Crude Oil Looks To Move Lower On Stronger Dollar, Swine Flu Outbreak

Market news just seems to be building against crude this week. The Mexican Flu outbreak, the stronger dollar and the SP 500 trending lower all are weighing heavily on crude oil. We appear to be range bound in the 48-53 range for now and while the future seems bearish for oil traders they appear more than willing to pile in long when meeting support.

For Tuesday we need to touch 48 for me to start building a scalp/long day trade position. Under 47 we go 100% long. In this market I will be 100% out if we rally any where near 1st resistance at 51.69

Tuesday's pivot point, our line in the sand is 49.85

1st resistance is 51.69
2nd resistance is 53.29

1st support is 48.25
2nd support is 46.41



Market news to watch for.................

4:30 PM ET. Apr 2...API Oil Industry Report

....................Crude Stocks (Net Change) (previous -1.01M)

....................Gasoline Stocks (Net Change) (previous +107K)

....................Distillate Stocks (Net Change) (previous +458K)

....................Refinery Runs (previous 82.1%)


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PetroChina Misses Analyst Estimates, Shell Profits Plummet

"PetroChina First Quarter Net Falls, Trailing Analyst Estimates"
PetroChina Co., the world’s second largest company by market value, posted a profit that trailed analysts’ estimates for the first quarter of what will be its “most challenging” year.

Net income declined 35 percent to 18.96 billion yuan ($2.8 billion) from 29.3 billion yuan a year earlier, the Beijing based company said in a statement to the Shanghai exchange yesterday. That’s worse than a median estimate of 19.5 billion yuan in a Bloomberg survey of three analysts.

China’s economy grew at its weakest pace in nearly a decade in the first quarter, and PetroChina faces “huge difficulties” in 2009 as the global financial crisis reduces demand for oil products, it said last month. Asia’s biggest crude producer said it will cut costs and reduce risk in the second quarter, and China passed a $585 billion stimulus package to revive growth.....Complete Story

"Florida House Members Mull Offshore Drilling Bill"
A bill that would allow oil drilling off Florida's coast is ready for a vote in the state House of Representatives.

Today legislators questioned Rep. Charles Van Zant, R-Keystone Heights, for more than an hour, voicing concern about the bill that would allow the governor and Cabinet to approve drilling leases between 3 and 10.5 miles off the state's coast. They expressed worries that drilling could hurt the tourism industry, the seafood industry, and the environment.

Van Zant assured members that drilling technology has advanced to the point that there is minimal risk. He said opening the coast to oil and natural gas exploration could create thousands of jobs.....Complete Story

"Shell, BP Profits May Drop Most In Five Years On Oil"
Royal Dutch Shell Plc and BP Plc, Europe’s largest oil companies, may post the biggest drop in quarterly earnings in at least five years after the recession dragged down crude prices.

U.S. oil futures averaged $43.31 a barrel in the quarter, 56 percent lower than a year earlier, after plunging from a record $147.27 reached in July. The companies responded by shelving projects and demanding price cuts from suppliers. BP may scale back its joint Sunrise oil-sands project in Alberta to cut expenses, while Shell has said industry costs could fall as much as 50 percent.

“We are going to see a very substantial drop in income and there’s very little they can do about costs in the short-term,” said Colin Morton, who helps manage about $2 billion, including BP and Shell stock, at Rensburg Fund Management in Leeds, England. “It’s going to be quite a tough period.”.....Your keyword


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Crude Oil Market Seems to Have The Flu This Morning

AS we go into regular trading hours on Monday crude oil is down over $3.00, near the 1st support level of $48. Common sense says that most traders will be buying these levels as we appear to be range bound in the 48 - 54 area.

The bears seem to have the technical advantage at this point and we will trade that side of crude oil. We are hesitant to play the long side here as it also looks like the SP 500 is willing to consolidate recent rally gains in the market. We will keep a close eye on the SP's ability to trade within the 830-880 level.

The U.S. dollar is also trading higher this morning further pressing on crude oil prices.

Today's pivot point, our line in the sand is 50.77

1st resistance 52.47
2nd resistance 53.46

1st support 49.78
2nd support 48.08


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OPEC General Sec. See No Cuts But Schlumberger Does

"OPEC Secretary General Doesn't See New Oil Cuts in May"
OPEC Secretary General Abdalla Salem El-Badri said he doesn't expect the oil cartel to cut production when the group meets next month, despite signs of even weaker crude demand and swelling oil inventory in big energy consuming nations. The Organization of Petroleum Exporting Countries needs to fully implement an agreement announced back in December to remove 4.2 million barrels a day from world markets before embarking on more reductions, El-Badri said. "We need to take all that off the market before we can talk about new cuts....Complete Story

"Oil Falls on Speculation Slow Recovery Will Limit Energy Demand"
Crude oil fell for the first time in five days in New York on speculation a slow recovery from the global recession may limit demand. The economy in the U.S., the world’s largest oil consumer, will continue to contract “for some time,” Lawrence Summers, director of the White House National Economic Council, said yesterday. Increased output by non OPEC producers has left the market oversupplied by about 720,000 barrels a day, said Algerian Oil Minister Chakib Khelil. “It’s difficult to see a really sustained rally in oil,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. “There are so many downside risks to the global economy....Complete Story

"Schlumberger CFO: Another Headcount Reduction Likely"
Schlumberger's Chief Financial Officer, Simon Avat, said Friday the oilfield services major will likely reduce its employment levels in the coming months, Dow Jones reports. The world's largest oilfield services company, Schlumberger cut some 5,000, or 6%, of its 84,000 global employees in the first round of layoffs announced in January amid a worldwide downturn in oil and gas activity and weakened crude prices. In the last five years, Schlumberger, whose principal offices are in Houston, Paris and The Hague, recruited 11,613 engineers from 140 countries and 8,754 specialists....Complete Story


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Has The Trend Changed For Crude Oil?

