Is Natural Gas Hitting Upper Resistance levels

Natural Gas was able to add value again as prices moved back toward the upper resistance level of $3/mmbtu. Weather related demand is continuing to become less of a bullish factor from both the short term temperature forecasts to the tropics. The latest NOAA six to ten day temperature forecast is projecting the smallest area of above normal temperature so far this summer which is certainly not very supportive for Nat Gas prices. The eight to fourteen day forecast is a bit more bullish in that it is projecting a larger area of above normal temperatures. Overall both forecasts will not nearly result in as much Nat Gas related cooling demand as what was experienced during the first half of the summer. The net result net injections will continue to creep higher over the next several weeks.

In addition the tropics are not threatening to Nat Gas production in the Gulf of Mexico as Ernesto is heading into Mexico and the two other tropical weather patterns out in the Atlantic are still low grade tropical weather event and it is much too early to project whether or not they will strengthen into something more impacting. Overall I do see any short term fundamental support for the current level of prices. I would expect that the market will run into difficulty in breaking through the technical resistance level of around $3/mmbtu.

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Today the EIA released their latest STEO report. Following are the main highlights relate to Nat Gas from the report.

EIA expects that natural gas consumption will average 69.8 billion cubic feet per day (Bcf/d) in 2012, an increase of 3.2 Bcf/d (4.8 percent) from 2011. Large gains in electric power use in 2012 will more than offset declines in residential and commercial use. Projected consumption of natural gas in the electric power sector averages 25.4 Bcf/d in 2012, 22 percent higher than in 2011, primarily driven by the improved relative cost advantages of natural gas over coal for power generation in some regions.

Consumption in the electric power sector during 2012 peaks at 31.6 Bcf/d in the third quarter, when electricity demand for air conditioning is highest. As a result of the extreme heat last month, estimated electric power sector natural gas consumption during July 2012 averaged 34.8 Bcf/d, 1.8 Bcf/d higher than projected in last month's Outlook......Read Dominik Chirihella' entire article.

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Precious Metals Charts Point to Higher Prices – Part II

Over the recent couple months the precious metals charts have made some sizable moves. Most investors and traders were caught off guard by the sharp avalanche type sell off and lost a lot of hard earned capital in just a few trading sessions. Gold dropped over 20% and silver a whopping 40%.

The crazy thing about all this is that these types of moves in precious metals can be avoided and even taken advantage of in certain situations. There is no reason for anyone to continue holding on to those positions after they pullback 6% of more because of the type of price and volume action both gold and silver had been displaying in the past few sessions.

I warned investors on August 31^st that precious metals were about to top any day and that protective stops should be tightened or taking profits was also a smart move. It was only 2 trading sessions later that precious metals topped and went into a free fall. You can get my detailed analysis if you read my report “Dollar’s On the Verge of a Relief Rally Look Out!”.

A couple weeks later once precious metals has found support and the uneducated investor’s were licking their wounds wondering what the heck just happened to their trading accounts… I put out another report but this time with a bullish outlook. Silver was currently trading at $29.96 and I had a $35-$36 price target over the next two months. Gold was trading down at $1611 and I saw it heading back up to $1750-$1775 area before finding resistance and pulling back. Both these forecasts were reached over the next two months. You can quickly review the report called “Precious Metals Charts Point to higher Prices” for more info.

With all that said, what exactly are the charts saying right now?

Current Precious Metals Charts Summary:

The past 6 weeks we have been watching both gold and silver struggle to hold up but they have managed to grind their way to my price targets. After reaching those targets a couple weeks ago sellers have stepped back into the precious metals market and put pressure these metals.

Last week gold and silver started to pullback in a big way with rising volume. This could just be the start of something much larger which I will cover in just a moment.

The wild card for precious metals and for every stock and commodity for that matter is Europe. Every other day there seems to be headline news moving the market and most of takes place in overnight trading for those of us living in North America. It’s this wild card which is keeping me from getting aggressive in the market right now.

Let’s take a look at the charts…

Silver Precious Metals Chart:

Silver is currently in a down trend and may be starting another leg down this week. Long term I am bullish but for the next couple months I am remain neutral to bearish for silver until it forms a base to start a new uptrend from.

