Thursday, September 30, 2010

Phil Flynn: Exporting America!

A surprise drawdown in gasoline supply as the US becomes an exporter of more products as refiners sink deep into seasonal maintenance. Strong data out of China helped offset concerns about European sovereign debt. Add to it a weak dollar and you have created the right condition for an energy rally. Also of note China has now surpassed the United States as the biggest consumer of Saudi oil yet we may see some slowing as China takes steps to bring down exploding property prices.

Inventories seemed to be the major driving force for yesterday steady methodical rally. The EIA reported that motor gasoline inventories fell by a shocking 3.5 million barrels last week even as gasoline production increased to 9.2 million barrels a day and refinery runs scrapped the bottom at 85.8 %.It is clear that the US is exporting more gas and diesel as demand stagnates here and is robust in other places. The EIA shows that four moving average for gas demand is averaging 9.1 million barrels per day which is up just 0.9% from last year percent from the same period last year.

Yet gasoline supply fell as refiners look overseas. The US is now a net gasoline exporter for the first time since 1961. Reuters News reported today, “US oil refiners are shipping fuels to foreign markets to restore profits battered by sputtering domestic demand, signaling a historic shift in the global oil trade. Gasoline guzzling Americans have cut consumption while emerging markets including nearby Latin America have seen demand grow beyond the capacity of local refineries.....Read the entire article.



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Mid-Week Market Report on SP500, Crude Oil, Gold & Dollar

Wednesday the market didn’t tell us anything new. The equities market is still over extended on the daily chart but the market is refusing to break down. Each time there has been seen selling in the market over the past two weeks, the market recovers. Equities and the dollar have been trading with an inverse relationship and it seems to drop every in value each selling pressure enters the market, which naturally lifts stocks.

That being said, sellers are starting to come into the market at these elevated levels and it’s just a matter of time before we see a healthy pullback/correction. The past 10 session volatility has been creeping up as equities try to sell off. There will be a point when a falling dollar is not bullish for stocks but until then it looks like printing of money will continue devaluing of the dollar to help lift the stock market. Some type of pullback is needed if this trend is to continue and the markets can only be held up for so long.

Below is a chart of the USO oil fund and the SPY index fund. Crude has a tendency to provide an early warning sign for the strength of the economy. As you can see from the April top, oil started to decline well before the equities market did. This indicated a slow down was coming.

The recent equities rally which started in late August has been strong. But take a look at the price of oil. It has traded very flat during that time indicating the economy has not really picked up, nor does it indicate any growth in the coming months. This rally just may be coming to an end shortly.


This daily chart of the SP500 fund shows similar topping patterns. This looks to be the last straw for the SP500. Most tops occur with a gap higher or early morning rally reaching new highs, only to see a sharp sell off by the end of the session which generates a reversal day. From the looks of this chart that could happen any day.


In short, volume overall in the market remains light which is why we continue to see higher prices. Light volume typically gives the stock market a positive bias while Sell offs require strong volume to move lower. That being said every dip in the equities market which has been close to a breakdown seems to get lifted back up by a falling dollar, but that can only happen for so long because one the volume steps back into the market the masses will be in control again.

You can get my ETF and Commodity Trading Signals if you become a subscriber of my newsletter. These free reports will continue to come on a weekly basis; however, instead of covering 3-5 investments at a time, I’ll be covering only 1. Newsletter subscribers will be getting more analysis that’s actionable. I’ve also decided to add video analysis as it allows me to get more info across to you quicker and is more educational, and I’ll be covering more of the market to include currencies, bonds and sectors. Before everyone’s emails were answered personally, but now my focus is on building a strong group of traders and they will receive direct personal responses regarding trade ideas and analysis going forward. Due to more analysis and that I want to keep the service personal the price of the service will be going up Oct 1st, so join today.

Let the volatility and volume return!

Chris Vermeulen
The Gold And Oil Guy.Com
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Wednesday, September 29, 2010

Where is Crude Oil and Gold Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, including gold's new high, and looks at where oil and gold may be headed tomorrow.



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Stock Market and Commodities Commentary For Wednesday Evening Sept. 29th

The U.S. stock indexes closed mixed today. The indexes earlier this week hit fresh multi month highs. Bulls still have upside near term technical momentum. We are half way through the historically bearish period from September to October, and the stock indexes have so far performed very well. It is my bias that if this autumn were to see serious market turbulence, it would likely have occurred during September. I would not be surprised to see the stock indexes rally during October and then trade sideways and choppy into the end of the year.

Crude oil closed up $1.53 at $77.71 a barrel today. Prices closed nearer the session high today following a bullish weekly U.S. stocks report. Bulls have gained the near term technical advantage in crude. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the September high of $78.86 a barrel.

Natural gas closed up 1.4 cents at $3.965 today. Prices closed near the session high today in quiet trading and saw more tepid short covering in a bear market. The bears still have the solid overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the September high of $4.298.

Gold futures closed up $3.20 at $1,311.60 today. Prices today closed near mid range today and scored another fresh record high. A weaker U.S. dollar and more safe haven buying interest boosted gold again today. Gold bulls have the solid overall near term technical advantage. There are still no early technical clues to suggest a market top is close at hand in the gold market. Prices are in a two month old uptrend on the daily bar chart.

The U.S. dollar index closed down 23 points at 78.97 today. Prices closed near mid range today and hit another fresh eight month low. Bears have the solid overall near term technical advantage. There are no early clues to suggest a market bottom is close at hand. Bulls' next upside price objective is to close prices above solid technical resistance at 81.00.

