Oil and Gas Technically Speaking

From guest analyst Chris Vermeulen, The Gold and Oil Guy!

Commodities continue to trade at their pivot points while the pressure rises!

USO Oil Fund – Weekly Trend Chart
Oil is trending sideways and taking a breather. I expect to see a breakout to the up side but this could still be a few weeks away. I will keep an eye on it for a low risk entry point.


UNG Natural Gas Fund
Natural gas is still trending down which can be seen clearly on the weekly chart. The farther gas continues to sell down, the larger the bounce/potential we will have in the future. Don’t rush this trade; let’s wait for it to come to us.


Technical Traders Conclusion:
The broad market put in a solid bounce today as buyers stepped back in to accumulate shares. Gold and silver are trying to find support to start a new leg higher.
Silver is leading the way which is always a good sign for gold and gold stocks.

Energy is not looking as hot, but once we see natural gas bottom and start heading higher it should be fun. We continue to focus on low risk setups for gold and silver while we wait for some signals from energy sector to come our way.

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Hedges Pay Off for Natural Gas Producers

For oil and natural gas companies, the budding crackdown on U.S. energy markets comes at an awkward time. Producers are relying more than ever on the futures markets to hedge the risk that prices will fall, even as regulators take aim at energy traders in an effort to blunt the sort of spikes that hit consumers last year. Recent earnings reports from a number of U.S. companies including El Paso Corp., XTO Energy Inc., and Chesapeake Energy Corp. showed a big boost from deals that locked in high prices for natural gas before that market sank to seven year lows.....Complete Story

UNG - Natural Gas Fund to Suspend Offering New Units

United States Natural Gas Fund, the world’s largest exchange traded fund in the fuel, said it will suspend offering new units after winning federal approval to issue up to 1 billion new shares. The approval will come today from the Securities and Exchange Commission in Washington, the fund said in regulatory filing. “Our attorneys have told us the prospect us has become effective this morning,” John Hyland, chief investment officer of the Alameda, California-based fund, said in a telephone interview. The fund said it will suspend offering “creation baskets,” which are blocks of 100,000 units, because of proposed regulatory.....Complete Story

Oil Is Little Changed on Forecast U.S. Inventories Expanded

Crude oil traded little changed below $70 a barrel before a report forecast to show that crude inventories expanded last week in the U.S., the world’s largest energy consumer. Oil pared earlier losses after the International Energy Agency raised its oil demand outlook for this year and next on accelerating Chinese industrial activity. The country processed a record volume of crude in July. U.S. oil inventories probably rose 1 million barrels last week as refiners handled less crude, a Bloomberg survey of 12 analysts showed. “Fundamentals are still sluggish,” David Fyfe, head of the IEA’s oil industry and markets division, said by telephone from Paris.....Complete Story

Crude Oil Closes Lower Signaling Short Term Top Has Been Posted

Crude oil closed lower on Tuesday and below the 10 day moving average crossing at 69.75 signaling that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought and are turning bearish signaling that sideways to lower prices are possible near term.

If September extends today's decline, the 20 day moving average crossing at 67.74 is the next downside target. Closes below the 20 day moving average crossing at 67.74 are needed to confirm that a short term top has been posted. If September extends the rally off July's low, the reaction high crossing at 74.25 is the next upside target.

First resistance is last Friday's high crossing at 72.84
Second resistance is the reaction high crossing at 74.25

First support is today's low crossing at 68.71
Second support is the 20 day moving average crossing at 67.74

New Video: The Achilles Heel of a Market

The U.S. Dollar closed lower due to light profit taking on Tuesday as it consolidates some of its recent gains but remains above the 20 day moving average crossing at 78.94. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If September extends this rally, the reaction high crossing at 79.91 is the next upside target. Closes below the 10 day moving average crossing at 78.67 would temper the near term friendly outlook.

