Oil -- Whyzzit still going up again? Yes I said Up

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Hi Ya'll,

For some crazy reason I stayed up tonite doing some surfin, and just for grins checked out the night session for crude oil. It's UP again! I'll be darned. It's up another 22 cents to $27.36 I'd kinda half way expected some early profit taking, well maybe later on.

Now the overnite trading session has pushed the March 00 contract up above its old highs and is now setting a new record high for the March 2000 contract. The chart oscillators, 12 of 13 are showing extremely bullish signals now. Some are wide open and pedal to the metal. I've got one favorite, old, reliable oscillator called the DMI with its plus and minus lines and the Advance Decline trendline. Well that AD trendline during the night finally appears to be touching a magic % point in the chart giving that signal for significant further movement. Now, it's not finalized on that signal yet so it could revert during the course of the next day's trading session but if prices hold here and advance further on Tue and Wed. then it looks to me like the DMI/ADX measurement will indicate a move to as much as $32.00 on the fairly near-term at least before it gives a significant shorting signal. (Keep in mind that the measuring theorum holds true in about a 6/4 or 7/3 ratio so it's not a for certain thingy. Still it should be indicating at least another $2.00 in the move before we might see a signal for shorting this market.

Now that I've given you all the technical mumbo-jumbo that some brokers and technicians use, what this means is that it looks like oil's not done moving. Now ask yourself: Whyizzit? Whyzit doin this?

Well there's conventional wisdom (read mainstream financial media) thinking that its OPEC talk about keeping the quotas. Well, duh! Now that's some sort of news flash? We all knew that these boys wanna keep a good thing going...and this was what helped spark the runnup last year...figurin in part on the fact that OPEC would keep it up all of this year too. So the market had already factored this "news" into the price. OPEC can't be the real reason the big boys are buying. They already new and factored it anyway.

But what is the reason? WELL absent some other political news, or political rumblings behind the scenes, (like WAR). You really have 2 essential elements --- SUPPLY or DEMAND. Actually it's a combo of both. So, I asked myself:

"Self, what is there about the demand for oil here lately?"

Now, January is a slow time for oil. Folks aren't driving as much, and cold temps mean the need for using heating oil in some parts of the country. Well, we're not really driving any more than usual in January and actually we've seen very warm if not springlike temps over much of the nation so far this month, so that means we don't have much demand.

Now let's consider supply. Supposedly we had/have or have/had all that buildup in gasoline and crude oil inventory in expectations for severe disruptions during New Years. Supposedly, people didn't stock up all that much so there is this glut of excess supplies still floating around. So we've got what?

LOTS OF SUPPLY and NOT SO MUCH DEMAND. OR DO WE?

I mean, we're also hearing stories about a bunch of refineries with problems. Hey, okay, maybe we've got some refineries down and others that are apparently "limping" along. Now someone here or at Downstreamers Forum posted a newswire story about the market actions and then made a little side note about the gasoline market and the Gulf Coast gasoline area which saw 2 refineries having to go into the market and buying up gasoline and paying almost RETAIL to get it! And other refineries around the country are buying on the spot market too although maybe not with such a panic. NOW others have mentioned this a little bit or alluded to it but it's stuck with me enough to ask "why would these guys be doing this"? Well, of course for one thing, they've got to meet contractual obligations of course. They have to keep their wholesaler's supplied or they'll lose market share which is key. BUT WHY did they have to go into that market and buy in the first place? I mean, the refineries should have (all of them) had inventory coming out their ears, right? Or am I missing something? I mean we were told about this excessive glut and the industry gov't stats confirmed this, right? So, okay maybe they had some production glitches but they still have extra inventory, or should have? OR maybe they didn't have so much OR maybe their production really took it in the shorts after the roll? Hey, I'm just askin here. On top of that, we're getting bizwire stories about plenty of general production capacity diminishment. So what's up?