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Musings: Marcellus Shale....Good News Critique

In the last issue of the Musings, we wrote about good news and bad news for the development of the Marcellus gas shale deposit extending across New York, Pennsylvania, West Virginia and eastern Ohio. This deposit with its multiple shales is considered to be potentially the largest gas deposit in the United States. It’s economics are challenging as the area is hilly, the road access is less than ideal, the land holdings are fractured and the public is not necessarily enamored with oil and gas drilling activities, especially hydraulic fracturing, which is key to the successful development of gas shale deposits. Low natural gas prices are potentially the biggest hurdle for Marcellus gas profitability.

Our article discussed the recently released 12 month natural gas production data for wells in the Pennsylvania portion of the Marcellus through June. The data showed average cumulative production for Marcellus horizontal wells in the 5 county core area of the North Central and Northeast part of Pennsylvania. The new data shows solid production results, and in fact, the average well’s production slightly exceeded the expected production suggested by Chesapeake Energy (CHK-NYSE) in a 2008 investor presentation. That chart was presented to show the company’s anticipated well economics for its foray into the region. Pennsylvania has a long history of oil and gas having been the cradle of the U.S. oil business with.....Read the entire article.


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Phil Flynn: Peak Oil Mirage

The closer we get to peak oil the further it goes away. As high prices collapsed when the global economic system fell apart the world is now awash in oil. Back around the beginning of this decade Fed Chairman Allan Greenspan warned that peak natural gas production in this country could put us in a competitive disadvantage.

Now it appears that some of the same ideas that took us from peak natural gas to an abundant supply could also change the supply outlook for oil. The Financial Times is reporting that, “A band of entrepreneurial oilmen have found an economic way to extract oil from shale rock, fuelling a frenzy for prospects that has pushed up lease prices and lifted hopes of the first rise in onshore US oil production in decades”.

The Times says, “These small independent oilmen had used hydraulic fracturing and horizontal drilling to triple estimates of US natural gas supplies and are now applying that same technology to get oil from shale rock”. The FT says that the method could add one million barrels of oil a day to US supplies in five to eight years replacing 10 percent of US crude imports. And that might just.....Read the entire article.

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Do You Really Understand How To Use Fibonacci Retracements

Do you know how to use the Fibonacci tool in your trading. I mean, do you REALLY know how to use it. We have had a number of requests to do a video on Fibonacci retracements and how they can be used in trading.

We put together this five minute lesson on Fibonacci trading and how we use this important tool to determine turning points in the market. Like all tools, it has its flaws and should be used with other complementary tools like our "Trade Triangle" technology.

As always, our videos are free to watch and there are no registration requirements. We hope you have the time to comment and share if this video helped you understand this important trading tool, or how you're already using it.

We hope you enjoy this brief lesson and it helps you understand how to use this important tool.


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Crude Oil Daily Technical Outlook Wednesday Morning Sept. 28th

Crude oil was higher overnight as it consolidates above the 20 day moving average crossing at 76.16. November has stalled above the 20 day moving average this week as concerns over demand have helped to limit near term gains.

At the same time, stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If November extends the rally off last week's low, the reaction high crossing at 78.86 is the next upside target. Closes below last Thursday's low crossing at 73.58 would renew the decline off this month's low.

First resistance is Monday's high crossing at 77.17
Second resistance is the reaction high crossing at 78.86

Crude oil pivot point for Wednesday morning 76.28

First support is last Thursday's low crossing at 73.58
Second support is the reaction low crossing at 73.08

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Tuesday, September 28, 2010

Crude Oil Rises After an Industry Report Shows Decline in U.S. Stockpiles

Crude oil advanced for the fifth time in six days in New York as an increase in Chinese manufacturing and a decline in U.S. supply bolstered speculation fuel demand in the world’s two biggest energy consumers will rise. Futures retraced yesterday’s 0.4 percent drop after a purchasing managers’ index showed manufacturing in China, the fastest growing major economy, accelerated for a second month. An Energy Department report today will probably show crude inventories in the U.S. fell last week, according to a Bloomberg News survey of analysts.

“There is still reasonable demand out there, and perhaps the sentiment toward economic optimism is still quite positive,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. Crude for November delivery rose as much as 44 cents, or 0.6 percent, to $76.62 a barrel in electronic trading on the New York Mercantile Exchange. It was at $76.45 at 1:37 p.m. Singapore time. Yesterday, the contract decreased 34 cents to settle at $76.18, snapping a four day rally.

Futures are down 3.5 percent this year. For September, the contract has climbed 6.3 percent and is poised for a 1.1 percent gain for the third quarter. An index of China’s manufacturing released today by HSBC Holdings Plc and Markit Economics rose to 52.9, the highest in five months, from 51.9 in August. The data are seasonally adjusted and readings above 50 indicate an expansion. China overtook the U.S. as the world’s largest energy user last year.....Read the entire article.



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Crude Oil's Time of the Year

The Fast Money guys and gal discuss the nature of the energy trade in October. Is it time for crude oil to rally?



All 7 Traders Whiteboard videos in one place!

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Stock Market and Commodities Commentary For Tuesday Evening Sept. 28th

The U.S. stock indexes closed firmer today despite a weak consumer confidence index reading that sunk the U.S. dollar. The indexes this week have hit fresh multi month highs. Bulls still have upside near term technical momentum as the stock market continues to "climb a wall of worry." We are half way through the historically bearish period from September to October, and the stock indexes have so far performed very well. It is my bias that if this autumn were to see serious market turbulence, it would likely have occurred during September.

Crude oil closed down $0.41 at $76.11 a barrel today. Prices closed near mid-range again today. Bulls and bears are on a level near term technical playing field. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the September high of $78.86 a barrel.

Natural gas closed up 4.5 cents at $3.961 today. Prices closed near mid range again today and saw tepid short covering in a bear market. The bears still have the solid overall near term technical advantage. Prices have seen a bearish downside "breakout" from a sideways trading range at lower price levels.

