Thursday, April 29, 2010

New Video: Is it All Over For The Euro?


Things have been bad in Europe recently. Between the travel restrictions due to the volcano and ash, as well as Greece not wanting to conform to strict fiscal policies, problems are adding up and adding weight onto the euro.

It is interesting to note that in the beginning of 2010, everyone was bearish on the dollar. Looking at the market action alone we could see that the dollar has done very well vis-à-vis the euro. This is where technical analysis shines as it is an unbiased viewpoint of the collective wisdom of all market participants.

In this new video we show you how you can trade the euro/USD cross using our "Trade Triangle" technology and come out of winner no matter what happens to Greece, Portugal, or Spain.

Just click here to watch Is it All Over For The Euro? And as always you can watch our videos without registration and there are no fees involved. Please feel free to leave a comment and let us know what you think about the EURO/USD trade.



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Wednesday, April 28, 2010

Spain is in Pain – US Dollar & Gold Are Safe Havens

It’s been an interesting week with Spain being downgraded as Europe debt crisis widens. This has investors looking at the US dollar in a new light thinking that maybe it’s not that bad of an investment after all. This sent the US Dollar higher along with the price of gold so far this week.

The past 7 days we have seen both the US Dollar and Gold rise together which is not something that happens often. With financial crisis’s popping up around the world I think the US dollar and gold will continue to strengthen (with corrections along the way). I think it will take another 12-24 months before another wave if issues arise in the financial markets and until then we just continue to focus mainly on buying the dips and corrections with the occasional short play in the larger corrections.



SP500 – Daily Chart

On April 14th we saw an extreme level of selling which sent the broad market sharply lower. This sell off was followed by value buyers pushing the prices back up to new 2010 highs.

Well this week we have seen the same extreme selling volume and the question we all want to know is will there be buyers this time around?



ETF & Futures Trading Conclusion

Gold is in a bull market but it was setup for another round of selling but this Spain issue has been a pain. If we had another downward word move on gold to the $1115 – 1120 area it would have washed out the majority of gold bulls resetting it’s self up for a big rally.

The Europe debt crisis has thrown a twist into the picture helping boost the price of gold. Gold could still head lower washing out the weak positions but the picture is fuzzy. Silver did not react much to this news as it’s not really seen as the safe haven gold or the US Dollar are.

As for stock picks and the broad market, it looks and feels like we are about to start a correction. But this week we saw fear in the market again with the VIX and selling volume surging higher to levels which have triggered temporary bottoms in the past. The problem I see here is that some key price levels have been taken out, so the odds are pointing to lower prices in the near future. But Tuesdays panic selling has pushed the market into an oversold condition so we should see a drift upwards for 1-4 days before sellers get active again as they want to sell and short the market at premium prices.

In short, precious metals are not giving any clear price action to take advantage of yet, and the SP500 looks like it’s on its last legs before heading lower for a meaningful correction which should provide a short setup and then a nice long setup once it bottoms out.

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Where is Crude Oil Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Phil Flynn: Oil On Junk


Oil prices and commodities got slammed on the S&P downgrades. They sent Greece to junk and Portugal is headed in that direction. Once again oil traders are reminded how much of the price of oil is dependent on some semblance of market stability. With the Fed dead ahead, oil traders have to realize that the price of oil transcends what some consider traditional supply and demand fundamentals. It is also a reflection of how the world views the economy and the relative value of the currency backing this commodity.

In the beginning of the financial crisis oil soared towards $147 a barrel and I attempted to explain that things were amiss. The price move in oil was out of line with the five year average price increase that already reflected stunning oil demand growth. I was scoffed at by some when I suggested that the spike in oil might lead to demand destruction. That the world economy had not “decoupled” from the US economy and that no matter what, Europe and China would consume oil even if the US banks started to fail. The naysayer and the blindly bullish say that the price move was just a function of peak oil and the prices would continue to soar higher and that price would have little impact on demand.

Yet I said that oil was being used as a safe haven and a hedge against systemic risk as the sub-prime crisis began to evolve. Of course the skeptics say it was nothing but a case of speculation gone wild. We remember that we were told not to worry because sub-prime crisis was less than 10% of all mortgages, the same way some are saying now not to worry about Greece because it is such a small economy.

We may see oil come back a bit today. The Greece crisis is in the market for the time being and oil may focus less on the loss of demand created by this crisis but by the fact that this crisis may ensure that US interest rates will stay lower for longer than expected. The Fed Fund Futures November contract which had priced in a 74% chance of a quarter point interest rate increase fell 15% after the European downgrade after the news. If the oil market gets the sense that interest rates are going to stay low for a longer and longer period of time, then oil becomes more bullish. It becomes bullish because the dollar will get weaker and it will get stronger as oil already puffed up on cheap printed oil stimulus money, then we can continue to see this global demand growth until the bubble eventually pops.

The Fed meeting will be key! The best way to get that news is watching it on the Fox Business Network where you can see Phil every day! Phil can also be reached at pflynn@pfgbest.com.


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Crude Oil Market Commentary For Wednesday Evening


Crude oil closed up $0.76 at $83.20 a barrel today. Prices closed near the session high today after hitting a fresh five week low early on. Crude oil bulls are fading and need to show more power soon. The next upside price objective for the bulls is producing a close above solid technical resistance at the April high of $87.59 a barrel.

