Where is Crude Oil Headed on Wednesday?

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 Tuesday Evening

Crude oil closed up $0.81 at $83.94 a barrel today. Prices closed near mid-range today and saw a corrective bounce from recent strong selling pressure. 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 4.6 cents at $4.073 today. Prices closed near the session high today on short covering in a bear market. 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.

The U.S. dollar index closed up 3 points at 81.13 today. Prices closed nearer the session high today in quieter trading. The bulls 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.

Gold futures closed up $4.70 at $1,140.50 today. Prices closed near mid-range today and saw a corrective bounce from selling pressure last Friday and on Monday. Higher crude oil prices added to buying interest in gold today. Uncertainty regarding the Goldman Sachs fraud charges from the SEC seem to have abated a bit, which also supported buying interest in gold today. No serious chart damage has occurred in gold, but the bulls need to show more power soon to keep the uptrend on the daily chart in place.

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Phil Flynn: Goldman Gets Rolled

Oil prices are beginning to shake off the fall-out from the Goldman Sachs fraud allegations yet at the same time, the market is worried about the longer term ramifications of these charges. Set aside the fact of Goldman’s guilt or innocence at this point, it's the larger issue of confidence in the overall market place that raises the largest concern. The timing of these charges that we now know was voted at the SEC along party lines makes one worry about the political influence over the market place. If The SEC is being controlled by the government to push financial reform it could be more dangerous to the economy than Goldman’s alleged fraud.

The Wall Street Journal Editorial page that I wanted to quote yesterday until my computer crashed stated, “The Securities and Exchange Commission's complaint against Goldman Sachs is playing in the media as the Rosetta Stone that finally exposes the Wall Street perfidy and double dealing behind the financial crisis." Our reaction is different: Is that all there is? After 18 months of investigation, the best the government can come up with is an allegation that Goldman misled some of the world's most sophisticated investors about a single 2007 "synthetic" collateralized debt obligation (CDO)? Far from being the smoking gun of the financial crisis, this case looks more like a water pistol. The Journal said, “Let's deconstruct the supposed fraud, in which Goldman worked with hedge fund investor John Paulson, who wanted to bet on a decline in the subprime mortgage market. The SEC alleges that Goldman let Paulson & Co. dictate the mortgage backed securities on which investors would speculate via the CDO, and then withheld from investors Paulson's role on the other side of the transaction.

The SEC also alleges that Goldman deceived ACA Management a unit of the largest investor on the other side of the deal and the firm officially selecting which mortgage backed securities everybody would bet on into believing that Mr. Paulson was actually investing in an "equity" tranche on ACA's side of the deal. Regarding the second point, the offering documents for the 2007 CDO made no claim that we can find that Mr. Paulson's firm was betting alongside ACA. The documents go so far as to state that an equity tranche was not offered by Goldman, as ACA must have known since it helped put the deal together and presumably read the documents. The SEC complaint itself states that ACA had the final word on which assets would be referenced in the CDO. And in some cases, ACA kicked out of the pool various assets suggested by the Paulson firm.

More fundamentally, the investment at issue did not hold mortgages, or even mortgage backed securities. This is why it is called a "synthetic" CDO, which means it is a financial instrument that lets investors bet on the future value of certain mortgage backed securities without actually owning them. Yet much of the SEC complaint is written as if the offering included actual pools of mortgages, rather than a collection of bets against them. Why would the SEC not offer a clearer description? Perhaps the SEC's enforcement division doesn't understand the difference between a cash CDO—which contains slices of mortgage backed securities and a synthetic CDO containing bets against these securities.

More likely, the SEC knows the distinction but muddied up the complaint language to confuse journalists and the public about what investors clearly would have known: That by definition such a CDO transaction is a bet for and against securities backed by subprime mortgages. The existence of a short bet wasn't Goldman's dark secret. It was the very premise of the transaction.” The Journal also points out that, “By the way, Goldman was also one of the losers here. Although the firm received a $15 million fee for putting the deal together, Goldman says it ended up losing $90 million on the transaction itself, because it ultimately decided to bet alongside ACA and IKB. In other words, the SEC is suing Goldman for deceiving long-side investors in a transaction in which Goldman also took the long side. So Goldman conspired to defraud . . . itself?