First resistance is Monday's high crossing at 79.51
Second resistance is the reaction high crossing at 79.81

First support is the 20-day moving average crossing at 78.88
Second resistance is the 10 day moving average crossing at 78.67

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Natural gas closed lower on Tuesday as it extends the decline off last week's high. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If September extends this week's decline, the reaction low crossing at 3.459 is the next downside target.

Closes above the 10 day moving average crossing at 3.763 would temper the near term bearish outlook in the market. If September renews the rally off July's low, the reaction high crossing at 4.261 is the next upside target.

First resistance is the 10 day moving average crossing at 3.76
Second resistance is last Monday's high crossing at 4.16

First support is today's low crossing at 3.53
Second support is the reaction low crossing at 3.46

Oil Drops Below $70 as Equities Decline, Dollar Strengthens

Crude oil fell below $70 a barrel in New York U.S. equities dropped and the dollar strengthened for a sixth day. Oil retreated as the Standard & Poor’s 500 Index lost as much as 1.2 percent, the biggest decline in more than a month, after analysts cut ratings on companies including Sprint Nextel Corp. and MBIA Inc. The dollar has risen 2 percent since Aug. 3. “Your bearish pressures are still there,” said Bill O’Grady, chief market strategist for Confluence Investment Management in St. Louis. "The recession probably ended in June, but it’s going to be a slow global recovery, and these prices are probably pretty elevated".....Complete Story

OPEC July Output Up 4th Straight Month on Saudi Rise

The Organization of Petroleum Exporting Countries Tuesday said its members' oil production increased for a fourth straight month in July above the group's production target. The increase, a bearish signal for crude prices, highlights the rising amount of crude various OPEC members are putting into the global market at a time when world oil demand is fading due to the end of the northern hemisphere summer, the peak driving season. In its monthly oil market report, OPEC said output from its 11 members bound by production quotas rose by 105,000 barrels.....Complete Story

China Imports Record Oil, Iron Ore as Economy Expands

China bought record volumes of oil and iron ore in July as automakers, steel producers and builders expanded output to meet rising demand driven by the nation’s $586 billion stimulus spending. Oil imports jumped 18 percent to 19.6 million metric tons, and iron ore purchases rose 5 percent to 58.1 million tons from a month ago, the Beijing based customs said today on its Web site. The second largest energy user and biggest iron ore buyer spent a combined $13.8 billion on the commodities.....Complete Story

Crude Oil Trades Higher on China Import Numbers

Crude oil was higher due to short covering overnight while extending last week's narrow trading range. Stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 67.81 would confirm that a short term top has been posted.

If September extends the rally off July's low, the reaction high crossing at 74.25 is the next upside target.

Crude oil pivot point for Tuesday is 70.76

First resistance is last Friday's high crossing at 72.84
Second resistance is the reaction high crossing at 74.25

First support is the 10 day moving average crossing at 69.89
Second support is the 20 day moving average crossing at 67.81

New Video: The Achilles Heel of a Market

The September Dollar was lower due to profit taking overnight as it consolidates some of the rally off last week's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 79.77 are needed to confirm that a short term low has been posted.

If September renews this summer's decline, the 75% retracement level of the 2008-2009 rally crossing at 75.73 is the next downside target.

First resistance is the Monday's high crossing at 79.51
Second resistance is the reaction high crossing at 79.81

First support is the 20 day moving average crossing at 78.88
Second support is the 10 day moving average crossing at 78.67

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Natural gas was higher due to short covering overnight as it consolidates some of last week's decline but remains below broken support marked by the 20 day moving average crossing at 3.775. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If September extends this month's decline, the reaction low crossing at 3.459 is the next downside target. Closes above the 10 day moving average crossing at 3.780 would temper the near term bearish outlook in the market.

Tuesday's pivot point for natural gas, 3.68

First resistance is the 20 day moving average crossing at 3.78
Second resistance is last Monday's high crossing at 4.16

First support is Monday's low crossing at 3.61
Second support is the reaction low crossing at 3.46

Where is Oil Headed on Tuesday?

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