After last week's much larger than expected drawdown in oil inventories, this week's report showed a partial rebuild. While the consensus forecast was for a build of 1 million barrels, the actual increase was much greater at 1.762 million barrels. As a result crude oil prices are getting whacked with oil trading down more than $2. Heading into the coldest part of the year, oil inventories remain well above their historical average.

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First, many thanks for the kind words that I received. It has been an awfully long time since my last article, due to opening up a new business.

I was reading the article on the “IEA Whistleblower” who claims that the IEA has been intentionally “underplaying” the onset of Peak Oil, and that the likelihood of the world’s Oil Supply keeping up with the upcoming demand is small. Most of this demand will come from the developing world, including countries such as India and China, but also Africa, the Middle East and Latin America.

By Paul Amery

After I published my article on contango yesterday, my colleague Matt Hougan asked me why the top- and bottom-performing ETCs were both short maturity trackers.

Is oil entering a bubble? That was the question on everyone's mind at last week's "Inside Commodities" conference, where keynote speaker Nouriel Roubini argued in his speech that oil prices had risen too far, too fast, too soon.

But oil can still go much higher, says Stephen Schork, editor of The Schork Report, a daily briefing on the energy markets. With over 17 years' experience in commodities trading and risk systems modeling, Mr. Schork is a highly respected voice in the energy markets, and has offered his expert opinion to CNBC, the Wall Street Journal, Bloomberg and dozens of other media outlets.

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.The allegations raise serious questions about the accuracy of the organisation' s latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

By Brad Zigler

The U.S. Energy Department usually releases its weekly petroleum inventory report on Wednesday, but since it's Veterans Day, we won't see those numbers ‘til tomorrow.

Forecasts about the world’s demand for energy are getting dire. We’ve got a big appetite now, but it’s about to get much, much bigger. The increased pressure could be good news for energy-related ETFs.

Worldwide energy demand is forecast to rise by about 40% between now and 2030. According to the International Energy Agency, the supply of oil will need to hit 130 million barrels per day by then, up from the 85 million barrels produced per day in 2008.

Earlier this year, oil ETFs were lagging oil prices by a wide margin thanks to contango. Although the situation has improved, it brings to light a situation that futures-based commodity funds can experience.

In the last month, United States Oil Fund (NYSEArca: USO) has been lagging oil prices slightly: it’s up 10.4% in the last month, compared to about 10.7% for oil prices. PowerShares DB Oil (NYSEArca: DBO) is up about 10.2% in the same time period.

Below we provide our trading range charts of ten popular commodities. The green shading represents between two standard deviations above and below the commodity's 50-day moving average. As shown, oil has been trading at the top of its trading range for a few weeks now, and its uptrend remains intact. Natural gas has also made a nice move over the past couple of months, but it has struggled to make the next leg up over the past few weeks.

As investors know, gold is currently the commodity of the day, and as shown in its chart, it is currently trading right at overbought territory. Silver and platinum have rallied along with gold, but they don't quite have the relationship with the dollar that gold has, so investors haven't plowed into them as much. Corn, wheat, orange juice, and coffee have also all done well recently.

“Words from the Wise” this week comes to you in a shortened format as I am about to leave Cape Town for a visit to the colder environs of Switzerland and Slovenia. Although reduced commentary is provided, a full dose of excerpts from interesting news items and quotes from market commentators is included. Blog posting will be slow (and totally absent on some days) while I am on the road. The normal blogging service will be resumed on my return to Cape Town on November 16.

The Federal Open Market Committee (FOMC) maintained its extraordinarily accommodative monetary policy following its meeting on Wednesday. The communiqué had no surprises and said that the committee expected to keep the fed funds rate target in the 0-0.25% range “for an extended period”. As expected, the European Central Bank (ECB) and the Bank of England (BoE) also kept interest rates unchanged at 1% and 0.5% respectively.

Below we highlight a list of the ETFs that are trading the furthest above and below their 50-day moving averages.

