Crude support levels

Now that Nymex crude oil prices have come off the all-time record high of $93.80 and with Goldman Sachs making its "sell oil" recommendation, this could be a good time to look at possible technical support levels. From the chart above, we've got $85, $78, and $70 (or just a bit below).

$78 seems to me to be an important support level. Of course, this could be wrong, but there are a few things going for it :

1. This whole $80 and $90 oil business started when oil broke through $78.77.
2. The previous record a year earlier was $78.40.
3. $78 is just a little over 2 Yergins (2 x $38).

A Yergin is a unit of measure used among some in the peakoiler community. It denotes a multiple of $38 of the oil price. You should see peakoilers break into uncontrolled laughter whenever this is brought up. We get laughs from it all the time.

One of these levels might provide the floor to act as a springboard to bounce to $100 (and beyond). We'll see.

- Update : Scratch that last. It's bounced off $89 and set a new record high at :

~~$94.00~~
~~$95.80~~
~~$96.21~~
$96.24

(2007-10-31 14:40:49 SGT) [Energy] Permalink Comments [1]

Monday October 29, 2007

"It's going crazy"

bloomberg.com :

Crude oil climbed above $93 a barrel for the first time, extending this month's gain to 16 percent, after Mexico shut down a fifth of its production because of a storm and the dollar fell to a record low. Petroleos Mexicanos, the state-owned oil monopoly and third- largest supplier of crude to the U.S., shut output of about 600,000 barrels, said Carlos Ramirez, a company spokesman in Mexico City.

The dollar dropped to $1.4426 per euro, the weakest since the introduction of the 13-nation common currency in 1999. Crude oil for December delivery rose as much as $1.33, or 1.5 percent, to an all-time high of $93.19 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

"It's going crazy, shooting up way too fast," said Tetsu Emori, chief commodities strategist at Astmax Futures Ltd. in Tokyo. "It's only a matter of time before it hits $100. It may be today, tomorrow or in the next few days or weeks."

- Update : It's going crazier yet. The new record is $93.80.

(2007-10-29 13:22:54 SGT) [Energy] Permalink

Mexico shutting 600,000 bpd oil output due to cold front

investing.reuters.co.uk :

Mexico's state-owned oil company Pemex was shutting down about one-fifth of its daily output on Sunday [28 Oct 2007] due to bad weather, but said it expects to quickly resume output within days. Pemex said it had already shut wells with about 200,000 barrels per day (bpd) of production and would close another 400,000 bpd of production in the coming hours as a cold front hits the Gulf of Mexico area. The country's three main oil exporting ports were all closed on Sunday.

Pemex's move came days after a storm killed at least 21 oil workers and closed the main oil exporting ports of Coatzacoalcos, Dos Bocas and Cayo Arcas. The disruption resulted in an inventory build-up at those ports and, with the new cold front in the Gulf, Pemex said it would not be able to move oil from the wells to the ports. Pemex produces about 3.1 million barrels of crude oil a day and is one of the top three suppliers to the United States.

- Talk about adding fuel to fire.

(2007-10-29 12:49:51 SGT) [Energy] Permalink

Another day, another record ($92.79)

Another day, another record high in crude oil prices. $92.22 barely lasted one weekend. This morning, I got up, went to the office, and found myself sitting down to a new record : $92.79 per barrel Nymex crude oil delivery for Dec 2007.

This one looks dollar-driven. The news outlets are talking about the USD falling to yet another record low against the euro. At the moment of writing :

CAD/USD = 1.041667 (1.03 has been broken!)
EUR/USD = 1.4407 (1.43 has been broken!)
USD/SGD = 1.4531 (bye-bye 1.46)
SGD/MYR = 2.297297 (rising in tandem?)

The US dollar index, USDX, is at 76.894, having fallen below 77.

Compare this to the figures blogged earlier on 18 Sep 2007, barely one and a half months ago :

1. USD/SGD=1.5068 (how far the mighty have fallen)
2. SGD/MYR=2.310519
3. USD/CAD=1.0094 (notice how I've swapped around to CAD/USD nowadays!)
4. EUR/USD=1.3979 (compare & contrast!)

And the U.S. dollar index (was) : USDX=79.169

- Update : Scratch that last. The new record is :

~~$93.18~~
~~$93.19~~
$93.20

20.57% : Singapore M3 slows a tad

mas.gov.sg -> mas.gov.sg (pdf) :

This could have been titled : "Do you hear anything?" You could almost hear the screeching of brakes as the Singapore M3 money supply growth rate slowed down, year-on-year, from over 23% to a 20.57% rate as presented in the Sep 2007 edition of the MAS Monthly Statistical Bulletin, for the month of Aug 2007.

The other sounds you hear might include the crash back on 17 Aug 2007, fading into the distance, accompanied by hushed whispers from some property agents about a softening housing market.

Poetic license aside, here's the M3 data (click here if you don't see the table in the IFrame below) :

Singapore's 2007 Q3 GDP growth was 9.4%, and if we take the two figures we do have for Q3 and divide by that, we find that M3 growth is still outpacing GDP growth by a factor of some 2.3x. Which is still inflationary, according to me (and those who follow Austrian economics).

And that is not exactly helped along by high wheat prices, which have doubled in the past year to over US$9 per bushel, driving up the cost of flour, which, you know, is made from wheat, and therefore also driving up the cost of bread, which, you know, is made from flour. A loaf of my favourite Gardenia high-fibre white bread has gone up from $1.70 to $1.80, then $1.90, $1.95 and now it is $2.00. I fully expect it to hit $3.00, then $4.00 some time later on, and patiently await the arrival of the $10 loaf of bread.

While we are talking about inflation, have you noticed the price of crude oil recently? I woke up early in the morning to a new record high in NYMEX crude oil prices - US$90.60 per barrel. Which was promptly broken a few minutes later, and the record (at the time of writing) is now ~~$91.10~~ ~~$91.19~~ ~~$91.29~~ $91.40 (shucks, it keeps hitting new record highs as I am writing this). A hint to motorists reeling from the recent 5 cent petrol price hike (from $1.910 to $1.960 for RON98 and from $1.836 to $1.886 for RON95) : you ain't seen nothing yet. I patiently await $100 oil. And then $150. And then $200.

A friend once asked me, so how do we stop all this inflation? I promptly replied : they have to stop printing money. He said that's not possible. I replied, yes, unfortunately, you are right.

Oil rises to record $91.10

bloomberg.com :

Crude oil rose to a record above $91 a barrel in New York on an unexpected drop in U.S. stockpiles and concern that supply from the Middle East may be disrupted. Inventories last week fell 5.29 million barrels to 316.6 million, the lowest since January, the U.S. Energy Department said. New U.S. sanctions against Iran, warnings of a Turkish assault on Kurdish militants in Iraq and a falling dollar helped push prices higher. Brent futures in London reached a record.

Crude oil for December delivery rose as much as 64 cents, or 0.7%, to $91.10 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since trading began in 1983. It traded at $90.97 at 9:26 a.m. Singapore time. Prices are 51% higher than a year ago. Yesterday the contract jumped $3.36, or 3.9 percent, to $90.46 a barrel, a record close. It was the biggest one-day gain since April 23.

The Bush administration yesterday announced new sanctions against Iran that designate the Iranian Revolutionary Guard Corps as a proliferator of weapons of mass destruction and its Quds force as a supporter of terrorism. The dollar approached a record low against the euro after reports showed U.S. orders for durable goods fell unexpectedly and initial jobless claims were higher than forecast, signaling economic growth may weaken. China yesterday said its economy, the biggest contributor to global growth, expanded 11.5% in the third quarter from a year earlier.