Oil Post Key Reversal Day, Lower Prices Possible Near Term

Crude oil posted a key reversal down on Tuesday and closed below the 20 day moving average crossing at 71.85 confirming that a double top with June's high as been posted. Stochastics and the RSI are diverging and are turning neutral signaling that sideways to lower prices are possible near term. The low range close sets the stage for a steady to lower opening on Wednesday.

Closes below last Monday's low crossing at 67.42 would confirm that a short term top has been posted. If October extends this month's rally, June's high crossing at 75.27 is the next upside target.

First resistance is today's high crossing at 75.00
Second resistance is June's high crossing at 75.27

First support is today's low crossing at 71.11
Second support is last Monday's low crossing at 67.42

Forget Forex - The Real Professionals Trade Oil Because It Is Easier And More Profitable > Click Here to find out how!

The U.S. Dollar closed slightly lower on Tuesday as it consolidates below the 20 day moving average crossing at 78.62. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If September renews last week's decline, the reaction low crossing at 77.52 is the next downside target. Closes above last Monday's high crossing at 79.36 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 78.66
Second resistance is last Monday's high crossing at 79.69

First support is last Friday's low crossing at 77.81
Second resistance is the reaction low crossing at 77.52

Dennis Gartman’s 22 Rules of Trading

Natural gas closed lower on Tuesday. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are oversold but are neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 3.429 would confirm that a short term low has been posted.

If September extends this month's decline, monthly support crossing at 2.640 is the next downside target.

First resistance is the 10 day moving average crossing at 3.10
Second resistance is broken support crossing at 3.37

First support is Monday's low crossing at 2.73
Second support is monthly support crossing at 2.64

Bloomberg Technical Analysis: Oil Risks Drop to $71.50 If Rally Stalls

Crude oil risks falling toward $71.50 a barrel if prices are unable to surpass a “strengthening level” near $75 in the coming days, according to Societe Generale. Oil has the potential to rise as high as $78 a barrel only if it can push past a $74.65 to $75.25 band, said Stephanie Aymes, a London based commodity technical analyst for the bank. A failure to break this resistance may trigger the unwinding of gains made over the past week. Prices will “further rise but mind $74.65/$75.25,” she said in a report yesterday. “Under $71.50 the correction resumes.” Oil climbed to a 10 month high above $74 a barrel yesterday on speculation the global economy is recovering from recession.....Complete Story

Crude Oil Lower on Overnight Profit Taking

Crude oil was lower overnight due to profit taking as it consolidates some of last week's rally. Stochastics and the RSI are diverging but remain bullish signaling that sideways to higher prices are possible near term.

If October extends last week's rally, June's high crossing at 75.27 is the next upside target. Closes below last Monday's low crossing at 67.42 would confirm that a top has been posted.

Tuesday's pivot point, our line in the sand is 74.13. The weekly pivot point is 71.85.

First resistance is Monday's high crossing at 74.81
Second resistance is June's high crossing at 75.27

First support is the 10 day moving average crossing at 72.29
Second support is the 20 day moving average crossing at 71.96

Get Your FREE Preview of INO TV

The U.S. Dollar was steady to slightly lower overnight. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If September extends last week's decline, the reaction low crossing at 77.52 is the next downside target. Closes below the reaction low crossing at 77.52 would renew this summer's decline.

First resistance is the 10 day moving average crossing at 78.66
Second resistance is last Monday's high crossing at 79.69

First support is last Friday's low crossing at 77.81
Second support is this month's low crossing at 77.52

How To Spot Winning Futures....Watch Video NOW

Natural gas was steady to lower overnight as it consolidates some of Monday's short covering rally. Stochastics and the RSI are oversold and are turning bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 3.432 are needed to confirm that a short term low has been posted.

If September extends this month's decline, weekly support crossing at 2.640 is the next downside target.

Natural gas daily pivot point for Tuesday is 2.88, the weekly is 2.95

First resistance is the 10 day moving average crossing at 3.10
Second resistance is broken trading range support crossing at 3.37

First support is Monday's low crossing at 2.73
Second support is weekly support crossing at 2.64

Oil Drops From 10 Month High as Stocks Fall, Dollar Strengthens

Crude oil dropped from a 10 month high as concerns that China may tighten lending and more U.S. loans may default pushed equities lower and strengthened the dollar, reducing the investment appeal of commodities. Oil declined as investors sought so called safe haven assets such as the dollar over commodities. Oil also fell in tandem with equities on concern that the Chinese government would curb new loans and SunTrust Banks Inc. said that U.S. lenders face more credit losses and commercial real estate may falter through 2010. “Equity and oil markets have been very closely correlated in the last six months,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne.....Complete Story

Transocean Maintains Strength In Numbers

The world's largest offshore drilling contractor with 141 jackups, semisubmersibles and drillships, Transocean has been able to maintain its strength through offshore innovation and acquisitions. Merging with Global Santa Fe in 2007 to cement its place as the world's largest offshore drilling fleet, Transocean has consistently set its sights on pushing the boundaries of technology. In fact, Transocean owned and operated the world's first ever jackup rig in 1954. Through the decades, the company has continued to achieve a number of industry firsts, and that spirit of innovation has helped to turn Transocean into an industry leader.....Complete Story

