Gold, Oil & Indices (Equity & Bond Indices)

Thanks for the energy reports! Many traders do not realize that hurricanes tend to have a larger impact on natural gas prices and for a longer period, than the impact on crude oil. One can look at the impact of various hurricanes on prices of both contracts before and after the storms. I have a feeling I will be closely following NG prices this summer. I've studied meteorology for decades and this looks to be a very dangerous hurricane season, which had an early start.

EIA Oil Demand Oulk Unchnged;To Track Global Econ Grwth-2
WASHINGTON (MNI) The following is the first part of excerpts from
the Energy Information Administrations July Short-Term Energy Outlook
published Wednesday:
U.S. Petroleum Product Prices.
Projected regular-grade gasoline retail prices rise from an average
$2.35 per gallon in 2009 to an average $2.77 per gallon in 2010 and
$2.90 per gallon in 2011. Forecast regular-grade pump prices average
$2.80 per gallon this summer, an increase of 36 cents from the previous
summer. On-highway diesel fuel retail prices, which averaged $2.46 per
gallon in 2009, average $2.98 per gallon in 2010 and $3.13 in 2011 in
this forecast.
Natural Gas
U.S. Natural Gas Consumption.
EIA projects total natural gas consumption will average 64.7
billion cubic feet per day (Bcf/d) and 64.8 Bcf/d in 2010 and 2011,
respectively. Estimated year-over-year consumption growth averaged 2.8
Bcf/d (4.3 percent) in the first half of 2010, with significant
increases in the electric power and industrial sectors. This growth is
expected to continue at a slower pace in the second half of the year
with an increase of 1.5 Bcf/d (2.6 percent). EIAs projected
natural-gas-weighted industrial production index (a measure of
industrial activity in natural-gas-intensive industries) increases by
7.5 percent in 2010, leading to a 1.0 Bcf/d (5.9-percent) increase in
natural gas consumption in the industrial sector.
Projected natural gas consumption is virtually flat in 2011. The
projected 2.7 percent increase in the natural-gas-weighted industrial
production index and NOAA forecast of slightly colder weather next year
(1.4 percent increase in heating degree-days) contribute to consumption
growth in the residential, commercial, and industrial sectors in 2011.
However, this growth is offset by a decline in natural gas consumption
in the electric power sector because of the forecast increase in natural
gas prices relative to coal prices next year.
U.S. Natural Gas Production and Imports.
EIA expects total marketed natural gas production of 61.3 Bcf/d in
2010, an increase of 1.3 Bcf/d over 2009 levels. EIA projects a
continuing decline in Gulf of Mexico production, which is offset by
gains in onshore production. Forecast marketed production declines by
0.4 Bcf/d to 60.9 Bcf/d in 2011.
Federal Gulf of Mexico natural gas production falls by about 10
percent in both 2010 and 2011 as a result of hurricane outages, the
announced offshore drilling moratorium, and the decline in active
drilling rigs over the last 4 years. The estimated median outcome for
hurricane outages from June through November is a cumulative 166 Bcf
this year, compared with 19 Bcf in 2009. The offshore drilling
moratorium is projected to reduce Gulf of Mexico production by an
average of 0.05 Bcf/d for the last 6 months of 2010 and 0.25 Bcf/d for
2011.
Projected lower-48 onshore production increases by 2 Bcf/d (3.8
percent) in 2010 and 0.2 Bcf/d (0.3 percent) in 2011. According to
Baker-Hughes, natural gas rig counts have climbed from under 670 in July
2009 to about 950 in April this year and have remained relatively stable
since then.
Forecasted imports of liquefied natural gas (LNG) average 1.37
Bcf/d in 2010, a downward revision of about 0.14 Bcf/d from last month.
Projected imports increase to 1.52 Bcf/d in 2011. While imports are
expected to grow, higher prices in European and Asian markets will
likely divert LNG cargoes from the United States. EIA also forecasts
gross pipeline imports of 8.8 Bcf/d in 2010, a decrease of about 2.9
percent from 2009. EIA expects gross pipeline imports of 8.2 Bcf/d in
2011.
U.S. Natural Gas Inventories.
On June 25, 2010, working natural gas in storage was 2,684 Bcf.
This is 27 Bcf below last years level and 287 Bcf higher than the
5-year (2005-2009) average. EIA expects working gas inventories this
year to remain very near last years levels, reaching 3,810 Bcf at the
end of October 2010.
U.S. Natural Gas Prices.
The Henry Hub spot price averaged $4.80 per MMBtu in June, $0.66
per MMBtu higher than the average spot price in May. The forecast price
for the second half of 2010 averages $4.68 per MM Btu, $0.32 per MMBtu
higher than last months Outlook. The risk of hurricane outages and the
projected reduction in drilling activity combine to strengthen prices
through the year. A small decline in U.S. production alongside increased
consumption leads to higher prices in 2011; the projected Henry Hub
spot price averages $5.17 per MMBtu.
Uncertainty over future natural gas prices is lower this year
compared with last year at this time. Natural gas futures for September
2010 delivery for the 5-day period ending July 1 averaged $4.77 per
MMBtu, and the average implied volatility over the same period was 53
percent. This produced lower and upper

