After surging yesterday on the weak dollar and now tropical storm Ida, I think we can focus on all the bearish stuff that did not seem to matter. You know stuff like gas gluts and supply surpluses. As Ida hits the coast the market realizes that there is plenty of oil, products and spare production capacity to easily weather this tropical storm. More oil is on the way as the Saudis and OPEC send signals that more oil production is likely at the December OPEC meeting and  news that China is raising the domestic cost of gasoline which could put a dent in China’s domestic oil demand.

Reuters News reported that Saudi Arabia, the world's top oil exporter, has increased December supplies to large companies, and one Asian customer is expected to receive full contract volume. Bloomberg News reported that OPEC is increasing output at the fastest pace in two years, adding to near-record inventories. This is raising speculation that this is a precursor to OPEC oil increase at the December OPEC meeting. Yet Dow Jones reports that the Saudi Arabian Oil Co., or Saudi Aramco, has kept its December term crude supply to Europe steady.  Buyers, including at least two refiners, said there had been no change to their allocation from November volumes.   However, another trader in Europe said allocations have risen globally, with European volumes rising the least of all regions. The trader didn’t term customers in Asia said Monday that Saudi Aramco will resume delivery of full contracted supplies of crude to some buyers in the region in December. Still with OPEC leaders wary of $80 a barrel plus crude, my expectation is that OPEC will continue to increase production as we head into winter.

The truth is oil and the products are still locked in a trading range even with the weak dollar and record high price for gold, oil really has not made a break for the upside.

In the natural gas arena the International Energy Agency in their Energy Outlook says that the world faces an acute glut of natural gas supply of around 200 billion cubic meters by 2012 to 2015. The IEA credits a boom in North American unconventional gas production and a drop in demand during the recession. The agency expects global unconventional gas output to rise to 629 billion cubic meters by 2030, with the fastest growth seen in the U.S. and Canada. As far as he Asia-Pacific region and Europe, output for unconventional gas is not projected to takeoff for several years. The agency expects rapid increase in shale gas will discourage liquefied natural gas imports in to Northern America and some LNG shippers have already redirecting LNG cargoes bound for the U.S. to Europe. 

Spencer Schwartz at Dow Jones reports that, “The International Energy Agency Tuesday said a new global deal to limit carbon emissions, if reached in coming months, could sharply curtail the growth in oil consumption in the years ahead as alternative energy resources and efficiency measures are tapped. The Paris-based agency, in its annual World Energy Outlook, said global crude demand may grow by just roughly 6 million barrels a day from current levels to a total of around 91 million barrels a day by 2030 if a major agreement to cut greenhouse gas emissions is signed and implemented by nations, including the U.S. An agreement would help propel industries and consumers toward using energy more efficiently and incentivize the auto industry to develop electric vehicles and other non-oil technologies, the agency said in its world outlook, which is seen somewhat as a bellwether among many industry analysts. The IEA, energy advisor to rich nations like the U.S., said energy efficiency measures in developed nations, along with the lingering effects of the recession, were already making a dent in the number of barrels consumer’s burn. Sometimes criticized by industry analysts for overoptimistic demand forecasts in recent years, the agency said global oil consumption over the next five years is now expected to grow to just 88 million barrels a day from current demand of 85 million barrels a day. The projection is far below the 94 million barrels a day the IEA forecast a year ago for total demand in 2015."

Petroleum is locked in a trading range. Contact me for intra-day trading points. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account today! Also check out the Fox Business Network where you can see me every day! If you are interested in our gold and silver accumulation program just hit this link http://www.pfgpreciousmetals.com/index.aspx?ID=638597e5-633d-449a-9787-f7aea282458c and find out how. Make sure you are signed up for my daily energy blast where we will soon be offering special extras!

We're long December crude from apprx 7727 - raise stop to 7745!  
Buy December RBOB at 19000 - stop 18800.
Sell December heating oil at 20750 stop 20850.

Sell December natural gas at 480 - stop 502.