Gold futures closed up $9.80 at $1,308.40 today. Prices today closed near the session high, scored another fresh record high and scored a big and bullish "outside day" up on the daily bar chart, whereby the high is higher and low is lower than the previous day's trading range, with a higher close. A weaker U.S. dollar and safe haven buying interest following some dour U.S. economic data today boosted gold. Gold bulls have the solid overall near term technical advantage and gained more power today.

The U.S. dollar index closed down 33 points at 79.22 today. Prices closed nearer the session low today and hit another fresh eight month low. Prices also scored a bearish "outside day" down on the daily bar chart. Bears have the solid overall near term technical advantage.


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A Breakthrough Invention in the Oil and Gas Market?

From Keith Schaefer at "Oil and Gas Investments Bulletin"....

An oil and gas entrepreneur in the US has devised an inexpensive way to capture oil and natural gas vapors around a well site, and sell them to make money. These vapors are often flared (burned), or vented into the atmosphere, and trust me, if people really knew how much oil and gas was flared around the world every day, even in first world countries, the media outcry would make the "water fracking" issue look like a kindergarten party. In fact satellite images show intense flaring occurring, principally in third world countries. Shell has just committed $2 billion to reduce flaring from its operations in Nigeria.


“Air pollution requirements related to oil and gas production from the states are becoming increasingly restrictive,” says co-inventor Dr. Paul Trost. And Trost's solution can be profitable. He adds that a study near Denver in the hydrocarbon rich Denver Basin containing almost 8000 oil and gas wells showed the “fugitive” hydrocarbons, gases emanating from production tanks can be captured and sold at a profit rather than burned in a flare. Just like water evaporates in a dish, oil and gas evaporates from the production tank at a well site, and escapes into the atmosphere or alternately is burned (flared).

The problem becomes bigger when a combination of gas and oil are produced with the gas being injected into a pipeline having pressure. The oil then is also pressurized and the pressurized gases (like gas in a pop can) then “flash” or boil off like a shaken beer can. In certain areas these gases are captured and directed to a flare for burning rather than being allowed to vent to the atmosphere.

Trost’s invention, called the V3RU (Variable Volume Vapor Recovery Unit), is different than other vapor recovery systems in that it uses a flexible accumulator (bag) to capture the vapors. “It swells up like it is taking a deep breath,” says Trost. “The bag thus captures both the flash gas and also any contained liquids. We exhale it slowly into compressor for injection and sale to a pipeline. It’s a variable volume bag and it’s safety rated. The alternative energy industry already uses it around breweries located in or adjacent to cities.” Without a bag, Trost says oxygen can get at the vapour and then it won’t meet pipeline specifications. The gas is then useless and must be flared. Using a bag allows some back pressure to be used, so it won’t let air in, and the gas retains its purity and suitability for pipeline sale.

Trost says the payout for the V3RU increases as the oil content of the natural gas increases, and also as the oil gets lighter (has a higher API rating) and contains more condensate. Typically the V3RU will range in cost from $8,000-$30,000. He gives a real life example of a gas/condensate well in Colorado that was producing about 30 BOPD and 400 mcfd, but high pipeline pressures were causing a large amount of “flash” gas, containing both recoverable oil and gas, was being lost. Application of the V3RU will allow the operator was able to capture an additional 8-10 boe/d, resulting in roughly a 2 year payout.

The product has been used almost exclusively in the Denver Basin, Trost says, but it is now starting to be used in other areas. Trost is a board member of Nextraction Energy (NEX-TSXv), which will be using the V3RU vapor recovery system to meet air quality regulations at Nextraction’s newly discovered gas-condensate well located at the Pinedale Anticline play in Wyoming.

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Georgian President: No Problem Getting Oil Financing

Georgia President Mikhail Saakashvili says the country is having no difficulties getting financing for energy projects.




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Phil Flynn: Take No Quarter, Give No Quarter

Or at the very least beware of the end of the US fourth quarter. The quarter was a dream especially the month of September for stock market and precious metal bulls. Yet it seems as the quarter is coming to an end the markets with the most strength are running out of steam as funds and traders look to book profits as the markets failed to take out key resistance. For gold and all the talk about $1300.00 per once, the market never officially made it there and at the end of the quarter it seems that close is good enough. So unless we get some bearish news on the dollar it seems that 1300 an ounce won’t be hit at least until the next quarter. The stock market is rounding out a profit taking top as traders look to book profits from the best September since 1939.

Yes this is a September to remember but also remember that this is a profit taking business and it appears that unless the data gets us real excited the correction should start. The market in gold and stocks has been helped by the Fed. Ben Bernanke and his band of money printing merry men have engineered this latest gold and stock market rally. Now if only they can get it to trickle down to the oil market. Oil prices, while higher, are a bit less inclined to get excited about the recent stock market strength. With supply near record high and high stock prices not necessarily being reflected in real oil demand oil traders are less.....Read the entire article.

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FREE GOLD ALERT!

Short term traders should now be on the sidelines in gold as a daily Trade Triangle flashed an exit signal at $1,291.70. Long and intermediate term traders should continue to hold long positions in gold.

Here is a preview of our MarketClub Trade Triangle Chart Analysis and Smart Scan technology






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Crude Oil Technical Outlook For Tuesday Morning Sept. 28th

Crude oil was lower overnight as it consolidates some of last Friday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term.

If November extends the rally off last week's low, the reaction high crossing at 78.86 is the next upside target. Closes below last Thursday's low crossing at 73.58 would renew the decline off this month's low.


First resistance is Monday's high crossing at 77.17
Second resistance is the reaction high crossing at 78.86

Crude oil pivot point for Tuesday morning is 76.40

First support is last Thursday's low crossing at 73.58
Second support is the reaction low crossing at 73.08

Just click here for your FREE trend analysis of crude oil ETF USO

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Monday, September 27, 2010

Oil Tumbles as Moody's Downgrade Irish Bank Rating Intensified Worries About Economies in the Eurozone.

