Wednesday, June 20, 2012

Crude Oil Breaks Through Strong Support Giving Crude Bears Downside Momentum

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Crude oil [August contract now] closed down $3.18 a barrel at $81.16 today. Prices closed near the session low today and hit a fresh 8 1/2 month low. A bearish weekly DOE report, a firmer U.S. dollar index and a downbeat assessment of the U.S. economy by the Federal Reserve combined to sink the crude oil market today. The crude bears have the solid overall near term technical advantage and gained fresh downside momentum today.

Natural gas closed down 1 1/2 cents at $2.559 today. Prices closed nearer the session low today after hitting a fresh four week high early on. Bulls have gained upside near term technical momentum recently to suggest a market low is in place. Bulls and bears are on a level near term technical playing field.

Gold futures closed down $7.00 an ounce at $1,616.00 today in volatile trading. Prices closed nearer the session high and moved well up from the daily low of $1,590.50 following the FOMC statement. After an initial bearish reaction to the FOMC statement, traders digested the wording and reckoned the Fed has indeed laid the groundwork for more aggressive easing of monetary policy in the near future. The key “outside markets” were bearish for gold today as the U.S. dollar index was near steady but up from lower levels early today.

The September U.S. dollar index closed up 22 points at 81.81 today. Prices closed nearer the session high today and saw support on some fresh safe haven demand after the FOMC's downbeat assessment of the U.S. economy. Bulls have the overall near term technical advantage but are fading as prices have been trending lower for nearly three weeks.

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