U.K. Gas Plunges on Excess LNG, Supplies From North Sea, Norway

U.K. natural gas contracts plunged amid lower than normal demand and excess flows of liquefied gas and fuel from the North Sea and Norway. Wholesale gas for same day delivery dropped as much as 13 pence, or 59 percent, to 9 pence a therm, according to broker ICAP Plc. That’s the lowest since October 2006 and equal to $1.49 a million British thermal units. A therm is 100,000 Btus. It was at 15 pence at 4:40 p.m. in London. Gas for the rest of the working week fell 6 pence to 17 pence a therm. U.K. gas demand in the 24 hours through 6 a.m. tomorrow is forecast at 173 million cubic meters, according to National Grid Plc data. That’s 9 million less than the last working day of last week and 37 million below normal for this time of year as the recession and unseasonably warm weather cut demand.....Complete Story

The Energy Report with Chris Vermeulen

The Energy sector seems to be a mixed bag. The weakness of the US dollar has help to boost the price of oil. Currently crude oil is threatening to break above the June high which will most likely trigger a surge of speculate traders/investors for buy crude oil. If the US dollar does find support in the coming weeks we should see the price of oil slide back down to the $60 per barrel level.

Natural gas as most of you know from my weekly writings is not something I am drooling over yet. It was every exciting two months ago with the bullish breakout but we avoided getting caught in the whipsaw action because of my low risk entry rules which confirm short term strength before we put our money to work.

Below is a 4 month chart of the Crude Oil price
This chart clearly shows momentum is up and the price of oil trying to move higher as it trades at resistance of the June high. We are close to a possible low risk buy signal but depending on the price action this week will dictate what happens.



Below is a 4 month chart of the Natural Gas price
Natural gas I will say has on ugly looking chart. The only observation I can really get out of this is that gas is trading at the bottom of its trading range which is $3.30 area, and the top of the range is $4.20. This is a 27% trading range and could be a great small spec trade at this price level. This type of trade is for a high risk taking trader. I would like to see the price move sideways 1-2 more days here so I know its not making another leg lower from here.



Energy Trading Conclusion:
There are several things which could happen here for oil and gas but in short my thought is if the US dollar continues to slide lower we will sell oil continue to rise and this will help boost natural gas prices some what. Because Natural Gas is at the low of its trading range there is a better chance we will see a higher price in the coming days for a small bounce. Natural gas has been underperforming the price of crude oil for 8 months which has happened in 2006 as well.

I continue to sit on the sidelines and watch the market unfold. Waiting is not the most fun but it is much better to wait than lose money on a bunch of high risk trades repeatedly.

Crude oil could have a low risk setup this week if all things work out. I am neutral on natural gas and not willing to jump on that rollercoaster.

If you would like to receive my Free Weekly Trading Reports or my Real Time Trading Signals for ETF’s and Stocks please visit my websites at Gold And Oil Guy or Active Trading Partner

To Your Financial Success,
Chris Vermeulen
The Gold and Oil Guy

Sinopec’s Net Surges on Fuel Prices; Beats Estimates

China Petroleum & Chemical Corp., Asia’s biggest refiner, said first-half profit rose more than four fold, beating estimates, after the government eased curbs on fuel prices and the nation’s economic recovery spurred demand. Net income increased to 33.2 billion yuan ($4.86 billion), or 0.381 yuan a share, from a restated 7.7 billion yuan, or 0.057 yuan a share, a year earlier, Sinopec, as China Petroleum is known, said in a statement to the Hong Kong stock exchange today. That compares with a 27 billion yuan median estimate in a Bloomberg survey of four analysts. The gain contrasts with earnings declines at Royal Dutch Shell Plc and Exxon Mobil Corp., the world’s biggest oil companies, after.....Complete Story

Oil Price Made New Year-High But Be Cautious When Interpreting Inventory Data

Early last week, the commodity market extended weakness in the previous week as risk sentiment turned more cautious on decline in stock markets (particularly sharp fall in stock markets in China) and strength in USD. However, since the middle of the week, impressive crude inventory draw, rebounds in equity markets and better-than-expected economic data revived investors' confidence. The Reuters/ Jefferies CRB Index added +0.5% on weekly basis. WTI crude oil price for October made a new year-high at 74.72 Friday after strong US housing data. The benchmark contract finished the day +1.3% higher to 73.89, the highest closing price since October 2008.....Complete Article

Possible New US Rules Are Wildcard for Commodity ETFs

Investors who want to buy a commodity exchange-traded fund need to perform a new type of calculus....Guessing which ones will be affected by possible new limits on speculators. Worries about regulators possibly curbing ETFs that hold commodity futures have been around since crude oil prices spiked last summer. But in the past few weeks, the threat has become much more real, hindering operations of funds that target commodities ranging from natural gas to wheat. Investors now face a guessing game about whether anticipated restrictions will affect still more funds.....Complete Story