The Journal asks, "Did Goldman have an obligation to tell everyone that Mr. Paulson was the one shorting subprime?" Goldman insists it is, "normal business practice" for a market maker like it not to disclose the parties to a transaction, and one question is why it would have made any difference. Mr. Paulson has since become famous for this mortgage gamble, from which he made $1 billion. But at the time of the trade he was just another hedge fund trader, and no long side investor would have felt this was like betting against Warren Buffett.

“Not that there are any innocent widows and orphans in this story. Goldman is being portrayed as Mr. Potter in "It's a Wonderful Life," exploiting the good people of Bedford Falls. But a more appropriate movie analogy is, "Alien vs. Predator," with Goldman serving as the referee. Mr. Paulson bet against German bank IKB and America's ACA, neither of which fell off a turnip truck at the corner of Wall and Broad Streets."

Some would argue that the global economy suffered when the housing bubble burst yet at the same time are these financial instruments to blame or is the government, the great enablers, and their policies that allowed the housing bubble to develop? The IBD points out that the financial reform bill fails to address some of the root causes of the financial crisis like, “The 1977 Community Reinvestment Act (CRA) was used as a bludgeon to force private banks to lend to unworthy bowers. Politicized (Government Sponsored Entities) Fannie Mae and Freddie Mac that became the chief funding mechanism for this corrupt housing policy and its bad loans."

For crude oil the Goldman news was bearish but as the markets asses the facts of the case it is unlikely that this case will lead to many others. The White House is already trying to distance themselves from the Goldman charges because any implication that the White House had a say in the timing of these allegations may indeed be fraudulent in itself and an abuse of power. The White House cannot be seen as having a major regulatory authority being used to further its own political agenda. This is not Venezuela for heaven’s sakes. It isn’t, is it?

The volcano pressured oil with an estimated demand destruction of roughly 2 million barrels of oil a day, some due to canceled flights and also decreased economic activity. The bulls' confidence has been shaken and oil needs to continue its rebound. The removal of economic optimism could mean the focus on over supply and sluggish demand may weigh. We still feel the best way to play the market right now is to take advantage of these very wide trading ranges.


You can reach Phil at pflynnpfgbest.com and watch him every day on the Fox Business Network!


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Crude Oil Daily Technical Outlook For Tuesday

With 4 hours MACD crossed above signal line, a temporary low is in place at 80.53, just ahead of 38.2% retracement of 69.50 to 87.09 at 80.37. Intraday bias in crude oil is turned neutral and stronger recovery might be seen, to 4 hours 55 EMA (now at 83.82). Break there will bring retest of 87.09 high. On the downside, note that decisive break of 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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Crude Oil Climbs From a Three Week Low on Forecast of U.S. Stockpile Drop

Oil rose from a three week low on speculation a report tomorrow will show crude stockpiles in the U.S., the world’s biggest energy consumer, declined for a second week and as rising equity prices buoyed investor sentiment. Inventories in the U.S. probably fell 600,000 barrels last week, a Bloomberg News survey showed. U.S. stocks yesterday reversed losses as Citigroup Inc. beat profit estimates and Bloomberg reported that the Securities and Exchange Commission was divided in its decision to sue Goldman Sachs Group Inc. Asian stocks rose today, led by finance companies.

“The market ran a little hard on the downside,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “Oil has come back quite a bit” and people are reconsidering some of the impact they were expecting from the action against Goldman, he said. Crude oil for May delivery rose as much as 93 cents, or 1.1 percent, to $82.38 a barrel on the New York Mercantile Exchange. It was at $81.96 at 12:13 p.m. Singapore time. Yesterday, the contract dropped 2.2 percent to $81.45, the lowest settlement since March 26. The more actively traded June contract climbed 32 cents to $83.45. Futures have gained 3.3 percent this year.