Now, I'm told by others that January refinery problems are pretty much a non-factor unless there is extremely cold weather, (which is normally the case in January). BUT this January is WARM not cold. SO we shouldn't be seeing this kind of level of refinery problems for this time of the year. So Whyzzzittt? HEY, I don't know but I'm wondering if these Y2K embedded guys who talked about embedded problems not showing up for hours, days, or weeks, maybe these guys were right all along. Wasn't there some guy named Dell Wade or Dale Wayman or something like that wasn't there somebody like him and some others that said it would take a while and not to expect fireworks to go off on New Years? If so, maybe these guys weren't so far fetched after all cause all I know is this --- We've got sky rocketing oil and gas prices. WHY? Stop and think about this too. Okay, so maybe if we admit there are some refinery problems...you know the intermittent kind of thingy with short stoppages and restarts. So IF we have refinery supply problems that means less oil is usable, meaning if you can't use it as fast to make gas, then you get a build up in crude inventory even more so than you already got? Right?

So, late last week we get a wire story from an analytical firm to expect a 4% shortage of crude oil in the first quarter of 2000. Now what's up with that? Where in the world did we suddenly get such a shortage, especially if we're slowing down in our usage because:

1. we aren't driving as much 2. we aren't heating as much 3. refineries have lost some capacity anyway.

So how do we suddenly get a shortfall if production remains status quo?

NOW, Don't look at me for answers. I'm just asking the questions, myself. Frankly it don't quite add up and I think I smell something rotten somewhere but I can't put a finger on it?

To top it off, it is highly unusual for a market, but especially volatile markets like oil or gold to have a lot of heavy hitting players go bananas long and then STAY LONG going into a 3 day holiday weekend. NOW THAT IS WEIRD in and of itself. I wish I had a buck for every time I heard the phrase in my brokering career: "They (the locals, pro traders) have 'squared their positions' in advance of the long holiday weekend." I mean if I've heard it once, I've heard it over and over and over again. I mean it is highly unusual to see that kind of "long" action in that kind of volume go into a 3 day holiday weekend, without some sort of significant geopolitical bullish news hangin over a market, be it oil, gold, currencies, OJ, the bellies, you name it. It is just rare that you see this like this.

I asked Downstreamer about this on his forum earlier & his response said it reminded him of the summer right before the Kuwait invasion. WhOA! Now there's a scary thought! Especially when we just got some news story about Iran maybe having or soon to have Nukes!

Oh well, I've vented my quizzings for the day. Go figure it and see what you think? I'm a looking for some alternative "RATIONAL" explanations about the supply aspects. You tell me, why we've got prices going nuts when supposedly supply is too great and demand is too low. I can see the low demand being correct. It's the supply thing that has me thinking something's not quite right.

Agree, or disagree?

-- Dick Moody (dickmoody@yahoo.com), January 18, 2000

Answers

Oh I almost forgot... hey Gordon, What's your thoughts on this?

-- Dick Moody (dickmoody@yahoo.com), January 18, 2000.

Response to Oil -- Whyzzit still going up again? Yes I said Up

Wow

Dick

You are usually a reasoned voice among folks here, when you start smelling wierdness one has to wonder. Gold has jumped $5 during the weekend after stagnation since the rollover, (suprised it didn't go lower :o)

Keep us informed.

-- Brian (imager@home.com), January 18, 2000.


Ipaid $124.9 at SA on Saturday in the Twin Cities. The price was $139.9 yesterday. That's an 11% jump. Price was the same at every station I saw. Is this because the price of crude ws $28+ Friday? Have othercities seem the same?

-- John (LITTMANNJ@AOL.COM), January 18, 2000.

Dick, your doubts and questions just beg this answer:

"Wells, pipelines and refineries have got (Y2K?) problems"

Take care

-- George (jvilches@sminter.com.ar), January 18, 2000.


very interesting...i have also been wondering whtzup with everything here latley. but thats not why i'm posting. the anoucement about Iran is a ploy by the cia. They got surprized by India & Pakastan having nukes so soon, the cia was embarassed by it..i saw at least three experts on the boob toob that said that Iran is far from reaching implimentation.

but of course it could be those crafty people from figi??? maybe we could ask truman about those guys ,,he might know.

btw gas prices in georgia have been steady at 1.30-1.39 per gal for premium since 12-1-99. see ya someone

-- someone (sway4@yahoo.com), January 18, 2000.