Natural gas closed up 4.2 cents at $4.357 today. Prices closed near mid-range today and did hit a fresh five week high in quieter trading. Bears still have the overall near term technical advantage. Prices are trading sideways and choppy at lower price levels. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.75.

Gold futures closed up $10.00 at $1,172.70 today. Prices closed nearer the session high today and hit a fresh nearly five month high. Gold's gains today again came despite a stronger U.S. dollar and lower crude oil futures prices. Traders this week are buying gold as a safe haven asset and as a hedge against further weakening of the European currencies as the Greek debt crisis appears to be worsening. Gold bulls have the solid near term technical advantage and have gained more upside momentum this week.

The U.S. dollar index closed up 16 points at 82.47 today. Prices closed near mid-range today and hit another fresh contract high on a flight to quality amid the European Union's sovereign debt crisis. The bulls have the solid overall near term technical advantage and have gained more upside momentum this week.


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Crude Oil Daily Technical Outlook Wednesday Morning


Intraday bias in Crude oil remains on the downside for the moment and further decline should be seen to 38.2% retracement of 69.50 to 87.09 at 80.37 or further to 100% projection of 87.09 to 80.53 from 85.63 at 79.07. On the upside, above 82.94 minor resistance will turn intraday bias neutral and bring recovery. But risk will now remain on the downside as long as 85.63 resistance holds.

In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal.

So even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Tuesday, April 27, 2010

Stronger Dollar Sends Crude Oil Bulls to the Sidelines


Crude oil closed down $2.14 at $82.06 a barrel today. Prices closed near the session low today and closed at a fresh five week low close. Prices were pressured by a stronger U.S. dollar index and weaker stock market today. Crude oil bulls are now fading and need to show fresh power soon. The next upside price objective for the bulls is producing a close above solid technical resistance at the April high of $87.59 a barrel.

Natural gas closed down 2.4 cents at $4.327 today. Prices closed near mid-range today in quieter trading. Bears still have the overall near term technical advantage. Prices are trading sideways and choppy at lower price levels. The next upside price objective for the bulls is closing prices above solid technical resistance at the April high of $4.421.

Gold futures closed up $8.00 at $1,162.00 today. Prices closed nearer the session high today, scored a bullish "outside day" up on the daily bar chart and hit a fresh three week high. Gold's gains came despite a stronger U.S. dollar and lower crude oil futures prices. Traders were buying gold today as a hedge against further weakening of the European currencies as the Greek debt crisis appears to be worsening. Gold bulls have the firm near term technical advantage and gained some more upside momentum today.

The U.S. dollar index closed up 86 points at 82.47 today. Prices closed nearer the session high today and hit a fresh contract high on a flight to quality amid the European Union's sovereign debt crisis. The bulls have the solid overall near term technical advantage and gained more upside momentum today.


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Phil Flynn: Oil Is Fed UP!


Oil prices still are having a hard time following through on its breakout over $85 a barrel. Obviously you have to respect that fact that the market has broken out yet at the same time, the bulls have to wonder what the market is waiting for.

It is very possible that the market is waiting for reassurance and permission to buy from our very accommodative Federal Reserve. The Fed has been taking baby steps back from the historic payload of economic stimulus and the oil market fears the impact that the removal of stimulus might have on the price of oil. The oil market has never before experienced the artificial amount of stimulation that it has experienced over the last year and so there is no wonder why there may be some angst building as we get closer to the judgment day. We can talk a lot about the demand growth in China but that too is the product of massive government spending. The Chinese spent 586 billion dollars to prop up their economy and it is unlikely that they will be pumping the economy with that kind of money again. Asian stocks fell hard on rising concerns that China, instead of adding stimulus, will actually be taking it away.

Oil just can’t get going because it is worried about the never ending Greece crisis and the concerns over other weak members in the PIIGS zone. Oil is worried about China and it is worried about what the Fed might say. The Fed has raised interest rates and removed most of its emergency lending programs. Now the market wants to know when the rates will start to rise. Every oil trader in the world is waiting for the answer. The removal of stimulus is a bearish oil event just waiting to happen.

If the bulls cannot get reassurance from the Fed maybe they can get it from Schlumberger. Chief Executive Andrew Gould said he feels that oil near $80 a barrel should hold and that customers will boost spending at oil prices near $80 a barrel. "Our customers will loosen their purse strings on high end technology," Gould said during a conference call to discuss the oil field services company's first-quarter earnings.

There is a lot of oil in storage. Bloomberg News reports that, “Traders increased the number of vessels used to store crude oil by 75 percent last week as the potential profit from storage rose, Morgan Stanley said. There were 21 oil tankers storing dirty products last week, 20 of them are very large crude carriers, up from 12 vessels in the previous week, a Morgan Stanley analyst, said in a report yesterday. Among the nine vessels there are four in Iran. About 41 million barrels of oil were stored in the tankers, Morgan Stanley said, enough to meet more than two days of U.S. consumption. That’s up from 24.5 million barrels a week ago.”

We also need to get prepared for the possible market impact from potential sanctions on Iran. I know that the Iran situation is well known that even with their abundant production of oil, they still do not have the refining capacity to produce what they need in refined products. So it is widely expected that any sanctions on the country will be a ban on gasoline. The AFP is reporting that Iran has increased its gasoline by inventories by about 220 million gallons and plans to boost domestic production to offset possible fuel sanctions according to Nooreddin Shahnazi-Zadeh, the head of National Iranian Oil Refining and Distribution. He claims that, "At the moment the volume of Iran's strategic petrol supplies has increased by over a billion liters" and dismissed the threat of sanctions saying, "it is impossible to impose such limitations in the current situation."

