Following the U.S. Treasury’s announcement last week requiring the world’s banks to maintain stronger capital and liquidity standards by the end of next year to prevent a re-run of the global financial crisis, 15 large banks that control the majority of derivative trading worldwide have committed themselves to maintaining greater transparency in a $600 trillion market that needs stricter oversight in the interest of the global financial system.   As part of a series of voluntary steps by the banks to expand the use of clearing houses for the over-the-counter market in derivatives, the international banking group on Tuesday made the commitment for targets in expanded central clearing systems to the Federal Reserve Bank of New York. Bank of America Corporation (BAC), Citigroup Inc. (C), Deutsche Bank AG (DB), Goldman Sachs Group Inc. (GS) and JPMorgan Chase (JPM) were included in the banking ...

On Sep 2, CME Group Inc. (CME) announced that August 2009 volume averaged 10.2 million contracts per day, assuming combined CME Group and NYMEX volumes. That's down 7% from Aug 2008, but up 5% compared to July 2009. The monthly volume marked the best year-over-year performance to date in 2009.

Total monthly volume was 214 million contracts, 81% of which were traded electronically. Total electronic volume averaged 8.3 million contracts per day, down 6% from the prior year but up 5% from July 2009.

Average daily volume cleared on CME ClearPort was 440,000 contracts for the month, up 7% compared with August 2008. This continued to highlight the market participants' increased interest in the safety and soundness of CME's regulated, transparent, and centrally cleared markets.

Year-to-date volume averaged 10.2 million contracts per day. Interest rates volume increased 14% sequentially, whereas FX volume and commodities and alternative investments volume experienced an annual

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Oil prices fell below $69 a barrel on Tuesday as economic concerns sent investors into safer havens, outweighing positive U.S. manufacturing and home sales data.

U.S. crude for October delivery fell $1.39 to $68.57 a barrel by 1:32 p.m. EDT (1732 GMT).

London Brent crude dropped $1.38 to $68.27.

U.S. stocks dropped as investors’ confidence in the economic recovery wavered.

“The dollar is strengthening and equities are coming off hard so (oil futures) did the same,” said Tom Knight, trader at Truman Arnold in Texarkana, Texas.

Meanwhile, the U.S. dollar rose as the slide in the U.S. stocks boosted the currency’s safe-haven appeal.

Oil futures had risen earlier in the day as the market focused on a report showing a jump in U.S. manufacturing and pending home sales.

“It looks like the whole complex is failing to sustain the gains … basically, the market’s not done yet on the downside,” said Tom Bentz, senior commodity analyst, BNP Paribas Commodity

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Profiting From Oil – Peak or Not

Tony Daltorio, The Investment U Research Team

It seems like the only times that the financial media talks about oil is when they mention either demand destruction in the United States or an inventory buildup of fuel, etc. in the United States.

The financial media is doing a real disservice to millions of investors in two ways.

The first is by ignoring the rest of the globe when it comes to demand for oil. For example, China imported a record amount of oil in July – 4.6 million barrels a day, up 42% from last July.

This record monthly figure is well above the previous peak of 4.1 million barrels of oil a day set in March 2008, when the financial media said that China was simply stockpiling oil ahead of the Olympics.

The second

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This post will begin a new category specifically focused on the military principles of SUN TZU and their relevance for contemporary traders.  It is my intent that you find my interpretation of this 2500 year old military treatise as beneficial to your trading success as I have.

If you trade and study the market for a living as I do, or have a desire to do so,  I suggest you read SUN TZU’S ART OF WAR.  You can read the complete text here:

SUN TZU ON THE ART OF WAR: THE OLDEST MILITARY TREATISE IN THE WORLD

WHY SUN TZU?

Anyone who has attempted to trade the markets, and by markets I mean any number of financial instruments from oil futures, forex, equities, options, etc.,

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Last week, Valero announced the postponement of a major capex project in Port Arthur, a guidance towards a second quarter loss, and a dilutive stock offering. Basically, a triple whammy that sent the stock tumbling from $22 to $18, a near 18% single day loss.

A lot has been written since about how CEO Bill Klesse and Valero management has mismanaged the business and how this company deserves its well below industry average P/E ratio.  The all-knowing Jim Cramer even put Bill on the “Wall of Shame.” Is this all an over reaction or was I wrong about my purchase of Valero earlier in the year? Is Valero not truly a value, but a dreaded value trap?

One positive note with regards to last week’s bomb was that Valero was able to issue shares to the market at $18, establishing a relatively

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The shell game is one of the oldest cons on record. Greek historians tell of ancient Egyptian slicksters stripping rubes of spare coins in the shadow of the pyramids. We have concrete evidence dating back to 1670, wherein Richard Hull writes of rogues cheating farmers at “thimblerig” at ye old faire.

The con was supposedly brought to the colonies by a Dr. Bennett, who was infamous for his ability to hide a pea amongst three walnut shells. Jefferson Randolph Smith – a.k.a. “Soapy Smith” – set up mobs of shell men throughout the Midwest and Alaska before he was caught out and shot in Juneau in 1898.

Today we are once again seeing the rise of this classic fiddle. I am not talking of impossible games of Three-Card Monte played on dark side streets off Times Square or such. Rather, I am

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CRUDE OIL had a build of 605K.  Consensus was for a build of 2500K.  LESS BEARISH THAN EXPECTED (AND WAY OFF THE CONSENSUS!)

GASOLINE had a draw of 167K.  Consensus was for a build of 550K.  BULLISH (AND OFF FROM THE CONSENSUS!)

DISTILLATE had a build of 2428K.  Concensus was for a build of  900K. BEARISH (AND OFF FROM THE CONSENSUS!) 

BEARISH numbers EXCEPT FOR GAS, which is very bullish.  Pretty much the same results as last week as the analysts continue to be more bearish on the oil and gas numbers than the numbers betray.

As usual, the trade will reveal itself later (if at all) after the initial emotions wear off and the initial spike one way or the other settles down. 

As I mentioned in my post about a new technical indicator I am developing and in my oil inventory post

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There are conflicting voices about oil.  Some say too much is available and demand is falling.  Others say demand is rising and reduced exploration will contribute to a new boom.  Some say oil is responding to the equities rally. Charts show oil with upward tendencies weeks before equities began to rise.

Here are some important media snippets with mixed bullish and bearish messages:

(April 9 Wall Street Journal) U.S. petroleum inventories sit at about 360 million barrels, their highest level since 1993, …  McKinsey [report] suggests that energy demand may snap back more quickly than many observers project, driven by strong demand growth from developing countries. …If the world economy returns to moderate growth, energy demand will increase about 2.3% a year between 2010 and 2020, nearly a full point faster than the period from 2006 to 2010 …  Developing regions will account for more than 90% of the growth, led by

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Our good friend Jim Cramer went on a rant last night on Mad Money about the shortcomings on the United States Oil Fund (NYSE Arca: USO).

According to the digest at TheStreet.com: "Cramer took aim at the United States Oil ETF in particular, calling the fund simply a travesty.

Cramer said the United States Oil Fund is not what it promises. The fund does not track the price of crude as it claims. Since the fund's [inception], crude oil has fallen 23%, yet the fund is down almost twice that at 54%. Just this year, oil is up 18%, but the United States Oil Fund is down 6%. This fund has nothing to do with oil at all, he said.

Cramer said the problem with the fund is that it doesn't buy oil, and instead buys oil futures. Since oil futures expire, the fund rolls over its contracts every month,

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