Dick,

The following is buried down at the bottom of a UPI news release that chronicles Saddam Hussein's latest speech.

http://www.vny.com/cf/news/upidetail.cfm?QID=57970

"Meanwhile, U.N. oil experts arrived in Baghdad on Sunday night to study ways to increase Iraq's production of crude oil. Officials said the team of experts, which includes two Britons, a Dutch national, a Norwegian, a Russian and a Jordanian, was due to begin its two-week mission on Monday."
In December, Iraq declined to ship their allocation of oil.  At that time their allocation was far less than their production capability.  Now, they are having experts in to decide how to increase this capability.

Why?

Why would they want to increase a capability that they can't use?

It might be that the UN is really seriously considering dropping all sanctions against Iraq, so that they would be able to open the oil spigots, and they want to have greater capability when this happens.

Or, it may be that the Iraqi oil industry was crippled by Y2K and must be fixed before they can even pump to the levels the UN permits.

Conjecture -- that's all we can do is think about it. The paragraph above raise more questions than it answers, but it may be one more piece in the overall puzzle.



-- rocky (rknolls@no.spam), January 18, 2000.


Dick: Inspectors have been taking samples from certain vessels (whether fuel/oil barge or tankers or both I can't yet tell; and the exact product I can't yet identify) in the New York Harbor region; it takes 3 to 4 hours for a result (and an OK) to come back from testing to a crew. This is occurring randomly at all hours. Perhaps some post- rollover synthesis problems have been identified.



-- Harbor Guy (HarborGuy@OnThe.Waterfront), January 18, 2000.

Excellent posting on oil confirming reasonable suspicion that something major does not jibe in all of this concerning crude. Keep up the pressure. This could be the makings of a key aspect story that has the markings of creating an international crisis as it slowly unfolds. A good detective learns how to ferret out clues, obtain facts, and uses his intuitive sense in concluding that "something doesn't seem right here", and that "something is going down". What we really need is Clint Eastwood here. WATCH OIL.

-- Patrick Lastella (Lastella1@aol.com), January 18, 2000.

11 am denver time

oil up 48c

gasoline up $2.13 to %76.65!!!! Overt two bucks. Mon dieu.

I've been trying to get to grips with what's going on for some time. This is big. This transcends regular market activity. This IMHO is "war" - economic war...

======================================================================

Downstreamer - i hope you don't mind me reproducing this piece here - we need all the help we can get here..

======================================================================

Detective Downstreamer -- Got a Mystery Who-dunnit for ya? ---------------------------------------------------------------------- ---------- Downstreamer,

Why did so many of the big player stay long over a US holiday weekend? In the metals the big sharks never stayed long over a holiday weekend unless they thought something was up. Now, I've tracked oil in the past to some extent and I'd always figured it was the same way...but frankly to me, the lack of really exciting news has me trying to figure out what in the world put the stamp into the pede last week? As I posted earlier I've ruled out the demand side, cause with the record warmer weather over much of the US and folks not driving all that much in Jan. I still don't see the OPEC news being much. I mean it has been well known for quite awhile that these boy's were gonna hang in there on the quotas. So that only leaves the production side as near as I can tell it?

But frankly even with refinery problems that ought to put downside pressure to crude and upside the refined products right? So how come crude went up with refined stuff? How come we see a couple of refineries chasing down extra gas on the open markets?

Something just don't quite smell right to me, thought I'd ask you how your smell tester is reacting? What kinda results is your tester gettin? It's a mystery to me, so I hope you'll break out you magnifying glass and inspect the crime scene for a whodunnit analysis? Yup, Sherlock Downstreamer... somehow that doesn't quite have the ring I was lookin for but oh well I just thought I'd get your take on this clues.

Andy Local user (1/17/00 9:19:26 pm) Reply Re: Detective Downstreamer -- Got a Mystery Who-dunnit for ya? ---------------------------------------------------------------------- ---------- My thoughts exactimundo Dick...

I'm no trader, and very inexperienced in these markets, but I have been following geo-politics, the gold/silver manipulation game, and y2k for 2 years + + + + + +.

