Crude Oil is making new highs here on the NYMEX for 2010 and this should not go unnoticed with the WTI spreads rallying along with the flatprice.  The spreads rally, especially in the back with Jun/Dec  to -170 and Dec/Red to -160 has had a positive affect on the upside for the oil markets.  Right now $83.60 does not look far out of the reach here and if these spreads keep rallying flat price will keep climbing.

SBK: Res. 2233-37, 2288, 2322, Sup 2162, 2140-2123, 2090

KCK: Res. 13130, 13285, 13390, Sup. 12970, 12860-25

CCK: Res. 2889, 2903, 2946-55, Sup. 2811, 2799-2795, 2760

CTK: Res. 8309, 8449-75, Sup. 8176, 8095-8075, 8000

6 more weeks of misery is what I need. Thanks Phil.

Crude Oil has declined from the overcrowded market above $80 and now has sold off to the 200 day moving average of $73.50.  This is a very critical support area and with rising inventories and a strengthening dollar it looks like it is only a matter of time that the $73.50 mark gets broken.  Unemployment still unhealthy and job creation at an all time low is not good for the energy sector.

It seems the Oil market is a bit overcrowded here above the $80 level as prices soared up to new yearly highs in recent weeks with the bitter cold weather conditions in the US.  Crude oil has halted here at $83.50 and has been drifting lower the passed few days even as wti spreads strengthen with the feb/mar above -50 now.  the last time Crude rallied above $85 was back in early 2008 when the wti spreads flipped from cantago to backwardation and oil rallied to $147.  It doesn’t look like that is going to happen yet here with demand still somewhat on the weak side.  It will be interesting to see where these spreads go from here with the flat price unable to break the $83.50 level.

Gold has sold off considerably in the last two weeks as the USD has strengthened against other major currencies.  Gold is now down $100 since it’s high of $1,226 as investors also take profit from the huge runnup this market had in just the passed three months alone.  Looks to be some consolidation around the $1,100 level as that is great support at that price.

The WTI spreads in the front months have been sold off with vigorous offers that it has dragged the flatprice down below $70.  The Jan/Feb spread has now weakend to -$2.60 in the front contract spread.  This has sold off significantly from the last blog I had written and will continue to do so as January goes off the board.

While everyone was enjoying their Thanksgiving Day, there was some big news impacting the financial world as the Dubai Govt has asked investors to extend the maturity of upcoming debt amortizations of two of its state-owned companies, Dubai World and its real estate development arm Nakheel,until 30 May 2010. Subsequently, the Dubai government has authorized Dubai Financial Support Fund to “restructure Dubai World with immediate effect”.  Technically, this does not constitute a sovereign default, since there are no sovereign guarantees on Dubai World and its subsidiaries; in fact, the government issued a decree earlier this year stating that it will not underwrite liabilities of Dubai World. But it was the government rather than the company that announced the stand still over the holioday, and investors can be forgiven for regarding the finances of the emirate and of its wholly-owned subsidiaries as not clearly distinguishable.  This did have an impact on the USD as investors rushed in to the oversold market and took risk off of commodities sending oil lower by -$5.00 at one point and Gold down -$50 respectively.  The market has quickly regained the momentum as the United Arab Emirates’ central bank said it would back the country’s lenders from a possible default by Dubai World, easing concerns of an economic slowdown.  This remains to be seen as either a temporary fix or if there are actual big-time problems with Dubai and it’s liquidity.  For now the markets like the news from the UAE and commodities are rebounding.

The WTI spreads have gotten considerably weaker the last few trading days losing more than -50 cents in the Jan/Feb contract going from -80 to -130.  This is a sign of traders liquidating their Jan positions and buying up the back end of the curve.  The Jan Arb (Jan WTI vs Jan Brent) has also gotten weaker going from flat yesterday to -70 today.  Yet another sign that Crude wants to test $75.

Oil broke the huge support of $76.50 Friday and traded down as low as $75.60.  There is still another big support level at $75.00 and this looks to be a good base for the Crude market right now as long as the USD continues to weaken.