Crude Oil Higher, Bulls Take The Advantage Overnight

Crude oil was higher overnight as it extends last week's rally. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If November extends last week's rally, the reaction high crossing at 73.58 is the next upside target. Closes below Monday's low crossing at 68.05 would temper the near term friendly outlook in the market.

Tuesday's pivot point, our line in the sand is 69.75

First resistance is the overnight high crossing at 71.63.
Second resistance is the reaction high crossing at 73.58.

First support is the 10 day moving average crossing at 68.05.
Second support is the reaction low crossing at 65.05.

Can you learn to trade crude oil in just 90 seconds?

Natural gas was higher overnight as it extends the rally off September's low. Stochastics and the RSI are diverging but are turning neutral to bullish signaling that sideways to higher prices are possible near term.

If November extends the rally off September's low, August's high crossing at 5.133 then the 50% retracement level of this year's decline crossing at 5.320 are the next upside targets. Closes below last Friday's low crossing at 4.351 would confirm that a short term top has been posted.

Natural gas pivot point for Tuesday is 4.91

First resistance is the overnight high crossing at 5.08
Second resistance is August's high crossing at 5.13

First support is the 10 day moving average crossing at 4.84
Second support is the 20 day moving average crossing at 4.60

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The U.S. Dollar was lower overnight as it extends the decline off last week's high. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. If December extends the overnight decline, September's low crossing at 76.05 is the next downside target. Closes above last week's high crossing at 77.74 would confirm that a short term low has been posted.

First resistance is last Tuesday's high crossing at 77.74
Second resistance is September's high crossing at 79.29

First support is the overnight low crossing at 76.40
Second support is September's low crossing at 76.05

The Market Oracle: Betting on Commodities, Especially Crude Oil

In 2008, prices of oil, natural gas, gold, silver, copper, corn, wheat, and most other commodities reached multi-year, and in some cases multi-decade, highs. They’ve fallen sharply since then, but commodities aren’t going out of business. Another peak is coming, and it will be far higher, especially for oil. The price run up to 2008 came as a debt induced economic acceleration in the developed countries sucked in imports from the emerging economies of Asia. Virtually all the world was gobbling up commodities, but supplies were still choked by the preceding decades of underinvestment in mine development, processing plants, pipelines, railroads, and other elements of the industrial infrastructure needed for producing and transporting raw materials.

Faster consumption and static production capacity had an unsurprising effect prices rose. Then they rose some more and kept on rising. And in the later stages of the commodity price boom, investors, especially hedge funds, joined the bidding as a way to bet on a growing world economy. More bidders, more price push. But not forever. When the credit bubble that had been overstimulating just about every industry became unsustainable and financial markets everywhere collapsed, commodity prices collapsed along with them in anticipation.....read the entire article

Oil Trades Near $70 After Rising as Equities Gain, Dollar Falls

Crude oil traded little changed near $70 a barrel in New York after rising yesterday on optimism fuel demand will increase amid improved prospects for an economic recovery in the U.S., the biggest energy consumer.

Stocks climbed as a report from the Institute for Supply Management showed that U.S. service industries returned to growth after 11 months of contraction. Commodities also gained as the falling dollar bolstered the appeal of raw materials as a hedge against inflation.

“The major headline supporting the rally was the September ISM non manufacturing report showing positive growth,” said Mike Sander, an investment adviser at Sander Capital in Seattle. “Oil was pushed higher thanks to the 100 point move in the Dow Jones” Industrial Average, he said.....Read the entire article

Phil Flynn of PFG Best "Jobs Jab Oil Bulls"

Jobs losses are mounting and oil supplies are rising. It is time to face facts. Recent economic data is undermining the bull's oil case. Welcome to the jobless economic recovery that should reduce oil demand expectations even further as we look out into our future. Oil prices slid as our nation's unemployment reached a painful 9.8% and we lost 263,000 jobs. The oil bulls had better hope the dollar collapses if they are going to have any luck defending these lofty price levels. US supplies are staggering but even more so when you consider the weakened state of the jobs market. With the US being a consumer based economy, it does not bode well for a quick return to robust growth.....Read the entire article

Open Interest Surge Signals Peak as Traders See Slump

Investors are snapping up commodities at the fastest pace in 18 months just as stockpiles of raw materials rise and shipping rates plunge, signaling that prices may be poised to fall. Open interest, or contracts yet to be closed, liquidated or delivered, rose 6.6 percent in the third quarter for the 20 most traded U.S. commodities, exchange data compiled by Bloomberg show. That’s the steepest gain since the first three months of 2008, just before the credit market freeze sent prices plunging from records.