Oil tumbled yesterday after the SEC sued Goldman, prompting investors to step away from risky assets such as commodities. Air traffic disruptions caused by a volcanic eruption under Iceland’s Eyjafjallajökull glacier cut jet fuel demand in Europe by about two thirds, according to Deutsche Bank.

Crude Stockpiles
Oil has fallen in eight of the nine sessions since April 6, when the market reached an 18 month high of $87.06. Prices rose on April 14 after the Energy Department reported an unexpected 2.2 million barrel decline in U.S. crude oil inventories. It was the first drawdown in 11 weeks. Tomorrow’s report will probably show a second decline as refiners increased operating rates for a fifth week to meet summer gasoline demand, according to the Bloomberg survey. Stockpiles of the motor fuel probably rose 140,000 barrels, based on the median estimate from 11 analysts polled.

U.S. oil stockpiles remain high and many commodities have “moved ahead of their fundamentals,” said Moore at Commonwealth Bank of Australia. Brent crude oil for June settlement climbed as much as 57 cents, or 0.7 percent, to $84.80 a barrel on the London based ICE Futures Europe exchange. It was at $84.64 at 12:17 p.m. Singapore time. Yesterday, the contract settled at $84.23 after losing 2.1 percent, the most since Feb. 25.

Reporters Gavin Evans and Yee Kai Pin can be reached at gavinevans@bloomberg.net and kyee13@bloomberg.net





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Dan Dicker: Oil Down....Blame Goldman

Dan Dicker explains how Goldman Sachs fraud charges have sent oil speculators running for cover.




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Crude Oil Market Commentary For Monday Evening

Crude oil closed down $1.60 at $81.64 a barrel today. Prices closed near mid-range today and hit a fresh three week low. No serious chart damage has been inflicted in crude, but the bulls have faded and need to show fresh power soon to keep the uptrend on the daily bar chart in place. The Goldman Sachs fraud news and the volcanic ash that is shutting down air travel in Europe are bearish factors for crude. Crude oil bulls still have the overall near term technical advantage.

Natural gas closed down 8.4 cents at $3.955 today. Prices closed near mid-range today. 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 $4.334.

The U.S. dollar index closed up 11 points at 81.06 today. Prices closed near the session low today. 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.

Gold futures closed down $1.30 at $1,135.60 today. Prices closed nearer the session high today after hitting a fresh two week low early on, following Friday's steep losses that produced a bearish weekly low close. The key "outside markets" were in a bearish posture for gold today, as the U.S. dollar index was higher, while crude oil prices were lower. Uncertainty regarding the Goldman Sachs fraud charges from the SEC also added to selling pressure in gold today.


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Crude Oil Daily Technical Outlook For Monday

Crude oil dives to as low as 80.53 today and further decline is still in favor. As discussed before, rise fro 69.50 should be over after hitting 61.8% projection of 69.50 to 83.16 from 78.56 at 87.00. Decisive break of 38.2% retracement of 69.50 to 87.09 at 80.37 will confirm this case and target 61.8% retracement at 76.22 and below. On the upside, above 83.35 will flip intraday bias back to the upside and put focus back to 87.09 high instead.

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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ExxonMobil CEO: Recovery Requires Stable Policies

The best way for government to kick start the economy is to provide a level playing field for competition and create stable policies that will enable long term investments, Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corporation, said today. "Leaders in government and in business agree that we face an urgent need to revitalize our economy and spur job creation," Tillerson said in a speech to the Houston World Affairs Council, where he accepted the Jesse H. and Mary Gibbs Jones International Citizen of the Year Award.

"To achieve these goals, we must unleash the extraordinary power of private citizens to seize new opportunities in free markets. Industry can achieve this by taking risks, investing in the future, hiring new workers, expanding operations and making our economy more competitive. But we can only achieve this when government creates a level playing field for competition and upholds a stable policy framework conducive to long term investments."

Tillerson said America's businesses, both small and large, need to be able to plan for the future in order to make investments that will create badly needed jobs for the nearly one in 10 Americans who are unemployed and millions more who are underemployed or no longer seeking work. "Every business leader faces challenges in assessing the future, but in tough economic times government can help by keeping a steady hand on the rudder. If the private sector knows that government will stay the course and resist the temptation to over-regulate, it can invest with confidence." According to recent studies, the oil and natural gas industry contributes more than $1 trillion a year to the U.S. economy and directly and indirectly supports more than 9 million jobs.

