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Is crude oil set to breakout? Itz believes so...but when? Looking at the Itz Pix portfolio, it is weighted to energy as well as gold/silver/copper. Itz issued a recent suggested 1/2 position buy in the Proshares Ultra Short Crude Oil ETF (SCO) as a short term hedge against the portfolio. Crude oil $WTIC had a nice run in September, some of the technical indicators were giving a sell signal on oil, thus Itz initiated the hedge.
In a recent blog update Itz noted that this week would present several key events that would move oil prices.
Oil climbed for a second day in New York after an industry-funded report showed U.S. crude supplies fell and the dollar declined against the euro, increasing the appeal of commodities as an alternative investment.
The FOMC gave the green light on QE2, expectations of the Federal Reserve will ease monetary policy further and after the American Petroleum Institute reported that inventories decreased the most since July. Futhermore, the International Energy Agency raised its global demand forecast and as China imported a record volume of the commodity in September.
Crude stockpiles dropped 4.01 million barrels last week to 362.1 million, the American Petroleum Institute said. A U.S. Energy Department report today may show stockpiles climbed 1.45 million barrels last week, according to the median of 18 analyst estimates in a Bloomberg survey.
The IEA increased its forecast amid signs of "apparently resurgent" demand in the U.S., Germany and Japan in the last quarter, the Paris-based energy advisory agency said yesterday in its monthly Oil Market Report. Crude use worldwide will average 86.9 million barrels a day in 2010 and 88.2 million barrels a day in 2011, the IEA said
Energy Department Forecast
The U.S. Energy Department also raised its demand outlook. The world will consume 86.06 million barrels a day this year, the department forecast in its monthly Short-Term Energy Outlook. That's up from 85.95 million last month and 84.33 million in 2009. Demand will climb to 87.44 million in 2011, 80,000 barrels a day higher than last month's projection.
The Energy Department increased its oil price forecast for 2011 by $1 a barrel to $83. The estimate included an assumption that OPEC will boost its output as prices climb, tempering a bigger gain. The department raised its 2010 outlook by 60 cents to $77.97. Oil has averaged $77.90 a barrel in 2010.
The Organization of Petroleum Exporting Countries will keep output quotas unchanged when it meets today because the oil market is well-balanced for the next few months, Rafael Ramirez, Venezuela's energy and oil minister, said yesterday in Vienna. The 12-member group pumps 40 percent of the world's crude.
~~Note: EIA weekly inventory reports one day later this week, Thursday @ 11a.m.~~
As this report is being written Crude Futures are up 75 cents link
Itz Stock Chartz see oil trending in a tight range into the New Year then breaking higher.