A top Kuwaiti oil official has predicted that crude will soar within days based on supply cuts and much increased demand due to colder than anticipated weather patterns circulating through much of the Northern Hemisphere. When you throw in the Gazprom fiasco, crude oil demand as an alternate supply of heating fuel has certainly risen as well. The Saudis have also stated that they plan on cutting more supply than earlier agreed upon.

Also, tomorrow kicks off earnings season. As shown in the chart of the NYSE further below, a bearish wedge has been set-up in anticipation of faltering earnings.

We will see if the combination of the two above events this week provide enough impetus to move gold above the highly defended $880 level and on to much higher levels.

Cheers - VHF

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Kuwait Sees Oil Prices 'Soar In Few Days'

TradeArabia

January 11, 2009

Oil prices are expected to rise in coming days as Opec's output cuts kick in and demand rises because of cold weather, a Kuwaiti oil official said in remarks published on Sunday.

The Organization of the Petroleum Exporting Countries (Opec) agreed last month to its deepest ever single supply cut of 2.2 million barrels per day to halt a plunge in oil prices of more than $100 from a peak last July that topped $147 a barrel.

Oil prices fell 2 percent on Friday after a big rise in US unemployment deepened the gloomy outlook for the world's biggest oil consumer, with U.S. crude settling at $40.83.

"A positive impact from OPEC decisions to cut output, the winter season and the increase in demand will have the biggest impact on prices and its increase another time in the next few days," al-Seyassah newspaper quoted Emad al-Atiqi, a member of Kuwait's Supreme Oil Council, as saying.

The council is the country's top energy decision-making body.

Atiqi also confirmed Kuwait's target to boost production of non-associated gas to 1 billion cubic feet per day by 2015.

"Kuwait's current strategic gas reserves are estimated at 35 trillion cubic feet which makes it possible to reach the planned target by 2015," he said.

Opec-member Kuwait, which suffers a shortage in gas supplies, began production from some northern gas fields in June. Kuwait is the world's seventh-largest oil exporter.

He also said Kuwait's oil reserves stand at around 98 billion barrels.

The size of the reserves have been a topic of public debate since industry newsletter Petroleum Intelligence Weekly (PIW) reported in 2006 that reserves were just 48 billion barrels - about half what was officially stated.

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Chart 1: NYSE bearish wedge set-up which is very negative for equities.

click to enlarge: http://tinyurl.com/7gluff