I also think we are going to re-test the lows.
This is from a energy market report I subsctibe to.
"Day's coverage from the latest EIA report indicates one of the reasons that OPEC cut production and perhaps why Saudi Arabia appears to be cutting more than its allotment. Days coverage is a useful measure to summarize the current supply situation. It is the number of days that current stocks can supply the market. Put simply it is an inventory to sales ratio.
Based on the last 4-week consumption numbers, the broad picture using total commercial crude oil and products shows 52.0 days supply up 4.7 days (10.0%) from a year ago. If the SPR is included, the number of days coverage is 4.8 days higher than last year.
The interesting part of the increase in days coverage is the source of the change. Remember
Days coverage = Stocks / Consumption
Total crude oil and product stocks are up 54.4 million barrels (0.8%) from last year. However, Consumption is down by 826,000 barrels / day (4.0%). Consumption dropping at faster pace than stocks are rising and is the main contributor to the increase of 4.7 days coverage over a year ago.
In its Monthly Oil Market Report released today, OPEC noted that the days forward coverage for the OECD countries stood at 57 which is 5 days over the five year average and over 3 days higher than last year. Our U.S. days coverage number is based upon the last four weeks consumption rather than the anticipated consumption for the next few weeks. Had we used that for the U.S. our days coverage would be higher. The high coverage numbers are extremely worrisome to OPEC as prices typically weaken when U.S. days coverage is much above 50.
Days Consumption Coverage
Percent
(4-week average) 01/09/09 01/11/08 Change Change
Crude Oil (Ex SPR) 22.6 19.1 3.5 18.1%
Gasoline 23.9 24.3 (0.4) -1.5%
Jet Fuel 26.9 25.2 1.7 6.7%
Distillate Fuel Oil 35.2 31.6 3.6 11.3%
Residual Fuel Oil 48.9 58.8 (10.0) -17.0%
Propane/Propylene 39.8 31.7 8.0 25.3%
Other Oils 41.6 34.3 7.4 21.5%
Total Product Stocks 35.4 33.2 2.2 6.7%
Total (Ex SPR) 52.0 47.3 4.7 10.0%
Total (Inc SPR) 87.6 81.2 6.4 7.9%
Imports 89.4 84.6 4.8 5.7%
NYMEX Prices for January 16, 2009
NYMEX Light Sweet Crude +1.11
$36.51
IPE Brent -1.11
$46.57
RBOB Gasoline NY Harbor -0.0070 $1.1672
Heating Oil NY Harbor -0.0137
$1.4734
NYMEX Natural Gas -0.042
$4.801
EIA report
There was little in the EIA's report for the week of January 9th that could be considered very bullish. The overall picture showed total petroleum demand down 4.0% from last year. Gasoline consumption is lower by 2.1%, jet fuel is down 11% and distillate consumption is lower by 2.4%. If we except periods of hurricane damage total petroleum consumption is at the lowest level since April, 2000.
We anticipate it will be years before U.S. petroleum consumption returns to the level of 2005 which averaged 20.8 million barrels per day. The 4-week average of all products supplied (consumption) was 4.0% lower than a year ago at 19.7 million barrels per day.
Depending on the length and depth of the recession it is entirely possible that consumption in the next 12 months will be as low as it was in 1999. If you recall 1999 was the year in which petroleum consumption returned to the 1979 high following the 17% decline between 1979 and 1983. The current decline is nearing 10% and our current recession is probably near the halfway mark.
While consumption is low stocks are not. Total petroleum stocks of 1,025 million barrels are 40 million barrels higher than the 5-year average for January.
EIA Report
The impact of high prices and a weak U.S. economy remains evident in the consumption numbers. Low demand is indicative of a recession. Recessions in major economies lead to lower oil prices. The weekly consumption data tend to be high and when revised we expect the last two data points to be lower. There is nothing bullish in the supply data as consumption is lower across the board. "
$20 oil?
On my trades today; Apart from the one oil trade that sopped me out for no gain. I didn't make any oil trades. Was looking for a short but could not find a good enough entry.
On my EUR/USD trade, I have locked in 150 PIPS with a stop and am currently sitting on a 220 PIP gain. If this breaks the 13120 level it could re-test 13026.
) is now expecting oil to drop soon. Usually, by the time everyone starts creaming "crash is coming", the crash has already completed its course. 