I'm flummoxed.

My hunch is there is a play going on by the Arabs/European masters to destabilise the dollar, or at least oil pricing in dollars [think about it - bubble.com and post-y2k America is pretty vulnerable now] - in favour of oil pricing in Euros. This would have the backing of the European Elite, who have no love lost with their counterparts in America, from what I have been able to piece together.

Just a hunch, my thoughts are still forming on this - I have a lot more I could add but quite frankly it's so complicated I don't have a handle on it - yet.

Somebdy is tightening the screws - that's for sure. the Oil market is just as rigged, even more so, than gold. We haven't fought many gold wars lately [other than in a very circuitous route]...

Over to you Downstreamer...

Biil P Unregistered User (1/17/00 10:26:26 pm) Reply Detective Downstreamer -- Got a Mystery Who-dunnit ---------------------------------------------------------------------- ---------- Just a thought: Indonesia, Russia or Nigeria.

Both Shell and Exxon-Mobil had to curtail refinery activity in I think Malyasia possible due to a crude shortage from Indonesia. As their main market is Japan, this would put the japanese bidding higher for refined product.

Russia and Chechnya are fighting for resources rights. Both seem to be targeting the others pipelines and fuel storage depots. Might this impact Europe?

Nigeria - didnt Shell declare Force Majure shortly after rollover on a facillity in Nigeria due to "local civil disorder". Followed a few days later by a nother facillity in Nigeria being shutdown due to "technical problems".

In addition to OIL, natural gas is moving also. So it appears to me to an across the board adjustment due to supply disruption and/or weaker dollar.

Downstreamer Administrator (1/17/00 11:02:15 pm) Reply It is a great mystery. ---------------------------------------------------------------------- ---------- I have no idea but it reminds me of the way NYMEX crude values rallied about $2 /barrel before Iraq moved into Kuwait.

(:o) <~~~oil market short

dickmoody Global user (1/18/00 1:13:41 am) Reply Re: It is a great mystery. ---------------------------------------------------------------------- ---------- WHOAAAA

You...no... nahh.. well maybe...noahhh well..

Are you thinking lightning might strike twice?

Well, in this case we just heard the the story about somebody (CIA?) announcing something about Iran and Nuke capability... hhmm

Or... of course, I suspect Saddamy still wants Kuwait ... course if he ever does try it, I'll bet he won't stop with Kuwait. He'll keep right on truckin' south as far his boys can go.

Ahh...anyway, Sherlock... we need get your Holmes plaid cap on... where's that magnifying glass and get you on the trail of this whodunnit Maybe you can Andy or Bruce or one of the guys to play Doc Watson.



-- Andy (2000EOD@prodigy.net), January 18, 2000.


--have no idea if this little tidbit is true or not, or if it relates to oil, but just heard on sw that 101 is being deployed soon to bosnia. If any dotmil posters here can verify or debunk this would appreciate it. Large politico/military moves don't happen for no reason. Thanks!

-- zog (zzoggy@yahoo.com), January 18, 2000.


At 1:10pm EST, crude oil is up 70 cents a barrel and the 30 year treasury bond is over 6.75%.

Ray

-- Ray (ray@totacc.com), January 18, 2000.


Hey, I love your posts on TB2000. Great work. Well written too.

I'm really curious to know why they're testing and I'm assuming, if I'm readin ya right, they're testing fuel of some sort in those barges?

I'm not a big tech person on oil. My specialty is in the markets anyway. I know folks in the oil biz, but all in landlocked areas primarily or in ways not connected to waterborne transport. So I'm not sure I could comment on it. I'm like you though, makes me think there might be a quality control problem? Maybe they're concerned with something being watered down? If so wonder why? maybe fear of Y2k problems with water ballast flooding into the hold??? I dunno. I'm a dummy. OR maybe it's just normal testing to determine what kind of crude or fuel type it really is...you know varying grades. Do you know if this testing seems to have always been the norm or is this something that is out of the norm?

Thanks again, look forward to your next reports.

Dick.

-- Dick Moody (dickmoody@yahoo.com), January 19, 2000.


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