Phil can be reached at pflynn@pfgbest.com And as always watch him each day on the Fox Business Network.


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Crude Oil Falls the Most in a Week as Equities Decline, Dollar Strengthens


Crude Oil fell the most in more than a week as global equities declined and the dollar advanced on skepticism European governments will approve the Greek bailout plan quickly enough to help the country avoid default. Oil lost 1.4 percent after Greece’s largest union said it will stage a strike for a day next month and Germany’s Chancellor Angela Merkel said yesterday that Greece “must do its homework” to reduce its deficit. A stronger dollar reduces the appeal of commodities as an alternative investment.

“Oil is lower because global equities are weaker and the dollar’s stronger,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut-based procurement adviser. Crude oil for June delivery dropped 78 cents, or 0.9 percent, to $83.42 a barrel at 10:13 a.m. on the New York Mercantile Exchange. Earlier, it touched $83.06 a barrel. Prices have risen 66 percent in the past year.
The U.S. dollar rose to $1.3306 per euro from $1.3383 in New York yesterday. The Standard & Poor’s 500 Index dropped 0.4 percent to 1,207.60.

Oil and equities pared their losses after the Conference Board reported confidence among U.S. consumers increased in April to the highest level since September 2008 as Americans became more upbeat about the labor market. The Conference Board’s confidence index rose more than forecast to 57.9 from 52.3 in March, according to the New York- based private research group. The median forecast of economists surveyed by Bloomberg News projected an increase to 53.5.....Read the entire article.

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Crude Oil Intraday Bias is Flipped Back to the Downside


Crude oil's sharp fall from 85.63 dragged 4 hours MACD below signal line and suggests that recovery from 80.53 has completed. Intraday bias is flipped back to the downside and deeper fall should be seen towards 38.2% retracement of 69.50 to 87.09 at 80.37 or further to 100% projection of 87.09 to 80.53 from 85.63 at 79.07. On the upside, above 85.63 will bring another rise to retest 87.09 high. But after all, sustained break there is needed to confirm rally resumption. Otherwise, another fall would still be seen before consolidation from 87.09 concludes.

In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.



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Monday, April 26, 2010

Where is Crude Oil Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Closes Below 20 Day, Signals Still Give Bulls The Advantage


Crude oil closed lower due to profit taking on Monday and below the 20 day moving average crossing at 84.97. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If June extends last Friday's rally, the reaction high crossing at 87.26 is the next upside target. Closes below last Thursday's high crossing at 81.73 would open the door for a larger degree decline into early May. First resistance is last Friday's high crossing at 85.19. Second resistance is the reaction high crossing at 87.26. First support is last Thursday's low crossing at 81.73. Second support is the 38% retracement level of the February-April rally crossing at 81.18.

Natural gas posted an inside day with a lower close on Monday and the mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Multiple closes above the reaction high crossing at 4.421 are needed to confirm an upside breakout of this month's trading range. If June renews this winter's decline, weekly support crossing at 3.502 is the next downside target. First resistance is the reaction high crossing at 4.421. Second resistance is the 25% retracement level of the October-April decline crossing at 4.4438. First support is the reaction low crossing at 3.967. Second support is the early April low crossing at 3.914.

Gold closed slightly lower due to profit taking on Monday but remains above the 10 day moving average crossing at 1148.40. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If June renews this year's rally, the 75% retracement level of the December-February decline crossing at 1184.00 is the next upside target. Closes below last Monday's low crossing at 1124.30 would confirm that a short term top has been posted. First resistance is today's high crossing at 1160.70. Second resistance is the reaction high crossing at 1170.70. First support is the 10 day moving average crossing at 1148.40. Second support is the 20 day moving average crossing at 1142.00.

The U.S. Dollar closed higher on Monday and the mid-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends this month's rally, March's high crossing at 82.52 is the next upside target. Closes below the 10 day moving average crossing at 81.07 are needed to confirm that a short term top has been posted. First resistance is last Friday's high crossing at 82.20. Second resistance is March's high crossing at 82.52. First support is the 20 day moving average crossing at 81.22. Second support is the 10 day moving average crossing at 81.07.



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Phil Flynn: Solid Economic Data


Solid economic data keeps the oil bulls dreams alive in an impressive drive to end the week. The market is still getting support from the calendar and found comfort in the fact that housing seemed to blow away market expectations. Sales of new homes increased by a stunning 26.9% over February, inspired by federal tax incentives for buyers that are set to expire in days. Still, as exciting as the numbers were by historical standards, they were not anything to write home about nor do they suggest that without government help they can be repeated. Yet it was enough to get the market to forget about Greece and their problems that had been weighing on the market in the morning.

The housing numbers made us forget all about Greece. Though Greece may be getting bailed out, the question remains if you will be next. Bloomberg News reports that Greece is unlikely to be the last euro nation to need an International Monetary Fund bailout, with Ireland, Spain and Portugal “conspicuously vulnerable, “the budget cuts needed in Europe in many countries are profound.” Bloomberg says that Portuguese, Spanish and Irish bond yields jumped last week as investors questioned their ability to reduce budget deficits and avoid Greece’s fate. Greece on April 23 triggered a 45 billion-euro ($60 billion) rescue package from the IMF and the euro region after its soaring deficit sent borrowing costs surging and sparked concern about a default. At 14.3 percent of gross domestic product, Ireland had the euro region’s largest deficit last year. Greece’s was 13.6 percent; Spain’s was 11.2 percent and Portugal’s 9.4 percent.