EIA Oil Demand Oulk Unchanged;To Track Global Econ Grwth
WASHINGTON (MNI) The following is the first part of excerpts from
the Energy Information Administrations July Short-Term Energy Outlook
published Wednesday:
Crude Oil and Liquid Fuels Overview.
EIAs view of the world oil market is largely unchanged from recent
Outlooks. EIA forecasts that world oil prices will rise slowly as an
expected renewal of global economic growth leads to higher world oil
demand and members of the Organization of the Petroleum Exporting
Countries (OPEC) continue their support of prices near current levels.
Global Crude Oil and Liquid Fuels Consumption.
EIA projects world oil consumption to grow by about 1.5 million
bbl/d in both 2010 and 2011, mostly unchanged from last months Outlook.
However, estimates for oil consumption in 2009 were revised upwards,
with these changes carried through the forecast period. Consequently,
the level of forecasted demand in 2010 and 2011 is higher than last
months Outlook. Countries outside of the Organization for Economic
Cooperation and Development (OECD) represent nearly all of the expected
growth in world oil consumption, led by China, Saudi Arabia, and Brazil
(World Liquid Fuels Consumption Chart).
Non-OPEC Supply.
EIA has revised its forecast of non-OPEC supply upwards from the
last Outlook, with non-OPEC supply now expected to increase by 0.6
million bbl/d in 2010 and decline by less than 0.1 million bbl/d in
2011. The forecast for oil production in Mexico is more optimistic than
last month. Data for the first half of the year have been higher than
expected, as recent decline rates at the Cantarell field have fallen and
the country has boosted output from other offshore areas. Nonetheless,
oil production in Mexico is still expected to fall by 0.1 million bbl/d
in 2010 and roughly 0.2 million bbl/d in 2011. Over the forecast
period, Brazil, the United States, and Azerbaijan should provide the
largest sources of non-OPEC supply growth.
OPEC Supply.
The 12 members of OPEC produced an estimated 29.4 million bbl/d of
crude oil in the second quarter of 2010. After remaining relatively
steady for the past four quarters, EIA expects OPEC crude oil production
to rise slightly through 2011 to accommodate increasing world oil
consumption and maintain the organizations market objectives. Even
with the increase in crude oil production, OPEC surplus capacity should
remain over 5 million bbl/d in 2010 and 2011, versus 4.3 million bbl/d
in 2009 and 1.5 million bbl/d in 2008. OPEC production of non-crude
petroleum liquids, which are not subject to OPEC production targets, are
expected to increase by 0.6 million bbl/d in 2010 and 0.7 million bbl/d
in 2011.
OECD Petroleum Inventories.
Commercial oil inventories held in the OECD stood at about 2.7
billion barrels at the end of the first quarter of 2010, equivalent to
about 57 days of forward cover, and roughly 67 million barrels more than
the 5-year average for the corresponding time of year. The level of OECD
oil inventories is expected to decline through the forecast period,
though days-forward-cover should remain high due to falling OECD oil
consumption.
Crude Oil Prices.
WTI crude oil spot prices averaged $75.34 per barrel in June 2010
($1.60 per barrel above the prior months average), close to the $76 per
barrel projected in the forecast in last months Outlook. EIA projects
WTI prices will average about $79 per barrel over the second half of
this year and rise to $84 by the end of next year.
Energy price forecasts are highly uncertain, as history has shown
(Energy Price Volatility and Forecast Uncertainty). WTI futures for
September 2010 delivery for the 5-day period ending July 1 averaged $77
per barrel, and implied volatility averaged 35 percent. This made the
lower and upper limits of the 95-percent confidence interval $60 and $98
per barrel, respectively.
Last year at this time, WTI for September 2009 delivery averaged
$70 per barrel, and implied volatility averaged 44 percent, rendering
the limits of the 95-percent confidence interval $52 and $95 per barrel.
U.S. Crude Oil and Liquid Fuels
U.S. Liquid Fuels Consumption.
U.S. liquid fuels consumption is beginning to show signs of
recovery after having fallen by 810,000 bbl/d in 2009, the fourth
consecutive annual decline. The year-over-year decline in total liquid
fuels consumption slowed to 20,000 bbl/d in the first quarter of 2010.
Total consumption for the second quarter, however, rose by 500,000 bbl/d
compared with the same period last year. For the year as a whole,
projected total liquid fuels consumption grows by 200,000 bbl/d in 2010
and by 170,000 bbl/d in 2011 as all of the major petroleum products
register consumption growth in each of those years.
U.S. Liquid Fuels Supply and Imports.
Projected domestic crude oil

1188.70 there's some early signs of a short reversal at 1188 level.

@Chloe: Thanks for your comments on gold. I still think we are going to see a big break one way or another, and for me at the moment, it's safer to be out of it. Does not apply to everybody, obviously.

I don't particularly remember Ashraf giving us all that many general rules for trading, except to use our margin wisely, but I probably miss a lot.



I don't mind admitting, there are clearly people here who are far better traders than me, and I'm here to learn.

A bit of humility is the one thing I can afford :-)))


And as a reminder to myself, if nobody else: Trade what you see, and not what you think or believe.