Volatility in oil trading increased as the US market opened. WTI crude oil for November delivery initially soared to as high as 77.17 after Trichet's comments on the Eurozone's outlook. Yet, gains were pared and price tumbled to 75.52 as Moody's downgrade of Anglo Irish Bank Corp's debt rating intensified worries about out peripheral economies in the Eurozone.

Crude oil ended the day flat at 76.52. Gold moved narrowly around 1300 as heightened sovereign concerns drove capitals to safe haven assets. Price settled at 1298.6, unchanged from last Friday's close. Profit taking was seen Asian session today.

ECB president Trichet acknowledged recent economic data has been 'better than expected' and said that the central bank expects 'the recovery to proceed at a moderate pace, with a positive underlying momentum but also with uncertainty surrounding the outlook'. The economy is 'out of the recession' but he and other members in the governing Council will remain cautious and prudent for this year and next.

Moreover, 'the rate of inflation could increase slightly in the short term but should remain moderate over the policy-relevant horizon. The comments were more upbeat than what the Fed Chairman Ben Bernanke said at a Princeton University conference last week. Bernanke said, despite stimulus measures, the US economy is only recovering at a slower pace than the central bank had expected. The Fed signaled.....Read the entire article.

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Kuwait Worried About OPEC Members' Output Quota Compliance

Kuwait's oil minister Monday said the country is worried about compliance with production quotas by members of the Organization of Petroleum Exporting Countries and will discuss the matter at the group's forthcoming meeting. Sheikh Ahmad Abdullah Al-Sabah also said the 12 member OPEC group is unlikely to change production quotas at the next meeting in Vienna, scheduled for Oct. 14, as current oil prices are "comfortable".

Al-Sabah told reporters he isn't concerned about global crude oil demand, but is worried about OPEC members conforming to production quotas, saying there have been "slippages here and there". "Compliance with their (OPEC) quotas is very important," said the Kuwaiti minister, who is scheduled to meet his Indian counterpart during his three day visit to India.

Al-Sabah's comments come as some member states produce far more than the amount allotted to them under OPEC's production quota system. Higher production by any member could lead to oversupply in the market and hurt global prices. Last week, the oil minister of Angola, an OPEC member, said the country is still producing 1.9 million barrels a day of oil, according to the Angola Press news agency. The southern African nation says its quota is 1.656 million barrels a day, but data from OPEC's general secretariat show Angola's allocation is 1.517 million barrels a day.....Read the entire article.

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Crude Oil Declines as Dollar Rises, Forecasts of U.S. Stockpile Increase

Crude oil fell in New York, snapping four days of gains, as the dollar strengthened against the euro and analysts forecast an increase in U.S. gasoline supplies, signaling demand recovery in the largest crude user may falter. Futures slipped as U.S. equities dropped and the euro weakened from a five month high against the dollar after renewed signs of debt problems at European banks and countries such as Ireland and Portugal. An U.S. Energy Department report tomorrow may show gasoline stockpiles climbed to the highest level in six months.

“We really haven’t made any headway into stockpiles,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Activity hasn’t improved. The crude market followed equity markets overnight.” The November contract lost as much as 40 cents, or 0.5 percent, to $76.12 a barrel in electronic trading on the New York Mercantile Exchange, and was at $76.26 at 10:54 a.m. Singapore time. Yesterday it added 3 cents to settle at $76.52. Prices are down 4 percent this year.

The dollar traded at $1.3428 per euro after rising 0.3 percent yesterday. A stronger U.S. currency limits investor need for assets to hedge against inflation. Brent crude oil for November delivery declined as much as 42 cents, or 0.5 percent, to $78.15 on the London based ICE Futures Europe exchange. Yesterday it fell 30 cents, or 0.4 percent, to settle at $78.57. November Brent’s premium to the corresponding West Texas future in New York narrowed to $1.96 a barrel today, down from $3.45 a week earlier.....Read The Entire Article.


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Where is Crude Oil and Gold Headed on Tuesday?

CNBC's Matt Nesto discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.



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Stock Market and Commodities Commentary For Monday Evening Sept. 27th

The U.S. stock indexes closed weaker today on some profit taking pressure from recent gains. The indexes early on today hit fresh multi month highs. Bulls still have some upside near term technical momentum as the stock market continues to "climb a wall of worry." We are half way through the historically bearish period from September to October, and the stock indexes have so far performed very well. It is my bias that if this autumn were to see serious market turbulence, it would likely have occurred during September.

Crude oil closed down $0.21 at $76.28 a barrel today. Prices closed near mid range today. Bulls and bears are on a level near term technical playing field. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the September high of $78.86 a barrel.

Natural gas closed down 9.3 cents at $3.916 today. Prices gapped lower on the daily bar chart, hit a fresh contract low and closed near mid range today. The bears have the solid overall near term technical advantage and gained more power today as prices saw a bearish downside "breakout" from the recent sideways trading range at lower price levels.

Gold futures closed up $0.10 at $1,298.20 today. Prices today closed near mid range in quieter trading as the market pauses and consolidates after setting a fresh all time record high of $1,301.60 an ounce on Friday. A stable U.S. dollar today limited buying interest in gold. However, some fresh economic and financial worries coming out of the European Union did limit selling interest in gold. Bulls still have the solid overall near term technical advantage.

The U.S. dollar index closed down 10 points at 79.50 today. Prices closed nearer the session low today and hit a fresh eight month low. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 82.00.