Precious Metals Charts

 Gold Precious Metals Chart:

Currently I am neutral/bearish on gold. If it can trade sideways for a few weeks then I will become bullish.

Precious-Metals-Charts

 Precious Metals Charts Conclusion:

In short, I feel there is a good chance the US dollar will continue higher and if that happens we should see strong selling in North American equities, commodities and likely on the precious metals charts.

Financial markets around the world are at a tipping point meaning something really big is about to take place. The question is which way will investment move. The only thing we can do is trade with the current trends, price patterns and volume.

At this time I still see a higher dollar and that means lower stocks and commodities. This could change at the drop of a hat depending on the news that comes out of Europe so the key to trading right now is to remain cash rich and taking only small positions in the market.

If you would like learn more about etf trading and receive my daily pre-market videos, intraday updates and detailed trade alerts which even the most novice trader can follow then join my FREE trading education newsletter and my premium trading alert service here at  The Gold and Oil Guy.com

Chris Vermeulen

Commodity Corner: Rallies All Around

November crude oil finished higher for the first time this week Wednesday, gaining 1.6% on news that China's appetite for crude oil increased in September. The price of a barrel of crude oil rose $1.34 to settle at $83.01 after China's General Administration of Customs announced the country's crude oil imports increased by 11% last month compared to its purchases in August.

Also providing momentum for oil was the International Energy Agency (IEA), which increased its global oil demand forecast by 300,000 barrels per day through 2011. Now, the IEA forecasts global oil demand to reach 86.9 million b/d for 2010 and 88.2 million b/d for 2011. Oil traded within a range from $81.68 to $83.45 Wednesday.

Natural gas, which has endured a slump recently on mild weather forecasts, rose 1.9% Wednesday as a result of profit taking by traders as well as the sentiment that prices have bottomed out. November natural gas settled seven cents higher at $3.70 per thousand cubic feet after trading from $3.63 to $3.78. The price of a gallon of gasoline increased by 2.4% Wednesday. The front month price settled a nickel higher to end the day at $2.17. It fluctuated between $2.12 and $2.17.

Courtesy of Rigzone.Com


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Oil Price Has Little Change Depsite IMF's Upgrades

Hovering around 70, the benchmark contract for crude oil changes little ahead of US opening. IMF's upgrades on economic forecasts and OPEC's production cut in September are bullish factors but investors probably feel nervous to push oil higher after the +5.8% rally yesterday.

IMF forecasts world economy will expand +3.1% in 2010, compared with +3.1% projected in July, as driven by growths of +9% and +6.4% in China and India respectively. As stated in the report, 'the recovery has started and financial markets are healing...'in most countries, growth will be positive for the rest of the year, as well as in 2010'. However, 'to sustain the recovery, private consumption and investment will have to strengthen as high public spending and large fiscal deficits are unwound'.

For OECDs, GDP in the US, Japan and the Eurozone are anticipated to rise by +1.5%, +1.7% and +0.3%. All of these estimates have been revised upward from Julys' projections. According to Bloomberg's estimates, OPEC's crude production declined 50K bpd from August to 28.395M bpd in September as led by reductions in Iraq, Saudi Arabia and Angola. For the 11 members (excluding Iraq) that are subject to quota, total output dropped -10K bpd to 26.045M bpd in September, though the production was still higher than the target.....read the entire article and charts!

Crude Remains Supported as IEA Raised Demand Forecasts

Crude oil price remains strong in European morning. The International Energy Agency (IEA) raised its forecast on oil demand, as indicated in the September report. The October contract hovers around 72 as investors await further details on US inventories. As driven by stronger than expected US demand and rapid growth in China, the IEA revised up its demand forecasts for 2009 and 2010, to 84.4M bpd and 85.7 M bpd respectively. There were compared with June's projections of 83.94 M bpd for 2009 and 85.25M bpd for 2010. According to the agency, 'there is growing evidence that the global economy may be finally stabilizing, with industrial destocking coming to an end, coupled with the effects of large scale government intervention... Oil demand in US, China and other Asia appears to be running stronger than preliminary estimates suggested'.....Read the entire article