Crude Oil Rises on Bigger-Than-Expected U.S. Fuel Supply Drop By Mark Shenk Nov. 8 (Bloomberg) -- Crude oil rose after an Energy Department report showed that U.S. diesel inventories fell for a fourth week. Diesel supplies plunged 2.92 million barrels to 78.4 million last week, the report showed. Stockpiles of distillate fuel, a category that includes heating oil and diesel, fell 2.68 million barrels to 138.6 million. A drop of 800,000 barrels was expected. Implied demand for distillate fuels averaged 4.4 million barrels a day over the last four weeks, up 8.9 percent from a year ago. ``This is the time of year when you start seeing distillate supplies fall,'' said Tom Bentz, an oil broker with BNP Paribas Commodity Futures Inc. in New York. ``The report shows that demand is pretty strong. We've been trading in this range for a long time and I don't know if this report will be enough to get us to break out.'' Crude oil for December delivery rose $1.12, or 1.9 percent, to $60.05 a barrel at 12:14 p.m. on the New York Mercantile Exchange. Prices are little changed from a year ago. Futures have traded in a range of $56.55 to $61.79 for the past month. ``We sold off yesterday and are rising today. I'm not reading too much into this move,'' Bentz said. ``We'll have to break out of the $60.50 area and especially $61.79, the high on Oct. 26, before we can confirm that we've put in a bottom. The drop left diesel stockpiles 13 percent higher than the five-year average for the period, the department said. Heating- oil inventories rose 248,000 barrels to 60.2 million last week, the report showed. Heating oil supplies were 7.2 percent above the five-year average, the department said. Total implied demand for petroleum products averaged 21.4 million barrels a day in the past four weeks, up 5.4 percent from a year earlier. The department measures shipments from refineries, pipelines and terminals to calculate demand. Less Bullish ``The distillate number really sticks out but isn't as bullish as it first appears,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. ``Heating-oil supplies actually rose slightly. There was a big decline in diesel but the harvest season is ending so it shouldn't be that significant.'' Crude oil inventories rose 435,000 barrels to 334.7 million last week, the report showed. It left stockpiles 11 percent higher than the five-year average for the week, the department said. An increase of 750,000 barrels was expected, according to the median of 15 responses to a Bloomberg News survey. The Organization of Petroleum Exporting Countries agreed on Oct. 20 to cut output by 1.2 million barrels a day to bolster prices. ``Oil has hovered around $60 and I'm not sure what will lead to a breakout,'' said Justin Fohsz, a broker at Starsupply Petroleum, a division of GFI Group Inc., in Englewood, New Jersey. ``How effective OPEC will be in making cuts, the Middle East situation and the winter weather will probably be what gets us out of the range.'' U.S. Elections The U.S. elections may affect energy policy in the country that consumes 25 percent of the world's oil. Democrats captured the U.S. House of Representatives for the first time in 12 years and moved close to taking control of the Senate. ``The election will probably mean nothing at all in the short term, as far as energy is concerned,'' said Michael Fitzpatrick, vice president for energy risk management at Fimat USA in New York. ``In the long term, a Democratic victory might mean higher taxes for big oil, which has become their hobby horse. But it won't mean a heck of a lot for prices.'' Brent crude oil for December settlement rose 99 cents, or 1.7 percent, to $59.47 a barrel on the London-based ICE Futures exchange. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net . Last Updated: November 8, 2006 12:31 EST
i have been positioning into oil for the last week. stop below the lows. i will scale out on strength if yer JUST looking at current month, or spot, you need to look at spread and is it contango, backwardated etc. that will tell u what traders and HEDGERs think also, look at COT but clearly, this is a great risk/reward play, as well as market hedge with a stop set below the recent lows, there is a very nice upside target, plus it acts as a nice market hedge. furthermore, the blogs and chat rooms are full of people who think oil is going down down down. its already down huge and as usual, the chasers won 't get interested until its near a top again - look at COT, look at calender spread divergence, look at selling divergences etc. it's been a buy for week
I still think oil is a bit scary... the only oil play I have is DVN, which has so much intrinsic value and is still so cheap that it doesn't matter what the market does (tho it's up by a lot over the last month too). I don't have any money left to buy since I'm all long anyway, but I'd think it'd be smarter to split between energy and alt energy right now... there's an awful lot of talk about trying to make the US 100% energy self sufficient out there...
You better already be LONG from just days before the election.....that was the "no brainer" time to buy imo. Right now you should already be well over $2.00 a contract in the money!
Ok, I'll tell you what I REALLY think of oil. This is my own opinion and it makes no difference because I'm all long and can't spend any more money, even if I wanted to. Every time I see a sector or stock pump on some kind of national news, I think... pump and dump. For the next few weeks, sometimes month, it will go up, rally rally rally. Then, the dumping begins suddenly overnight, so people can get their stops trashed thru or don't catch it. So when I see ARTICLES saying: BUY THIS, I start looking for an exit position, or I run out and buy a covering put, locking in gains either way (while I too have some stops, I don't trust in stops for more reasons than I can get into here). If I buy under those conditions, I buy with a married put (which still means you lose $1-$3 of upside, so it really depends how close to the top you were). I'm VERY bullish on this market. I and only 1 other person were a week ago here, where the other person was getting slammed day in and day out for being bullish. What I'm not bullish on is what mass media is bullish on... because I never trust their motives. This goes back to my lesson learned on MCI. As it was in free fall, Maria Bartiroma interviewed this fund manager, who said she was buying MCI, because it was so cheap, and everyone knows that MCI was too big to fall. I held that stock down til it went to $.05 a share from $45. Did that fund actually BUY MCI? No, they were pumping and dumping. By the time any article or 'advisor' comes out with info, THEY have bought. They want you to buy, so they can get OUT at an even better price. Not immediately, but soon. If it keeps going up, all the better for them... but THEY are wishy washy, thus the pump. My MCI lesson has served me now for the better part of 7 years, and I make more and more money because of it. So what do I see in the news? BUY OIL! Hrm.
From the attached chart, I believe that OXH (oil holder stock) has posted a buy signal. Any comments based on technical perspectives?