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Crude Oil Trades Near Two Week High on Optimism Fuel Demand to Increase

Crude oil futures were little changed as U.S. stocks rebounded from an early decline and the dollar fluctuated against the euro. Oil rose 72 cents in the last hour of trading to erase a loss as the Standard & Poor’s 500 Index rebounded. The greenback was steady against the euro on renewed signs of debt problems at banks in the 16 nation region. “The equity market is back up unchanged, that brings crude unchanged,” said Richard Ilczyszyn, a market strategist at Lind-Waldock, a broker in Chicago. “Crude oil is very susceptible to currencies and equities right now.”

Crude for November delivery rose 3 cents to settle at $76.52 a barrel on the New York Mercantile Exchange. The price ranged from $75.52 to $77.17, the highest level since Sept. 14. “After a brief period over the past few weeks where the oil market appeared to disconnect from equities, the linkage appears to be alive and well again,” analysts including Lawrence Eagles at JPMorgan Chase & Co. said in a report today. The Reuters/Jefferies CRB Index of 19 commodities rose 0.2 percent to 284.08 at 2:30 p.m. in New York. The dollar gained 0.1 percent against the euro to $1.3474. November crude rose 2.1 percent last week as the dollar weakened after the Federal Reserve said it may take more steps to ease monetary policy.

The Standard and Poor’s index rose 0.1 percent at 2:30 p.m. before falling 0.6 percent to 1,142.16 at 4:28 p.m. Brent crude oil for November delivery fell 30 cents, or 0.4 percent, to settle at $78.57 a barrel on the London based ICE Futures Europe exchange. ‘Hard to Get Bullish’ “The dollar and the stock market are the two drivers,” said.....Read the entire article.


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Gold's Net Speculative Long Positions Dropped for the First Time in 7 Weeks

Crude oil price changed little in Asian session after Friday's rally but the near term outlook remained firm as the dollar weakened. Current trading at 76.6, the benchmark WTI contract stayed in the middle of the 70-80 trading range. The chance of going higher and lower is balanced for today but it's unlikely for a break out of the range. Gold price moves narrowly around 1300. While the macroeconomic backdrop is favorable for further gains, a pullback on profit taking cannot be ruled out as the metal has advanced for 7 out of the past 8 weeks.

Dollar's weakness is a main theme sending commodities higher in recent weeks. The USD Index plunged below 80 for the first time since March last week and has dropped -10% from June's peak. USD should continue to be pressured as long as speculations on Fed's additional QE measures remain intact. Today in Asia, EURUSD soared to as high as 1.3494 before retreating. Investors trimmed investments on the euro as Ireland will disclose the final expenses of bailing out Anglo Irish Bank Corp. later this week. In fact, the euro fell against 15 out of 16 currencies as concerns about banking crisis in the Eurozone resurfaced. The euro's weakness against dollar is only mild in comparison with others. USDJPY changed little at 84 although the government may implement a stimulus plan of up to 4.6 trillion yen to boost recovery. Meanwhile the BOJ Governor Masaaki Shirakawa said the central bank is 'ready to implement appropriate action in a timely manner if judged necessary'. A deflationary Japanese economy and the government's currency intervention and stimulus policy are theoretically negative for Japanese yen. Yet, strength in the currency indicates that the effects of a unilateral intervention are limited.

We have a light calendar today. Japan's corporate service price contracted -1.1% in August, slightly better than expectations of -1.2% and unchanged from July, while trade surplus stayed unchanged at +0.59 trillion yen in August from a month ago. The money supply (M3) in the Euro zone probably grew +0.3% y/y in August, following a +0.2% increase in July.
Commitments of Traders:

Speculators showed mixed expectations on the energy complex as they were more bullish on fuels than crude oil. Net length for crude oil declined -4 437 to 43 900 contracts as the Enbridge pipeline 6A resumed operations earlier than market expectations. Net lengths for heating oil and gasoline increased, by 7 083 and 4 367, to 17 891 and 35 232 respectively. Net short for natural gas rose for a 7th week even though price has fluctuated around the $4 level. Traders lacked incentives to trade the futures as we saw both long and short positions declined during the week but the drop in the former was 6 times higher. The fundamental outlook was largely unchanged with gas supply remaining sufficient and hurricanes failing to disrupt production activities.

Performance was also discordant in the precious metal complex. Net length for gold slipped for the first in 7 weeks although price has set new record highs. Some traders entered short positions as they viewed the rally overstressed. While some market participants began to worry about a gold price bubble, gold has only set a record in USD terms but remained below June's levels in terms of many other currencies. Moreover, it's far from the peak when calculated in real terms. We believe gold's long term uptrend remains intact if the low rate environment persists. Net lengths for silver and platinum increased further while that for palladium dropped in concert with price decline.

Let's go to the charts on Non-Commercial Net Positions


The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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Phil Flynn: The Oil Market Finally Decided To Join The Commodity Rally

The oil market finally decided to join the commodity rally after spending most of the week on the sideline. The power of the Fed cannot be ignored forever as the threat of stimulus is always lurking around the corner. With most other commodities putting in strong performances, oil and the products followed but only reluctantly. Some say the durable goods number was the catalyst or strong data from Germany yet more than anything was the rising tide of all commodities that floated the oil market boat. Natural gas is collapsing as the weight of oversupply begins to take its toll.

With Gulf storms seemingly not a threat to supply and the fact that a falling dollar really does not matter that much to this market, gas could start to fall even harder. The trade likes to play crude off of the gas market and that should lead to further downside pressure. Do you remember when OPEC seemed to matter? Dow Jones reports that the Organization of Petroleum Exporting Countries is unlikely to change production quotas at its next meeting in Vienna, scheduled for Oct. 14, as current oil prices are "comfortable," Kuwait's Oil Minister said Monday. Sheikh Ahmad Abdullah Al-Sabah added that he isn't concerned about global crude oil demand but is worried about.....Read the entire article.

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Crude Oil Technical Outlook For Monday Morning Sept. 27th

Crude oil was steady to slightly higher overnight as it extends last Friday's rally above the 20 day moving average. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term.