Do you need any more proof of where crude oil is headed and where the SP 500 may be following it?

Oil Rises Fourth Day as Stocks, Dollar Outweigh Demand Concern

Crude oil rose for a fourth day, the longest stretch in two months, as advancing equities and a weaker dollar outweighed concern about lower fuel demand.

Oil gained 3.9 percent after better than expected earnings from American Express Co., Ford Motor Co. and Microsoft Corp. sent stocks higher. Prices fell earlier on signs the Organization of Petroleum Exporting Countries isn’t cutting output fast enough to reduce a supply glut. U.S. crude stockpiles are at their highest in nearly 19 years.

“The strength in equity markets is the main reason oil prices are higher,” said Bill O’Grady, chief markets strategist at Confluence Investment Management in St. Louis. “We are ignoring incredibly high inventories.”

Crude oil for June delivery rose $1.93 to settle at $51.55 a barrel at 2:50 p.m. on the New York Mercantile Exchange. Futures are up 16 percent this year. The June contract declined 1.8 percent this week.....Complete Story


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Schlumberger First Quarter Net Down 30% On Reduced U.S. Drilling

Schlumberger Ltd.'s (SLB) first quarter earnings fell 30% amid plummeting drilling activity, exceeding analysts' pessimistic expectations of a bigger decline amid a sharp drop in drilling activity for oil and gas.

Chief Executive Andrew Gould, however, said Friday in a conference call that Schlumberger would have difficulty replicating its first quarter performance amid lower prices for services and uncertainty in U.S. natural gas drilling.

Gould said Schlumberger's customers are seeking and obtaining lower prices for services. He said the company's first quarter performance would be "extremely difficult" to repeat as those renegotiated prices take hold.

"A lot of price concessions that we have given will flow though in subsequent quarters," Gould said.

Producers have cut back on drilling as low oil and gas prices have left many projects unprofitable and left less cash for those that could make money. Earlier this month, the number of drilling rigs in the U.S. was off by more than half from September to 975, according to Baker Hughes Inc. (BHI), the first drop below 1,000 since 2003....Complete Story


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Crude Advances On Dollar Weakening Against The Euro

Crude oil is trading higher as commodities rise sharply on the dollar trading lower against the Euro in overnight trading. The markets in general are helping oil move higher, but traders all will remain tentative today on news of bank stress test results expected around 2 P.M. est.

Today's pivot point, our line in the sand is 49.30.

First resistance is 50.23
Second resistance is 50.85

First support is 48.68
Second support is 47.75

Crude Oil Closes Higher, Bears Still Have Near Term Advantage

June crude oil closed up $0.58 at $49.43 a barrel today. Prices closed near mid range today. Crude oil bears still have the near term technical advantage. The next downside price objective for the crude oil bears is to produce a close below solid technical support at $44.00.

The U.S. stock indexes closed firmer today. Trading has turned choppy this week. Banking worries and bearish corporate earnings reports this week are keeping the bulls tentative. The recent uptrends in the stock indexes are "rolling over" on the daily charts, which is a bearish technical clue.

June gold futures closed up $14.50 at $907.00 today. Prices closed nearer the session high again today on short covering and fresh speculative buying and amid a weaker U.S. dollar. Prices did hit a fresh three week high today as bulls and bears are back on a level near term technical playing field. Prices are still in a two month old downtrend on the daily bar chart, however.

The June U.S. dollar index closed down 92 points at 85.56 today. Prices closed near the session low today. Bulls are fading quickly. Bulls' next upside price objective is to close prices above solid technical resistance at this week's high of 87.22.



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Crude Oil Closes Slightly Higher, Florida OK's Drilling Bill, NOV Reports It's largestDecline

"Oil Rises as Dollar Drops, Bolstering Demand for Commodities"
Crude oil rose for a third day in New York as the dollar dropped against the euro, bolstering the appeal of commodities. Oil climbed as much as 2.2 percent as the falling U.S. currency increased demand for crude and precious metals as a hedge against inflation. The U.S. Energy Department reported yesterday that crude stockpiles rose for a seventh week to the highest since September 1990. “There’s a hard asset play due to dollar weakness,” said John Kilduff, senior vice president of energy at MF Global Inc. in New York. “Until there is firm evidence that the stimulus package is working and the economy is growing....Complete Story

"Florida House Oks Bill to Drill Off Coast"
State lawmakers gave initial approval Tuesday to a bill that could allow offshore drillers a chance to set up rigs within sight of Florida's Gulf of Mexico beaches. A surprise introduction of legislation by Dean Cannon, R- Winter Park, slated to be House leader next year, calls for lifting the state's decades-old ban on rigs and giving the governor and Cabinet authority over proposals for drilling between 3 to 10 miles from shore. Lucrative move or 'pure insanity'? Industry boosters and legislators praised the concept in a meeting of the House Policy Council, calling it potentially lucrative for an economically depressed state and a needed step toward energy independence....Complete Story

"National Oilwell Varco Drops After Pace of New Orders Slumps"
National Oilwell Varco Inc., the largest U.S. maker of oilfield equipment, had its biggest decline this year in New York trading after its pace of new business slowed by more than half for a second straight quarter. The company’s order backlog, which began the year at $11.1 billion, shrank to $9.6 billion in the first quarter, according to a statement today by the Houston-based manufacturer. National Oilwell Varco booked $240 million in new orders, net of $32 million in work that was canceled, down 67 percent from its fourth-quarter pace. Net income rose 18 percent from a year earlier on the strength of past bookings....Complete Story


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