Yet despite the problems in Europe the oil market is getting caught up in a seeping wave of increasing economic optimism. Crude oil is getting its drive in part from fears that rates will continue to remain low as demand for the products rise increasing the chances for more commodity price inflation.

The Deepwater Horizon site is said to be leaking about 1000 barrels of oil per day. NOAA says that an attempt to control the leaking well using a Remotely Operated Vehicle (ROV) was not successful, and the well continues to leak. All available assets are being brought on-scene to address well control and cleanup of the floating oil. Over 1000 people are supporting the operational response. Efforts are now focused on gathering more information about the spill (amount, fate and effects), plans for possible undersea containment, drilling relief wells, maximizing oil recovery and readying for shoreline assessments. NOAA says the plan for attacking the spill has elements that try to activate the blow out preventer (BOP), a cut-off valve at the well head using ROVs, then if successful use an undersea dome to contain leaking oil. This process could take several months.

Phil Flynn can be reached at pflynn@pfgbest.com And make sure to watch him everyday on the Fox Business Network!


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Exxon Chevron Showdown

Chevron has been gaining while Exxon has been dropping, but based on valuations and smart money flows Exxon looks like the better investment.



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Crude Oil Daily Technical Outlook For Monday


Intraday bias in crude oil remains mildly on the upside and recovery from 80.53 could still continue towards 87.09 resistance. Nevertheless, sustained break there is needed to confirm rally resumption. Otherwise, another fall would still be seen before consolidation from 87.09 concludes. On the downside, below 82.86 minor support will flip intraday bias back to the downside for 38.2% retracement of 69.50 to 87.09 at 80.37 or possibly further to 61.8% retracement at 76.22.

In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Sunday, April 25, 2010

Crude Oil Rises a Fifth Day on Signs Global Fuel Demand to Recover


Crude oil rose for a fifth day on speculation demand will increase as the world economy recovers from recession. Oil traded above $85 a barrel as a Conference Board report tomorrow in the U.S., the world’s largest energy user, will probably show consumer confidence climbed to a three month high. Asian stock markets rose by the most in five weeks on expectations of higher earnings at Toyota Motor Corp. in Japan.

“People are becoming more bullish on oil demand growth,” said Serene Lim, an energy commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The more positive world economic data, especially in the U.S. data, is bringing about more optimism.” Crude oil for June delivery rose as much as 44 cents, or 0.5 percent, to $85.56 a barrel in after hours electronic trading on the New York Mercantile Exchange. It was at $85.36 at 1:39 p.m. in Singapore.

The MSCI Asia Pacific Index rose 1.5 percent to 127.24 as of 12:40 p.m. in Tokyo, with more than seven times as many stocks advancing as declining. Oil climbed 1.7 percent to $85.12 on April 23, the highest settlement since April 15, after government reports showed that U.S. sales of new homes surged in March and orders for non transport durable goods climbed. Commodities had rallied as the dollar fell against the euro for the first time in seven days.

A Commerce Department report on April 23 showed that sales of new U.S. homes increased 27 percent in March, the most in 47 years. Bookings for goods meant to last at least three years, excluding cars and aircraft, climbed 2.8 percent.....Read the entire article.


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Weekend Gold, Silver, Natural Gas, Crude Oil & SP500 Report

Last week the market slowly recovered from the recent sell off in stocks and commodities. So far the market is unfolding as we expected and with any luck there will be a surge of low risk setups across the market in the near future. Take a look at the charts below.

GLD – Gold Chart
GLD/Gold is trading at a key pivot point. This week there will most likely be a sizable move either up or down. Past chart analysis is pointing to lower prices which would complete an ABC trace pattern and this makes for a larger and stronger rally once prices to turn back up. Silver is trading in much the same situation. Gold and silver tend to move together with silver having more volatility than gold.



UNG – Natural Gas Chart
Natural Gas continues to try and bottom and posted some solid gains last Thursday & Friday with rising volume. But we have seen this pattern form over and over again in the past year so I am not excited yet. Once the base is formed and the trend starts up we will find low risk entry points for this commodity. I would look for shorting opportunities but natural gas is so oversold I feel the risk is higher than I prefer.



USO – Crude Oil Chart
Looks like the trend line break down flushed out a lot of weak positions as seen in the volume surge. Oil momentum is still down but we are now starting to look for a buy signal.



SPY – SP500 Chart
Equities recovered nicely from the previous week’s sharp sell off. We saw volume rise with higher prices which is a strong sign of the overall strength of the market. But it is important to note that the market sentiment has reached an extreme level with 53% of traders now being bullish on the market and only 17% being bearish. This extreme level is the same level reached just before the January correction earlier this year.



Equities and Commodity Trading Conclusion:
If recent historical prices repeat again then we are looking for a small move higher on Monday and then a couple days of weakness for both stocks and commodities later in the week. The market is very close to generating several low risk trading signals which is very exciting.

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Where is Crude Oil Headed Next Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities market and looks ahead to where oil is likely headed next week.