"These economic contributions are even more important in light of the global economic downturn and the slow job creation of the nascent recovery," said Tillerson. "I believe our industry can, and must, be part of our national efforts to achieve more robust economic growth." Tillerson said much focus has been placed on the role small businesses play in job creation, but studies show that large corporations are also critical engines of job creation and employment. "As big businesses flourish, small businesses are created as the direct suppliers, contractors and providers of other services essential to the success of the larger businesses. With the right public policies, the energy industry and companies like ExxonMobil can lead the way back with our disciplined investments in new projects, new technologies, and new jobs."

Tillerson said that when government creates an environment where businesses can be creative, take risks, and grow, the private sector will repay that trust by creating millions of new jobs but also through unequaled acts of private charity and corporate citizenship. ExxonMobil's 80,000 employees are proud of their contributions in providing for social development, environmental protection and the company's most visible contribution, supporting economic growth and development by providing reliable energy, well paying jobs, tax revenues, technological innovation, and shareholder value. ExxonMobil's corporate citizenship efforts help communities achieve long term economic and social development, through programs focused on battling malaria, increasing economic opportunities for women and supporting improvements in science, technology, engineering and math education.

"We have a long record of going beyond our primary responsibility of delivering the energy that benefits our consumers, shareholders and business partners," said Tillerson. "As a company and as individuals, the men and women of ExxonMobil are dedicated to being good corporate citizens wherever we operate. We believe this ideal is so integral to our long term success that we have built it into our business model and our corporate governance. In other words, we believe our commitment to citizenship is fundamental to our year to year success as a company."

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Oil N Gold: Commodities Extend Weakness as Investors Avoid Risks

Crude Oil prices extend weakness for a third consecutive day as global risk aversion jumps amid Goldman's case. WTI crude oil price slides to 80.8 in European session, after plummeting -2.69% to 83.24 last Friday. Declines in heating oil and gasoline also accelerate with losses of -3% and -2% respectively.

After disclosing production of 29.26M bpd in March (+5.6% y/y), OPEC will probably increase shipment, by +0.9%, in the 4 weeks ending on May 1. This further increases oil supply which is already in a surplus in the market. Member countries are boosting production regardless insufficient demand.

In an interview over the weekend, Qatar's oil minister Abdullah bin Hamad al-Attiyah said there's no need for a special meeting before its October meeting but he mentioned that recent rally in oil price was is 'not related at all to there being a shortage...We see that inventories are at their highest'.

Natural gas has fallen in consolidative phase since April. However, resumption of inventory builds indicates risk of price is to the downside. Gas supply will likely remain ample in coming years as large producers are not going to cut output despite slump in prices.

Although Algeria's energy minister Chakib Khelil plans to seek commitments from 11 gas exporting nations to reduce output, both Russia and Qatar, respectively the biggest and the third biggest holders of the world's reserves, will probably refuse to collaborate.

Gold price slides due to broad based decline in commodities and weakness in the Euro. Currently trading at 1130, the benchmark contract fell to as low as 1124 earlier today. Despite the fall, gold's performance is relatively resilient when compared with oil prices. Some investors buy gold as they lose confidence on currencies on Greece's issue.

Talks on Greece involving the European Commission, the IMF and the European Central Bank have been delayed until April 21 as a volcanic ash cloud disrupted air travel. The market expects the EU and the IMF will impose tough conditions for the rescue package for Greece. The spread between Greek and German 10 year government debt widened +32 bps to 462 bps, the highest level since October 1998.

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Crude Oil Extends Decline on Speculation Recovery in Demand Is Trailing Supply

Crude oil fell for a third day on speculation the commodity’s climb to an 18 month high have outpaced a recovery in global demand. Oil extended losses after tumbling 2.7 percent on April 16, the most in 10 weeks. Prices are being driven by speculation and currency movements and there’s no need for OPEC to review output before its October meeting, Qatar’s oil minister Abdullah bin Hamad al-Attiyah said yesterday. The dollar strengthened against the euro, reducing the appeal of commodities.

