Friday, January 28, 2011

Crude Oil Trades Flat as U.S. GDP Numbers Take Center Stage

If you put your ear to the street it seems every one is expecting Fridays GDP report to show that the U.S. probably grew at a faster pace in the fourth quarter of 2011 on the biggest gains in consumer spending in four years and rising exports. So why has crude oil only stabilized overnight as traders look to the U.S. GDP report today to give them guidance? Are the fundamentals in crude oil that weak?

The threat of further tightening in China and the possible reigning in of QE 2 in the first half of 2011 is starting to "loom large" in trader chatter on the street. But maybe, just maybe it's OPEC to the rescue. Farouk al-Zanki, the head of Kuwait Petroleum Corp, told Reuters at the World Economic Forum in Davos, Switzerland, he was concerned high oil prices might contribute to the start of another global downturn as they did in 2008. "The first signs are emerging that OPEC is responding, with a thinly veiled call for an emergency OPEC meeting by a Kuwaiti official and indications others are unilaterally raising output," JPMorgan analysts led by Lawrence Eagles said.

Crude oil rebounded to 85.9 after plunging to as low as 85.11 on Thursday. Heating oil and gasoline prices also stabilized while natural gas fell for a second day even though inventories in the U.S. took a dip. Gold got some support above 1300, near the critical 1296.40 level, but most traders maintain a near term bearish outlook and a further decline in gold prices.

It's Friday and here is your pivot, resistance and support numbers for crude oil, natural gas and gold. And rise or fall we'll be on the sidelines well before the close.....

Crude oil was slightly higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the 50% retracement level of the May-January rally crossing at 83.06 is the next downside target. Closes above the 20 day moving average crossing at 90.08 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 88.82. Second resistance is the 20 day moving average crossing at 90.08. First support is the 38% retracement level of the May-January rally crossing at 85.51. Second support is the 50% retracement level of the May-January rally crossing at 83.06. Crude oil pivot point for Friday morning is 86.17.

Natural gas was lower overnight as it extends the decline off Monday's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends this week's decline, the 62% retracement level of the October-January rally crossing at 4.225 is the next downside target. Closes above the 10 day moving average crossing at 4.513 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.492. Second resistance is Monday's high crossing at 4.823. First support is the overnight low crossing at 4.272. Second support is the 62% retracement level of the October-January rally crossing at 4.225. Natural gas pivot point for Friday morning is 4.376.

Gold was lower overnight as it extends this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. Closes above the 20 day moving average crossing at 1366.50 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1344.20. Second resistance is the 20 day moving average crossing at 1366.50. First support is the overnight low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Friday morning is 1325.20.


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