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Saturday, April 24, 2010

Crude Oil Weekly Technical Outlook


Crude oil's rebound from 80.53 resumed towards the end after initial setback and closed strongly at 85.12. Further rise would be in favor to retest 87.09 high but after all, sustained break there is needed to confirm rally resumption. Otherwise, another fall would still be seen before consolidation from 87.09 concludes. On the downside, below 81.73 minor support will flip intraday bias back to the downside for 38.2% retracement of 69.50 to 87.09 at 80.37 or possibly further to 61.8% retracement at 76.22.

In the bigger picture, medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.....Nymex Crude Oil Continuous Contract 4 Hours Chart.



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Friday, April 23, 2010

Phil Flynn: Deepwater Horizon Triumph and Tragedy


The more you read about the tragedy that is unfolding in the Gulf of Mexico surrounding the Deepwater Horizon oil rig fire the more you realize the magnitude and the symbolism of what is happening. Obviously the loss of life is a reminder of the risks that those in the oil industry take on a daily basis to bring us products that we take for granted. To a larger extent the history of this rig is a reminder of the type of entrepreneurial spirit that has made this country great. It represent the same type of spirit that Horatio Alger captured in his stories of America the land of opportunity or the call from Horace Greeley and John B. L. Soule that urged Americans to go West young man can grow up with the country. This accident is a loss that should be felt by us all.

The Deepwater Horizon was a marvel of modern technology. It was what they call an ultra deepwater dynamic position semi submersible oil rig. It was the size of two foot ball fields and was like a ship that used a computer controlled system to automatically maintain its position and heading. It was a rig that could reach the bottom of the ocean and the Gulf of Mexico to depths many had even imagined. In September of last year Deepwater Horizon made history by drilling the deepest oil well in history. This was an achievement not unlike landing a man on the moon or a successful space shuttle. An achievement that in another era would have inspired the passion and imagine of the nation in a nation that has become accustomed to great achievements.

Think about the implications of drilling for oil in an area of the ocean where no man dared drill before. Think of the impact it can have on a world that is not satisfied with surrendering to the sentence of peak oil but to expand our imagination and our desires to overcome the status but to do what those who think small said was impossible. Instead of surrendering to the prospect that world and the economy was doomed because of Peak Oil to those that said we have not even begun to tap the earth’s possibilities.

There are other concerns of course like fears that this accident will be used by drilling opponents as an example why we should not drill and extend the benefits that off shore drilling to the economy and the health and well being of the human race at large. In fact there was word that BP was about to announce another major discovery at the sight that would have added tens of millions of barrels of oil to the marketplace. In many ways the Deepwater Horizon was a vessel that deserved the same type to of reverence that is given to the Spirit of St. Louis or Space Shuttle Challenger. It loss is a national tragedy.

Speaking of tragedy let us talk Greece, again. MarketWatch reports that” The Greek government surrendered to the credit markets Friday, formally requesting the activation of a joint European Union International Monetary Fund rescue plan after soaring borrowing costs were seen making it virtually impossible for the debt strapped nation to meet its funding needs on the open market. The Greek government surrendered to the credit markets Friday, formally requesting the activation of a joint European Union International Monetary Fund rescue plan after soaring borrowing costs were seen making it virtually impossible for the debt strapped nation to meet its funding needs on the open market. This can impact oil yet oil seems to be less sensitive to the dollar.

Perhaps oil is focusing more on the upcoming summer driving season and the upcoming showdown with Iran. Iran had war games in the straits of Hormuz and Iran’s supreme Leader is t is lashing out as the possibilities of sanctions against his country are looking exceedingly likely. Iran's Supreme Leader Ayatollah Ali Khamenei said that it is impossible to break the will of the Iranian people by threatening with nuclear weapons, and this is a shameful paper in the U.S. political history and a black spot on the U.S. government. Hey who is threatening who? Iranian war premium seems to be creeping back into oil.

Phil can be reached at pflynn@pfgbest.com Have a great weekend!




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Q1: Gold vs. MarketClub's "World Commodity Portfolio"


We began Q1 with high hopes of keeping our winning streak alive, just as we had finished out the year on a very positive note with some strong gains in Q4 of 2009.
Q1 proved to be a challenging quarter for the "World Commodity Portfolio." Out of the six markets we track, we had winning positions in four markets (that's the good news) and losing positions in the other two. However, the big disappointment in Q1 was the gold market which produced our biggest quarterly loss of any market since we began tracking the "World Commodity Portfolio."

The main reason for this loss was the choppy, trend-less action in the gold market. In the eleven quarters we have been tracking gold, we have made money in eight of those quarters. This is not the time to abandon trading gold, rather it is a time to continue with our game plan and "Trade Triangle" approach that has been so successful for this portfolio. Furthermore we have never had back to back losing quarters in gold.

On the brighter side, the grain markets proved to be resilient and just the ticket as corn, wheat, and soybeans all put in positive performances. The only other market to put in a negative performance in Q1 was crude oil. All these gains were not enough to turn the tide and prevent our only second losing quarter in eleven quarters. While the loss was 6% based on margins of $50,000 (margin is needed to trade the "World Commodity Portfolio") it was still a loss and we hate losses.