“We’ve still got higher than average stockpiles in various markets, including the U.S.,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney. OPEC “will want to see those stockpiles drawn down further before they consider increasing supply.” Crude oil for May delivery fell as much as $1.58, or 1.9 percent, to $81.66 a barrel in electronic trading on the New York Mercantile Exchange. It was at $81.73 at 11:14 a.m. Singapore time. Prices have declined in eight of the nine trading days after touching $87.09 on April 6, the highest since October 2008.

The May contract, which expires tomorrow, lost $2.27 on April 16 to $83.24 a barrel, the biggest drop since Feb. 5. Prices slumped after the U.S. Securities and Exchange Commission accused Goldman Sachs Group Inc. of fraud, triggering a selloff in commodity and equity markets. The more widely held June future was down $1.30, or 1.5 percent, at $83.37 today.

Greece Bailout
The euro fell to a one week low against the dollar after European Union finance ministers told Greece to brace itself for the International Monetary Fund’s conditions on a bailout package. The U.S. currency was at $1.3460 per euro at 10:40 a.m. in Singapore, from $1.3503 April 16 in New York. “There will be fits and starts to do with the recovery story and I think this Goldman news is another event that seems to have exposed the fragility of market confidence,” said CWA’s Hassall. “Longer term, the global recovery story is going to continue to drive the oil market.”

Oil at $90 a barrel would be harmful and may “jeopardize the market,” according to Angola’s oil minister, Jose Maria Botelho de Vasconcelos. A “good level” is between $70 and $80, he said yesterday at a gas conference in Oran, Algeria. Angola and Qatar are members of the Organization of Petroleum Exporting Countries, which pumps 40 percent of the world’s oil. The group slashed output by a record 4.2 million barrels a day beginning January 2009 to prevent a supply glut as the global economy sank into recession. Ministers voted to maintain official output targets at a March 17 meeting in Vienna.

Speculators
Hedge fund managers and other large speculators trimmed bets on rising oil prices for the first time in three weeks, U.S. Commodity Futures Trading Commission data showed.
Speculative net long positions, or the difference between orders to buy and sell the commodity on the New York Mercantile Exchange, decreased 12 percent to 113,364 contracts on April 13, the commission said last week. Brent crude oil for June settlement fell as much as $1.36, or 1.6 percent, to $84.63 a barrel on the London based ICE Futures Europe exchange. The contract was at $84.77 at 11:10 a.m. Singapore time.

Reporters Gavin Evans can be reached at gavinevans@bloomberg.net and Yee Kai Pin at kyee13@bloomberg.net


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


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Precious Metals & Oil ETF Trend Trading

Last week was exciting with broad market and gold forming an intraday reversal pattern after a long overbought rally, then broke down though short term key support levels. While this move lower was tough on the pocket book for those who chased the market up the past few days and/or were not moving their protective stops up, this move is good for the health of the market.

This pullback is actually a good thing for us active traders who wait for low risk setups and don’t chase prices higher, but rather buy on the dips in a bull market when most of the risk has been flushed out already. Trading with low risk setups is not the most exciting type of trading because there are not a ton of setups but if one can be patient and wait for these plays it is a very profitable strategy in the long run.

Those traders who live and breathe the market focusing on trading intraday price action most likely made a small fortune last week with Fridays sell off in stocks and precious metals. You can see how some of us took advantage of this sharp pullback last week with my before and after videos.

Below are the charts showing what I am currently thinking is going to happen for gold, silver, gold stocks and oil. I will be tracking the market with intraday charts to help pin point a low risk entry point for a possible short or long position as the market unfolds this week.

GLD – Gold Trading ETF

The chart below is an updated chart which I have showed several times. It shows how gold corrected, bottomed and is now trending back up. This week I will be watched closely to be sure we take a position which has the highest probability of working in our favor if and when a low risk setup occurs.