If November extends the rally off last week's low, the reaction high crossing at 78.86 is the next upside target. Closes below last Thursday's low crossing at 73.58 would renew the decline off this month's low.

First resistance is the overnight high crossing at 76.89
Second resistance is the reaction high crossing at 78.86

Crude oil pivot point for Monday morning is 75.94

First support is last Thursday's low crossing at 73.58
Second support is the reaction low crossing at 73.08

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Sunday, September 26, 2010

SP500 Internals, Dollar & Gold Pre-Week Analysis

From Chris Vermuelen.....The Gold and Oil Guy

After a fierce equities rally on Friday, which I figured would happen, just not that strong; I have to wonder if there is some event or major decision in the works we don’t know about?

Friday’s rally could be something simpler like window dressing by the funds. This is when the funds buy up all the top performing stocks for month end reporting. They do this so that their investors think they are on the ball and know what they are doing. Window dressing will end Monday and from there we could see some profit taking (selling) start. But for all we know Obama could be extending the tax cuts for everyone or cutting payroll taxes etc…

It would only take one of these events to trigger a sharp up move in the market and that could be what Friday’s move was anticipating. That being said volume has remained light and during low volume session the market has a tendency to move higher. Sell offs in the market require strong volume to pull the market down, so until volume picks up there could still be higher prices just around the corner.

Let’s take a look at some charts…

SPY – SP500 60 Minute Intraday Chart
Last week we saw the market reverse to the down side with a strong end of say sell off. That set the tone for some follow through selling and for any bounces to be sold into. That being said, the market always has a way of surprising traders and it did just that on Friday gapping above Thursday’s reversal high causing shorts to cover and the typical end of week light volume drift to help hold prices up.


NYSE Market Internals – 15 Minute Chart
I like to follow some market internals to help understand if investors are becoming fearful or greedy. It also helps me gauge if the market is over bought or oversold on any given day.

These three charts below show some interesting data.
Top Chart – This indicator shows me if the majority of shares traded are bought or sold. When the red line spikes up and trades above 5 then I know the majority of traders are buying over covering their shorts. I call this panic buying because traders are buying in fear that the market will continue higher and they will miss the train. When everyone is buying you know a pullback is most likely to occur.

Middle Chart – This is the NYSE advance/decline line. When this indicator is below -1500 then the market is over sold and bottom pickers/value buyers will step in and nibble at stocks. But when this indicator is trading over 1500 then you know the market is overbought and there should be some profit taking starting any time soon.

Bottom Chart – This is the put/call ratio and this tells us how many people are buying calls vs put options. When this indicator is below 0.80 level more traders are bullish and buying leverage. My theory is if they are buying leverage for higher prices, then they have already bought all their stocks and now want to add some leverage for more profits. When I see the majority of traders bullish then I an sure to tighten my stops (if long) as top my be forming.

Putting the charts together – When each of these charts are trading in the red zone know I must be cautious for any long positions because the market just may be starting to top. Or a short term correction may occur.


UUP – US Dollar Daily Chart
The US dollar has been under some serious pressure with all the talk about quantitative easing (printing money). Obviously the more the Fed’s print the less value the dollar will have. The chart below shows a green gap window which I think once it is filled should put the dollar in a oversold condition for a short term swing trade bounce before heading back down. A bounce in the dollar will put pressure on equities, gold and oil.


GLD – Gold Daily Chart
Gold continues to grind its way up. This move is looking very long in the teeth and pullback will most likely be sharp.


Weekend Trading Conclusion:
In short, equities and gold continue to grind their way higher while the US dollar continues its grind lower. When I say the market is grinding I am implying the market is over extended and a reversal any day should occur.

Financial stocks like Goldman (GS) which typically leads the market has been strongly underperforming over the past week. Insiders were selling GS very strongly which is strange and makes me wonder what’s up there? With the financial stocks underperforming it sure looks like a market reversal is just around the corner.

If Friday’s rally was simply window dressing by the funds then it should end on Monday and with any luck we will see a sharp reversal to the down side early this week.

You can get my ETF and Commodity Trading Signals if you become a subscriber of my newsletter. These free reports will continue to come on a weekly basis; however, instead of covering 3-5 investments at a time, I’ll be covering only 1. Newsletter subscribers will be getting more analysis that’s actionable. I’ve also decided to add video analysis as it allows me toe get more into across to you quicker and is more educational, and I’ll be covering more of the market to include currencies, bonds and sectors. Before everyone’s emails were answered personally, but now my focus is on building a strong group of traders and they will receive direct personal responses regarding trade ideas and analysis going forward.

Let the volatility and volume return!

Chris Vermeulen
The Gold and Oil Guy .com

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Lukoil, Investors Buy $2.4 Billion of Company's Shares From ConocoPhillips

Lukoil, Russia’s largest oil producer not controlled by the state, together with a group of investors bought almost 5 percent of Lukoil’s shares from ConocoPhillips [COP] for $2.4 billion, the Moscow based company said.

Lukoil and the investor group bought 42.5 million shares in the form of American depositary receipts at a price of $56 each. The purchase, arranged by UniCredit Bank AG, was for less than half of an 11.6 percent holding that ConocoPhillips had made available under an option that expired yesterday, Lukoil said in an emailed statement.

The deal aims at enhancing the company’s attractiveness to investors. “It allows us to support our share prices, since the transaction is funded by the group’s internal resources, without increasing the company’s total debt,” Lukoil Vice President Leonid Fedun said in the statement today.....Read the entire article.

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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Saturday, September 25, 2010

Commodity Corner: Crude Oil, Natural Gas End the Week Higher

A positive change in a German business indicator helped to bolster the euro against the dollar Friday, which in turn gave crude oil a nice bump to end the week.