As we have said before, diversification is the key, followed by a sound market-proven game plan. This is the one way to positively approach the markets with the odds stacked in your favor.
Q2 promises to be better and we expect to turn in a positive performance. This is based on the fact that the "World Commodity Portfolio" has never lost money two quarters in a row.
Even with this quarter's loss, the "World Commodity Portfolio" has produced, on average a 60% return per quarter. This number however was greatly skewed with the huge run up in crude oil in Q4 of '08. That being said, it just emphasizes the point that you have to be in it to win it.


The results we show in the "World Commodity Portfolio" are hypothetical and should not be taken as trades that were actually made in the marketplace. The results however, do show and resemble how you would have come out using MarketClub's "Trade Triangle" approach.

If you'd like to know more about this approach visit our website at MarketClub.com

Here's to a profitable Q2.





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Crude Oil Market Commentary For Friday Morning


Crude oil was steady to slightly higher overnight as it consolidates below the 20 day moving average. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends Monday's decline, the 38% retracement level of the February-April rally crossing at 81.18 is the next downside target. Closes above last Wednesday's high crossing at 87.26 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 84.73. Second resistance is last Wednesday's high crossing at 87.26. First support is Thursday's low crossing at 81.73. Second support is the 38% retracement level of the February-April rally crossing at 81.18.

Natural gas was lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. May appears to be forming a symmetrical triangle off the early April high. Closes above 4.269 or below 3.879 are needed to confirm a breakout of this consolidation pattern and point the direction of the next trending move. First resistance is last Wednesday's high crossing 4.269. Second resistance is the 25% retracement level of the October-April decline crossing at 4.405. First support is the reaction low crossing at 3.879. Second support is April's low crossing at 3.810.

Gold was lower overnight as it consolidates some of this week's rally but remains above the 20 day moving average crossing at 1139.00. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 1139.00 are needed to confirm that a short term top has been posted. If June renews the rally off March's low, the 75% retracement level of the December-February decline crossing at 1184.00 is the next upside target. First resistance is the 10 day moving average crossing at 1147.90. Second resistance is last Monday's high crossing at 1170.70. First support is Monday's low crossing at 1124.30. Second support is the reaction low crossing at 1102.40.

The U.S. Dollar was higher overnight as it extends the rally off last week's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends this week's rally, March's high crossing at 82.52 is the next upside target. Closes below the 10 day moving average crossing at 81.00 are needed to confirm that a short term top has been posted. First resistance is the overnight high crossing at 82.20. Second resistance is March's high crossing at 82.52. First support is the 20 day moving average crossing at 81.23. Second support is the 10 day moving average crossing at 81.00.

The CRB Index, Can It Predict Inflation and Deflation?

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Crude Oil Reverses Losses as Equities Closed Higher


Crude oil initially slumped as global stock market tumbled amid revision of Greece's debt deficits. Together with disappointing inventory report released Wednesday, the front month WTI contract plummeted to as low as 81.73. However, buying interests emerged at that level as price reversed and ended the day flat at 83.7. Strong rebound in equities and attack of Iraqi oil pipeline also supported oil.

After the EU released a report revising up 2009's Greek fiscal deficit to 13.6% of GDP from the 12.7% of GDP estimated previously, the Greek Financial Ministry reassured the market that will endeavor to shrink the deficit by 4%. With the upward revision and potential further revision, the country is unlikely to reduce the deficit to 8.7% of GDP as previously estimated.

Worse still, Moody's announced to cut its rating on Greek debt to A3 from A2. Moreover, Greek officials said that the country has prepared to ask the EU for a bridge loan. In US trading session, the market was further pressured by President Barrack Obama's call for new financial reform as well as the Senate's approval of derivative legislation requiring US lenders to spin off their swaps trading desks.

Despite the negative news, stocks managed to crawled back and DJIA and S&P 500 ended the day gaining +0.1% and +0.2%, respectively. Encouraging corporate earnings, mildly bigger than expected decline in initial jobless claims and stronger existing home sales data restored sentiment.

Specifically to the oil market, damage of an oil pipeline from Iraq to Turkey disrupted supply which will take around 3 days to resume.

Gold fell, halting a 2 day rally, as the euro tumbled to a new 11 month low against the dollar. However, the recovery after sliding to as low as 1132 signaled yellow metal's underlying strength. In fact, while the market has only focused on Greece's deficit issue, such problem has also rooted in other countries including the US, Japan and the UK. If worries intensify and spread to these countries, we believe gold should benefit.

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Thursday, April 22, 2010

Where is Crude Oil Headed on Friday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Market Commentary For Thursday Evening


Crude oil closed down $0.01 at $83.67 a barrel today. Prices closed nearer the session high today. No serious chart damage has been inflicted in crude, but the bulls need to show more power soon to keep the uptrend on the daily bar chart in place. Crude oil bulls still have the overall near term technical advantage.

Natural gas closed up 16.2 cents at $4.203 today. Prices closed near the session high today and scored a bullish "outside day" up on the daily bar chart. A positive weekly gas storage report boosted the market today. Short covering was featured. Bears still have the near term technical advantage. Prices are trading sideways and choppy at lower price levels.

Gold futures closed down $6.10 at $1,142.70 today. Prices closed near mid-range today and saw some profit taking and pressure from a stronger U.S. dollar index and weaker crude oil futures prices. The gold market is still a 2 1/2 month old uptrend on the daily bar chart. Bulls' next upside technical objective is to produce a close above solid technical resistance at the April high of $1,170.70.