SLV – Silver Trading ETF

Silver really took a hit on Friday. It is now trading near support but there is not much we can do until we see what happens on Monday. There could be a bounce or more down side, tough to call right now…. And it’s not something you want to be on the wrong side of.



Gold Stocks – Gold Stock Trading

Gold stocks did not drop as much as I thought they would which indicates the market is still very bullish on gold. There is still potential for more downside… so I am letting the market unfold before doing anything.



USO – Oil Trading Fund

You can see oil moved down sharply on Friday and is now testing both a price support level and trendline support. Although this looks like a perfect setup, the market is designed to shake people out of positions before continuing the move. So it is likely for oil to dip which would break both these support levels triggering stop orders. Then the price should drop to the key support level where support should be found for at least a bounce or a new bottom.



Precious Metal & Oil ETF Trading Conclusion:

In short, the market had a nice correction on Friday and the heavy selling volume indicates that we are getting close to a larger correction which should provide two swing trades, a shorting opportunity and a new buying opportunity in the coming days, weeks or months depending how long the market takes with this pullback/correction.

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Where is Crude Oil Headed Next Week?

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





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Crude Oil Weekly Technical Outlook

Crude oil had a rebound attempt last week but failed at 86.39, below near term high of 87.09, and reversed sharply. The close below near term rising trend line argues that rise from 69.50 is over after hitting 61.8% projection of 69.50 to 83.16 from 78.56 at 87.00. But we'll need more evidence to confirm. Hence, we'll stay neutral first. On the upside, above resistance will suggest that recent rally is still in progress for 90 psychological level before making a top. On the downside, however, firm break of 38.2% retracement of 69.50 to 87.09 at 80.37 will confirm that rise from 69.50 is over and will bring deeper fall to 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.

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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Bulls Lose Their Momentum.....Crude Oil Closes Below 20 Day Moving Average

Crude oil closed lower on Friday and below the 20 day moving average crossing at 83.56 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If May extends today's decline, the 38% retracement level of the February-April rally crossing at 80.66 is the next downside target. Closes above Wednesday's high crossing at 86.39 would temper the near term bearish outlook. First resistance is today's high crossing at 85.44. Second resistance is this month's high crossing at 87.09. First support is today's low crossing at 82.52. Second support is the 38% retracement level of the February-April rally crossing at 80.66.

Natural gas closed higher due to short covering on Friday and the high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. Multiple closes above the reaction high crossing at 4.334 are needed to confirm that a low has been posted. If May renews this winter's decline, weekly support crossing at 3.502 is the next downside target. First resistance is the reaction high crossing at 4.334. Second resistance is the 25% retracement level of the October-April decline crossing at 4.405. First support is the reaction low crossing at 3.857. Second support is the early April low crossing at 3.810.

The U.S. Dollar closed higher due to short covering on Friday as it consolidates some of the decline off March's high. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends this week's decline, March's low crossing at 79.73 is the next downside target. Closes above the 20 day moving average crossing at 81.30 are needed to confirm that a short term low has been posted. First resistance is today's high crossing at 81.04. Second resistance is the 20 day moving average crossing at 81.30. First support is Wednesday's low crossing at 80.14. Second support is March's low crossing at 79.73.

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Phil Flynn: Crude Oil is Having a Hard Time Following Through

Oil is having a hard time following through on its bullish momentum especially which is particularly disappointing to the bulls especially after China’s red hot GDP numbers. Strong growth numbers out of China seemed to not inspire the type of buying frenzy that one might imagine. Mixed data out of the US and the fact that oil should be getting close to a seasonal peak perhaps is weighing down the marketplace. China did take some steps t o try to slow their economy down from overheating by attacking surging real estate prices and that may be another reason why China’s surging prosperity didn’t trickle down to the oil market. The Financial Times reported that the Chinese State Council said that anyone buying a second home in China would need to put up a 50 per cent deposit up front. That is up from 40 per cent previously. First time homebuyers in China buying homes s bigger than 90 square meters have to put up 30 per cent. The Financial Times says that China instead of raising rates like Australia and India, China has targeted a 22 per cent reduction in new loans from a record $1,400bn last year and twice asked lenders to set aside more cash as reserves.