The price of a barrel of oil for November delivery settled at $76.49 a barrel, a $1.31 improvement from Thursday, after the Munich based IFO Institute for Economic Research announced a slight improvement in Germany's business climate for September. Using 100 as the seasonally adjusted benchmark, IFO reported a business climate index of 106.8 for September 2010. In comparison, the figures for the preceding month and September 2009 were 106.7 and 91.3, respectively. The IFO Business Survey revealed that manufacturing firms remain encouraged by export opportunities. However, they expect the pace of the export market to slow down six months out.

Oil also benefited from rallying equities markets. The Dow Jones was up 1.86% as of 4 p.m. Friday while the S&P 500 and Nasdaq were up 2.12% and 2.33%, respectively. The intraday range for crude was $74.66 to $76.64, and oil ended the week up 2.2%.

The diminishing likelihood that Tropical Storm Matthew will affect oil and gas infrastructure in the Gulf of Mexico placed downward pressure on natural gas prices, which lost 14 cents Friday to settle at $3.88 per thousand cubic feet. Nevertheless, October natural gas ended the week 1.5% higher compared to the settlement price last Monday. Natural gas traded from $3.87 to $4.04 on Friday.

Gasoline for October delivery settled three cents higher at $1.95 a gallon. The front month contract price fluctuated between $1.91 and $1.96. For the week, gasoline remained flat.

Courtesy of Rigzone .Com

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Crude to Remain Range Bound Under OPEC's Manipulation

The dovish September FOMC statement heightened speculations that the Fed will announce additional monetary easing measures later this year. Provision of extra liquidity to the market is negative for USD. The dollar index dropped below 80 for the first time since March 2010. Weakness in USD drove commodities higher. WTI crude oil rallied, after a week of selloff in the prior week due to earlier than expected resumption of operation in the 6A pipeline, as a lower dollar increased it appeal despite unexpected rise in crude inventory. Precious metals strengthened with gold reaching rising above 1300 for the first time on record while silver outperforming its counterparts. Base metals were generally higher as robust demand from China boosted confidence in the complex's outlook.


Crude oil rallied on Friday as driven by strength in Wall Street. WTI crude oil for November delivery jumped to 76.68, the highest level in more than a week, before settling at 76.49, up +3.84% during the week. Meanwhile, corresponding contract for Brent crude gained +0.84% during the week. WTI-Brent spread widened to 4.9, a level not seen since mid-May, on Wednesday, as crude inventory surprisingly increased despite shutdown of the Enbridge pipeline, before narrowing to 2.4 on Friday.


When sovereign crisis in the Eurozone reached its peak in May/June, rally in the dollar and selloff in growth assets had sent crude oil price to as low as 64.24. As the concerns gradually abated and risk appetite increased slowly, oil buyers became active again and sent prices above 80 in August. Nevertheless, crude oil price has remained within a range of 70 and 80 for most of the time. In fact, we expect the 'range-bound' situation will continue for the rest of the year as we see price below 70 would attract buying, e.g. from the Chinese government as strategic reserves, and trigger 'intervention' by the OPEC while price above 80 is unsustainable giving growing non-OPEC production and ample OPEC spare capacity.

China's strategic petroleum reserve (SPR) plan aims at completing the 3 phases of oil reserve base construction in 15 year (around 2020). While the sky-high oil price in 2008 had discouraged stockpiling, China's oil imports rebounded sharply in March 2009 when oil price stabilized after a sharp selloff. In 2010, China has been importing a large amount of oil and a record high being set in June 2010 (at 22.27M metric tons). We believe part of the oil imports went to the country's national oil reserves and the commercial oil reserves of China National Petroleum Corporation (CNPC) and the Sinopec Group. Now that the country's is in the middle of the 15-year plan and, given the opportunistic nature of the SPR buying, it's likely for the country to accelerate the pace of stockpiling when global oil price fall below 70,  the lower boundary of the trading range.

OPEC is in control of the world's 40% oil supply and has proven capability of 'adjusting' oil prices using its output. The cartel appears satisfied with recent price levels and some oil ministers expressed they preferred oil to trade at around 70-80. Saudi Arabia's King Abdullah said that 75 is a level he wants. Therefore, it's reasonable to believe the cartel will do something, i.e. cut production, to defend the floor.

Yet OPEC's supply is a 2-edged sword. While it may cut production so that oil price will not fall to a level that hurts oil investment and national revenues, its abundant spare capacity is limiting the upside of oil price.

According to the September Short-Term Energy Report by the US Energy Department, OPEC's crude oil production will increase +0.3M bpd and 0.5M bpd 2010 and 2011, respectively, with non-crude petroleum liquids expected to increase by 0.6M bpd 2010 and 0.7M bpd in 2011. Spare capacity in the cartel should remain near 5M bpd compared with 4.3M bpd in 2009 and 1.5M bpd in 2008.

Courtesy of Oil N Gold.Com....Here's the Precious Metals Weekly Report

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Friday, September 24, 2010

Phil Flynn: How Fed Saved Oil And OPEC From A Total Price Collapse

The Federal Reserve promise to maintain the target range for the federal funds rate at 0 to 1/4 percent and maintain its existing policy of reinvesting principal payments from its securities holdings to provide additional accommodation or a second round of quantitative easing if necessary, helped the oil market ignore some of the most bearish fundamentals in decades. Just this week the Energy Information Agency reported that total U.S domestic oil product inventories hit 768.1 million barrels which is the highest level since 1990 since the Energy Department began reporting weekly data.

The figure doesn’t even include ethanol stockpiles which add to the bearishness and the fact that demands in this shoulder season is even weaker than normal. With an economic outlook that is deteriorating and a glut of supply, oil prices should be getting annihilated yet despite this historically bearish outlook, oil losses in the weakest demand period of the year are only modest. The Feds impact on the price of oil is an undeniable fact and there are many reasons for that. First and foremost is the impact of that policy on the.....Read the entire article.