The U.S. dollar index closed up 45 points at 81.72 today. Prices closed nearer the session high today and hit a fresh two week high. The bulls still have the overall near term technical advantage and are regaining upside technical momentum.


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Crude Oil Declines as Greece’s Deficit Weakens Euro and Equities


Crude oil fell for the first time in three days after the European Union said Greece’s budget deficit last year was worse than previously forecast, sending equities and the euro lower. Oil slipped as much as 2.3 percent in New York after the U.S. currency’s gain dimmed the appeal of commodities as an alternative investment. An Energy Department report yesterday showed that U.S. crude and fuel supplies increased last week as demand slipped in the world’s largest energy consuming country.

“The stuff out of Europe doesn’t get any better,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “The problems out of Europe continue to impact the dollar and raise concerns about economic growth.” Crude oil for June delivery dropped 95 cents, or 1.1 percent, to $82.73 a barrel at 11:50 a.m. on the New York Mercantile Exchange. Futures are up 4.2 percent this year. The EU’s statistics office said Greece’s deficit was 13.6 percent of GDP last year, topping the government’s two week old forecast of 12.9 percent. Greece’s widening deficit and questions about the accuracy of its economic data have undermined the credibility of the EU’s budget rules and contributed to the 7.2 percent slide in the euro this year.

The dollar traded at $1.3293 against the European currency, up 0.7 percent from yesterday. It was the greenback’s sixth straight increase. The Standard & Poor’s 500 Index slid 1 percent to 1,193.98. The Energy Department’s report showed crude oil stockpiles in the U.S. increased by 1.89 million barrels in the week ended April 16. Gasoline supplies rose 3.59 million barrels to 224.9 million, and inventories of distillate fuel, a category that includes heating oil and diesel, gained 2.1 million barrels to 148.9 million.....Read the entire article.

New Video: Has Crude Oil Topped Out for the Year?

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Mid Week Silver, Crude Oil, SP500 & Gold Charts

It’s been, an interesting week as stocks and commodities claw their way back up after the end of week sell off on Friday. Most of the chart technical are pointing to another wave lower for gold, silver, oil and the broad market.

This next wave of selling would form an ABC retrace pattern on the commodity charts and this pattern is bullish. Also commodity prices would drop to key support levels which would most likely provide a low risk entry point depending on the price and volume action at that time. So lower price is good for the big picture which is higher prices.

The charts below are a quick visual of what I am seeing and thinking....

GLD – Gold Exchange Traded Fund Trading Chart
The gold etf trading fund is getting closer to completing is 4 month correction and start another rally if all goes well in the coming week or two. What I am looking for is gold to hit resistance at $113 and then drop to the $110 level which is a key support level.


SLV – Silver Exchange Traded Fund Trading Chart
SLV etf fund looks ready for a pullback also. Both gold and silver tend to move together and support would be tested here also.


USO – Oil Trading Fund Chart
USO shows that one more thrust down would bring prices to a key support level also.


SPY – SP500 Exchange Traded Fund Trading Chart
Stocks have been on fire the past few months but this rally looks to be getting long in the teeth. After a rally this strong without any pullbacks one has to think that when a correction does start it will be a very sharp sell off. I will point out a few years ago we saw this exact type of price action for the broad market and it continued higher for several more months before actually putting in a large correction. If we don’t see a large correction, then we would see similar price movement which we saw last November and December with the sideways choppy price action and slow rally higher.


Mid-Week Market Conclusion:
In short, I think the market is ready to finally take a breather. What I am looking for another sell off which will break the low for gold, silver, oil and SP500 last week. If this happens then panic would be triggered washing the market of all the traders who have been buying at these high levels (chasing prices).

Stocks have been very strong and new money continues to push prices higher so we could just see a relatively small pullback between 3-5% and then the rally could continue…. This would work very well with gold, silver and oil as they would be testing key support levels and should be ready for a another upward surge.

It doesn’t really matter what the market does as there will always be great opportunities. Waiting for quality setups requires discipline and focus because it is not very active. I see traders making all kinds of silly trades which chip away at their profits because they cannot sit and watch when they should be.

During slow times I actually focus on learning more about the markets going through charts, inter-market analysis comparing things….. That kills a ton of time and helps make you a better trader in the long run. So if you don’t see a good trade get out and do something fun or educational. Don’t just start trading the 5 minute charts because you want to trade…

Just click here if you would like to receive Chris Vermeulen's ETF Swing Trading Signals newsletter.






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Crude Oil Daily Technical Outlook For Thursday


Crude oil's recovery was limited at 84.64 and subsequent break of 82.85 minor support argues that such recovery is completed. Intraday bias is flipped back to the downside for 38.2% retracement of 69.50 to 87.09 at 80.37. Note that sustained trading below 80.37 fibo support will confirm that rise from 69.50 has completed after hitting 61.8% projection of 69.50 to 83.16 from 78.56 at 87.00. In such case, deeper fall should be seen towards 61.8% retracement at 76.22 and below. On the upside, above 84.64 will turn focus back to 87.09 high.

In the bigger picture, note again that medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


New Video: Has Crude Oil Topped Out for the Year?


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Wednesday, April 21, 2010

Where is Crude Oil Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.





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Sorry Crude Oil Bulls....My Family is From Missouri. Show Me!


