Dubai gets a bailout and the risk appetite tries to come back but oil is still being held back by a load of supply. Supply gluts put oil back into a rut on signs that OPEC is cheating more each day. OPEC compliance to production targets fell to just 58% which is the worst score for the cartel since the financial crisis began. The biggest cheaters were Iran and Angola but also, believe it or not, Nigeria's production has come back much faster than expected after the country was plagued with rebel attacks on its infrastructure.

The reasons for the cheating on production quotas within OPEC are varied. There is the greed angle but part of it is  there are those who actually want to purchase the oil. Oh sure it is easy to comply with your production targets when there are no buyers for your oil but not so much when you can actually find some buyers.

Speaking of buyers, there were plenty of them for the auction on Iraq's oil fields. The problem is that US companies were not among them. The big winners for Iraq's oil fields went to Russia's Lukoil and Gazprom, Europe's Royal Dutch Shell, China's CNPC and Malaysia's Petronas. According to the Financial Times these companies have promised to raise Iraq's oil production by a whopping 8.5 million barrels per day which is more than Saudi Arabia produces today.  

Oil is still probing for a low near $65 longer term but may have trouble short term hitting that target. Today it looks like a range kind of a day so baring any breaking news, you would be selling if the market if it makes new highs on the day and buying on new lows for day trades. For a position trade we prefer the short side. I think a position in the 74-75 range that would be great and 68 will be tough stuff on the downside.

Heating oil looks like it is getting ready for a pop to perhaps the 202 area. Is the market predicting a cold snap?  Matt Rogers at is saying that  the short-term, especially today and tomorrow, has trended warmer in the East and South but the big picture through December continues to be cold-dominated with several chances of winter storms as well as additional cold air entry.

Natural gas likes the cold and is looking very strong. Today is a day where we may drive it towards a new higher trading level.

RBOB will take its cue from inventories which should fall this week and demand should improve do to the cold weather. Look for crude to be down 3 million barrels, distillates down 3 and gas down 1. Runs should be up 1.5