was not supportive.

From a broad perspective, equities and commodities are a little on the oversold side, so more buying, or sideways trading will likely be seen in the holiday-shortened week ahead. Europe's ability to sell the world on it's efforts to solve the region's debt issues will determine sentiment, and will likely be the source of volatility near-term.

Finance in the News

Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis

Feb. 13 (NYTimes) Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.

Read more: http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=1&hp

CFTC Commitment of Traders 9-Feb-10

Source: U.S. Commodity Futures Trading Commission

Baker Hughes N.A. Rotary Rig Count 12-Feb-10

Source: Baker Hughes, Inc.