The last time China's growth accelerated to more than 11 per cent, in the first quarter of 2006, the central bank raised rates within a month. Still the Times said that China's cabinet signaled caution in ending crisis policies, saying first-quarter economic growth was largely driven by stimulus policies and a comparison with low levels in 2009. I think the bulls would like to end the week with the front month closing over $85 to confirm their bullish aspirations which is getting harder to do as we are seeing a lot of rolls continuing from the May into the June and other contract. June has more open interest now yet with record volume and a lot of rocking and rolling to do we could see the contango continue to widen.

The other factor holding oil back is the dollar. The dollar seems to be gaining strength on the ongoing on again off again Greek worries. Oh no. It’s not resolved yet? The Financial Times reported that “Greece capitulated to market pressure yesterday and took an important step towards a bailout from its Eurozone partners and the International Monetary Fund as it formally sought "consultations" over a €30bn-plus loan package to stave off default.” With uncertainty surrounding the latest bailout once again going into the weekend traders may seek the safe haven of the dollar so they can sit back and enjoy their recent stock market profits. Yes that soaring stock market has also provided support. Yet the run while impressive may face some profit taking especially after Google missed the whisper number

Natural Gas’s little foray above $400 ended in an ignominious fashion. The EIA reported that wworking gas in storage was 1,756 Bcf according to EIA estimates. This represents a net increase of 87 Bcf from the previous week and a whopping 16.3 per cent above the five year average. So much for that preseason hurricane premium. Of course ample supplies o cheap natural gas is the unsung hero and a part of the incredible manufacturing come back. Think of the natural gas price as an economic stimulus package that the taxpayer does not have to pay for. We still feel the best way to trade energies and other commodities at this point is to trade the ranges.

Phil can be reached at pflynn@pfgbest.com And make sure to watch him on the Fox Business Network broadcasting all weekend long!

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Crude Oil Daily Technical Outlook For Friday

Crude oil's recovery was limited below 87.09 resistance and drops sharply since then. With 4 hours MACD crossed below signal line, intraday bias is turned neutral again. Note that consolidation from 87.09 is still in progress and deeper fall to 82.51 or below could be seen. Nevertheless, strong support is expected at 61.8% retracement of 78.56 to 87.09 at 81.82 to conclude the correction and bring rally resumption. Break of 87.09 will target 90 psychological level next.

In the bigger picture, medium term rise from 33.2 is still in progress and could extend further higher. Nevertheless, there is no change in the view that it's the second wave of the whole correction that started in 2008 at 147.27. Hence, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, below 78.56 support will be the first signal of topping and will turn focus back to 69.50 support for confirmation.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Dow and S&P Update Video....Can We Keep Going Higher Forever?

We owe trillions of dollars, but Crude oil is at $86 a barrel, the DOW, S&P, and NASDAQ are making new highs almost everyday and unemployment is officially at 9.7%.

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So is the DOW, S&P, and NASDAQ all going to keep going higher forever? Or are the teachings of a dead mathematician going to reverse this juggernaut of a market?

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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 Closes Lower, Bulls Still Maintain The Advantage

Crude oil closed down $0.34 at $85.50 a barrel today. Prices closed nearer the session low today and saw mild profit taking. Crude oil bulls still have the solid 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 $87.09 a barrel.

Natural gas closed down 19.2 cents at $4.007 today. Prices closed near the session low today and were pressured by a bearish weekly natural gas storage report. Bears have the solid near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at last week's high of $4.334.

Gold futures closed up $0.50 at $1,160.10 today. Prices closed near the session high today and were supported by speculative bargain hunting buying after prices were under selling pressure early on. A stronger U.S. dollar index did limit gains in gold, however. Bulls still have the solid near term technical advantage. A nine week old uptrend line is in place on the daily bar chart.

The U.S. dollar index closed up 28 points at 80.58 today. Prices closed near mid-range today. While no serious chart damage has occurred recently the bulls have faded and need to show more power soon. The bulls still have the overall near term technical advantage.


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