Crude oil closed down $0.17 at $83.68 a barrel today. Prices closed near mid-range again today. No serious chart damage has been inflicted in crude, but the bulls need to show more power soon to keep the uptrend on the daily bar chart in place. Crude oil bulls still have the overall near term technical advantage. The next upside price objective for the bulls is producing a close above solid technical resistance at the April high of $87.59 a barrel.

Natural gas closed down 0.9 cents at $4.055 today. Prices closed nearer the session low today in quieter trading. Bears still have the solid near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the April high of $4.421.

Gold futures closed up $9.60 at $1,148.80 today. Prices closed nearer the session high today and saw bargain hunting buying interest after recent selling pressure. The bulls have shows resilience and have kept a 2 1/2 month old uptrend in place on the daily bar chart.

The U.S. dollar index closed up 15 points at 81.29 today. Prices closed near mid-range today in more quiet trading. The bulls still have the overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at the April high of 82.06.

Watch > New Video: Has Crude Oil Topped Out for the Year?

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Crude Oil Gains as Earnings Exceed Estimates, IMF Raises Global Growth Target


Crude oil rose as U.S. companies posted better than estimated earnings and the International Monetary Fund raised its forecast for global growth this year, signaling fuel consumption will climb. Oil rebounded after Morgan Stanley profits rose as fixed income trading revenue more than doubled from a year earlier. The IMF said the economy will expand 4.2 percent in 2010, the fastest pace since 2007, compared with a January projection of 3.9 percent. Prices dropped as much as 1.1 percent earlier when a report showed that U.S. supplies gained last week.

“These markets tend to move on expectations of what will be, rather than what is,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy. “The earnings are pointing to a significant recovery and today’s IMF report also points to increased growth. Demand is poised to grow, outpacing output.” Crude oil for June delivery rose 31 cents, or 0.4 percent, to $84.16 a barrel at 12:31 p.m. on the New York Mercantile Exchange. Oil traded at $84.30 before the release of the inventory report at 10:30 a.m. in Washington.

U.S. supplies of crude oil rose 1.89 million barrels to 355.9 million, the Energy Department report showed. A 750,000 barrel drop was forecast, according to a Bloomberg survey. Inventories of crude at Cushing, Oklahoma, where New York traded West Texas Intermediate oil is stored, surged 5.8 percent to 34.1 million barrels, the highest since the week ended Jan. 8. “There was a massive build at Cushing, which should be very bearish,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “Between mid-February and mid-April supplies at Cushing have gone from a year on year deficit of 13 percent to a 15 percent surplus.”

Reporter Mark Shenk can be contacted at mshenk1@bloomberg.net


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New Video: Has Crude Oil Topped Out for the Year?


There is no doubt about it, crude oil has been very choppy. There are two camps involved in the crude oil market: one is bullish and the other is bearish. In this new short video, we show you which camp we are in and what we think is going to happen to the crude oil market for the balance of the year.

You will also get to see the key areas that we have recently approached and reversed back down from, and why this area is so important for the future of crude oil.

As always, our videos are free to watch and there are no registration requirements. We welcome your thoughts and comments regarding this posting so please feel free to leave a comment.


Watch > Has Crude Oil Topped Out for the Year?


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Crude Oil Daily Technical Outlook Wednesday


Crude oil's correction from 87.09 might have completed at 80.53 already, just ahead of 38.2% retracement of 69.50 to 87.09 at 80.37. Intraday bias is mildly on the upside for stronger rebound for retesting 87.09 high. On the downside, however, below 82.85 minor support will argue that recovery from 80.53 is completed and flip intraday bias back to the downside. Also, note that sustained trading below 80.37 fibo support will confirm that rise from 69.50 has completed after hitting 61.8% projection of 69.50 to 83.16 from 78.56 at 87.00. In such case, deeper fall should be seen towards 61.8% retracement at 76.22 and below.

In the bigger picture, note again that medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Tuesday, April 20, 2010

Clearly, OPEC Lost Control Of Oil In March


Non OPEC global oil supply increased in March and is now expected to average 51.53 million barrels per day (mb/d) for 2010, which is a 0.50 mb/d increase over 2009 according to Hellenic Shipping News (HSN). It is also an increase of 0.10 mb/d to the 2010 forecast from just a month ago.

HSN:
Russia supply in March marked a new post-Soviet record oil supply from Russia is expected to grow by 0.09 mb/d over 2009 to average 10.01 mb/d in 2010, representing an upward revision of 20 tb/d from recent evaluations. The healthy production figure in the first quarter, which came higher than previously expected, necessitated the upward revision. Russia oil production reached a new post Soviet record in March following strong production levels in January and February.

China supply to increase by 80 tb/d in 2010 China’s oil production is estimated to average 3.93 mb/d in 2010, an increase of 80 tb/d over the previous year and an upward revision of 40 tb/d from the previous month. The strong production figures from the first two months required the upward revision, which was the highest in the first quarter compared to other non-OPEC countries’ revisions.

Meanwhile, OPEC members continue to violate their group's production quota's and over produce. OPEC output rose 5.6% year over year in March to 29.2 mb/d. While OPEC says it would 'mull an output boost' at $100 oil, note they are already increasing output thanks to violations. So one has to wonder if $100 can even be reached, sustainably, despite some forecasts in the market.

OPEC's reference price for a basket of 12 crude oil types just dropped by $1.97 to $80.89 per barrel.

Reporter Vincent Fernando can be reached at The Business Insider


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