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New Video: Let The Carnival Begin!

Here is a market that we like a lot more than the US market. We really like the way its acting and it looks set to take out the highs that were seen in December of 2009. If that is the case, then we could see this market make all time highs pretty quickly. You definitely want to have
this one on your radar screen.

In this new short video, I show you what I'm looking at and how we showcased this market last week when we did our last webinar. This webinar is set to be rebroadcast on Friday, September 24th at 5pm EST/9pm GMT.

This market is still looking good and looking strong. Pay very close to it this Friday because if it closes well, it should bode well for the following week.

As always our videos are free to watch and there is no need for registration.

Click Here to watch "Let The Carnival Begin!"

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Crude Oil Technical Outlook For Friday Morning Sept. 24th

Crude oil was steady to slightly higher overnight as it consolidates some of the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If November extends this decline, the reaction low crossing at 73.08 is the next downside target. Closes above the 10 day moving average crossing at 75.99 would confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 75.92
Second resistance is the 10 day moving average crossing at 75.99

Crude oil pivot point for Friday morning is 74.79

First support is Thursday's low crossing at 73.58
Second support is the reaction low crossing at 73.08

How to Use Money Management Stops Effectively

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Thursday, September 23, 2010

Petrobras Raises $70 Billion in World's Largest Share Sale

Petroleo Brasileiro SA, the state controlled oil company, raised 120.4 billion reais ($70 billion) from the Brazilian government and other investors in the world’s largest share sale as it seeks cash to develop offshore fields.

Petrobras, based in Rio de Janeiro, sold 2.4 billion common shares for 29.65 reais each and priced 1.87 billion preferred stock at 26.30 reais apiece, according to a regulatory filing from the company today. That represents a discount of about 2 percent below today’s closing price.

The company is selling stock to fund development of offshore oil fields such as Tupi, the largest discovery in the Americas in three decades, and to preserve its investment grade credit rating. As part of the share sale, Petrobras issued about $42.5 billion of stock to Brazil’s government in exchange for the rights to develop 5 billion barrels of oil reserves.

“It’s positive that they managed to get such strong demand and the price was above market expectations,” said Mirela Rappaport, who helps manage about $100 million at Investport in Sao Paulo, including Petrobras shares. “In the long run, what will be important for Petrobras is if oil prices go up and for how long and at what cost it will take to develop oil reserves”.....Read the entire article.


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Where is Crude Oil and Gold Headed on Friday?

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



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Stock Market and Commodities Summary For Wednesday Evening

The S&P 500 index closed lower due to profit taking on Thursday as it consolidated some of the rally off August's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1097.04 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, the 75% retracement level of the April-July decline crossing at 1152.70 is the next upside target. First resistance is Tuesday's high crossing at 1143.70. Second resistance is the 75% retracement level of the April-July decline crossing at 1152.70. First support is today's low crossing at 1117.90. Second support is the 20 day moving average crossing at 1097.04.

Crude oil closed higher on Thursday as it consolidates some of the decline off last week's high. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If November extends the decline off last week's high, August's low crossing at 71.49 is the next downside target. Closes above last week's high crossing at 78.86 are needed to renew the rally off August's low. First resistance is the 10 day moving average crossing at 76.19. Second resistance is last Monday's high crossing at 78.86. First support today's low crossing at 73.58. Second support is August's low crossing at 71.49.

Natural gas closed higher on Thursday however, profit taking tempered early gains and the low range close sets the stage for a steady to lower opening on Friday. However, stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If October extends last week's rally, the 38% retracement level of the June-August decline crossing at 4.321 is the next upside target. Closes below Monday's low crossing at 3.806 would temper the near term friendly outlook. First resistance is last Friday's high crossing at 4.060. Second resistance is the 38% retracement level of the June-August decline crossing at 4.321. First support is Monday's low crossing at 3.806. Second support is August's low crossing at 3.697.

Gold closed higher on Thursday as it extends the rally off July's low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices is possible near term. Upside targets will now be hard to project as it extends this year's rally. Closes below the 20 day moving average crossing at 1260.06 would confirm that a short term top has been posted. First resistance is Wednesday's high crossing at 1298.00. First support is the 10 day moving average crossing at 1272.60. Second support is the 20 day moving average crossing at 1260.06.

The U.S. Dollar posted an inside day with a higher close on Thursday as it consolidates some of the decline off August's high. The mid-range close sets the stage for a steady opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends the decline off August's high, the 87% retracement level of this year's rally crossing at 78.66 is the next downside target. Closes above the 20 day moving average crossing at 82.20 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 81.39. Second resistance is the 20 day moving average crossing at 82.20. First support is Wednesday's low crossing at 79.77. Second support is the 87% retracement level of this year's rally crossing at 78.66.

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Phil Flynn: The Autumn Un-Equinox

Gold sizzles, oil fizzles in the aftermath of the Fed promise to reinflate the economy. Oil and the leafs are beginning to fall as demand for oil and the economic outlook continue to weigh heavily. The disparity between gold and oil recently seem to reflect the despair that we are feeling from the FOMC committee or perhaps the Obama economic team. Now this morning the market fears that demand for oil may fall in Europe as well after a euro zone purchasing managers' survey fell to 53.8 in September from 56.2 in August the slowest pace in 7 months.

While their manufacturing sector is still expanding the market was looking for a number closer to 55.7%. This slower pace comes a day after a very bearish Energy Information Agency report that showed a surprise increase in crude supply and a depressing feeling on demand. If you were worried about the impact that the Enbridge pipeline shutdown and inclement weather might have had on supply I guess you shouldn’t have because supplies increased anyway. Crude defied expectations rising by.....Read the entire article.

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