As shown, the Internet group ETF (HHH) is the most overbought at +10.49%, followed by Brazil (EWZ), Emerging Market Latin America (GML), Oil (DBO), all of Latin America (ILF), and Gold (IAU) and (GLD). Other notables on the list of most overbought ETFs include China (GXC) and (FXI), Steel (SLX), Russia (RSX), and Silver (SLV).

By Brad Zigler

Real-time Monetary Inflation (last 12 months): 4.0%

Crude oil futures climbed further in overnight trading after rising nearly 2 percent in the Tuesday NYMEX floor session. Buoyed by outside influences, oil prices were also driven by the release of bullish industry data.

By Paul Amery

A bird in the hand is worth two in the bush, as the old saying goes.

In the ETF/ETC world, it turns out that owning a barrel of oil is also much better than owning a claim on a barrel of oil for delivery in a month’s time, or at least it has been for most of 2009.

Oil is getting a boost this morning following the weekly EIA inventory report which showed that crude oil stockpiles decreased by 3,963K barrels (expectations called for a build of 1,500K). At a time of year when stockpiles are typically rising, today's inventory decline came as a big surprise.

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Global economies are growing fast and monetary policy in the United States is loose. These and other factors are fueling the rise of ETFs related to the oil industry.

• Low interest rates. The great increase in global money supply has fueled oil-intensive growth and consequently, pushed up oil crude prices, comments Martin Hutchinson for Money Morning. Many countries have kept interest rates low, and they don’t expect to change it anytime soon.

• More cars. China and India’s burgeoning auto industries are producing an expected 11 million and 2.5 million cars, respectively, while Brazil’s auto sales surged 20% in September. This translates into increased demand for oil.

• Weak U.S. dollar. The price of oil and the dollar historically have an inverse correlation; oil is priced in dollars, so as it weakens, oil becomes cheaper for foreigners. As the U.S. government takes on more debt, investors are predicting a further depreciation of the dollar.

• The economy. Some believe the worst is over, and oil will soon benefit from a more active economy with higher energy consumption, remarks Dave Mock for The Motley Fool.

• Scarcity. Oil bulls argue about a “peak oil,” where the peak of global oil production will finally be seen. Oil, like other commodities, is a finite resource.

There are several ways to play oil. Some ETFs hold shares of major oil companies, such as Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX). These companies range from oil exploration, to refining, to production. Examples include:

As Obamacare dominates the American lamestream media, the fundamentally most important news for oil and the dollar was to be found first in the Tehran News on October 27. The Iranian Oil Bourse was finally inaugurated last Monday, after such a statement was already made in February 2008, leaving room for confusion.

According to the Tehran Times:

By Julian Murdoch

For most commodities, you can look at the underlying forces driving supply and demand and understand what will move the market. Except, it seems lately, for oil. Prices have risen so far, so fast from their mid-February lows that some investors have started to wonder: Is the price of crude decoupling from supply and demand?

This week's report on Energy Inventories from the EIA showed a smaller than expected build in crude oil stocks (778K vs. 1910K forecast). Gasoline and distillate stocks, however, posted larger than expected builds. In addition, even though the build in crude oil stocks was less than expected, current levels are well above their historical averages. While oil prices were down heading into the report, prices have dipped further following the release.

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Generally we think of the Federal Reserve as being very queasy, in an old school sort of way, about rising oil prices. But at a time of collapsed trade flows and the attendant reduction in Dollar reserve building, might the Fed secretly welcome an advance in the price of oil? Readers of this site know that in a number of posts this year I’ve laid out the case that recession is bullish for sovereign debt, but collapse is not. In addition, at a time of 1.5 -2.0 Trillion dollar annual budget deficits in the US, I’ve also noted the punk rate of saving here domestically that cannot hope to cover such spending increases. And so, into this gaping maw the Fed itself has been active, buying 300 Billion of Treasury debt so far in 2009. But with the rise in the price of oil, have oil producer recycling flows started back up again?

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