While the U.S. economy shows signs of bottoming after the deepest financial crisis since the Great Depression, supplies of raw materials are growing faster than demand. Oil inventories rose 15 percent in the past year, Energy Department figures show. The Baltic Dry Index, a barometer for raw material demand, slid 41 percent in the third quarter. Alcoa Inc., the largest U.S. aluminum company, will report an adjusted loss of 83 cents a share this year, based on the average estimate of analysts. “We’ve been moving out of our commodity holdings and into cash,” said Peter Sorrentino, who.....Read the entire article

Here is Some Potential Mega Trades For Q4

It seems to me that we are at an inflection point in the economy. The government has blown pretty much all of its money and the economic recovery and the economy is still sputtering along. No surprise there.

So what’s going to happen? We believe that we’ll have another economic downturn which is going to push the dollar to new lows, push gold to new highs, and push the equity markets back down to their March lows.

Yes, I know it’s a scary scenario but that’s what could potentially happen. We are just looking for one or two more pieces to fall into place and then we could see the unfolding of a very dramatic set of economic conditions here in the United States.

This new video looks at gold, the dollar, and the S&P 500. I believe if you’re interested in your economic future you need to watch this video.

Just Click Here to watch the video, and as always our videos are free to view and do not require any registration. If you think this is an important video, I strongly suggest you share with your friends and comment about it on our blog.

Crude Oil Trades Below $70 After Falling on Recovery Concern

Crude oil traded below $70 a barrel in New York after falling on concern that oil demand in the U.S., the biggest energy consuming nation, will be slow to rebound after the jobless rate increased. Oil prices dropped as much as 3.5 percent on Oct. 2 after the U.S. lost more jobs than estimated in September. Economist Nouriel Roubini, the New York University professor who predicted the financial crisis, said Oct. 3 that stock and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors.

“There was weak data coming out of the U.S. and equity markets were weaker,” Mark Pervan, senior commodity strategist at ANZ Banking Group Ltd. in Melbourne, said by phone today. “It’s all pointing downwards.” Crude oil for November delivery traded at $69.88 a barrel, down 7 cents, in electronic trading on the New York Mercantile Exchange at 10 a.m. Singapore time.....Read the entire article

Commodities Consolidate as Economic Outlook is Mixed

Crude oil price plunged to as low as 68.32 Friday as the US Labor Department reported disappointing employment data for September. Investors worried the pace of economic recovery will be delayed and thus took profits from long positions in oil. Although buying interest emerged afterward, WTI crude oil settled -1.2% at 69.95 during the day. On weekly basis, the benchmark contract gained +6%. After plummeting to the lower end of recent trading range of 65-75, oil price recovered in the middle of the week although the US Energy Department reported larger than expected crude builds in the week ended September 25.

Investors used the surprising draw in gasoline stockpile, lower than expected rise in distillate stockpiles and rise in fuel demand as reasons to bid up prices. However, we retain out views that crude oil price will continue move range bounded in coming weeks and occasional rise in demand does not alter the fact that fuel consumptions remain in depressed levels. Gasoline demand rose to 9.126M bpd last week, representing increases of +3.8% on weekly basis and +4.5% on annual basis. However, Exxon's CEO said that gasoline demand has already peaked in 2007 and will decline into the futures. In the US, oil product demand was 20M bpd in 2007 and should fall to about 17M bpd by 2020.....Read the entire article and charts!

So You Think It's Time to Buy UNG? Let's go to The Chart!

In all of my years of trading I have never seen so much attention given to natural gas by the retail investor. Nat gas has been trading at historic low prices recently so it must be ready to skyrocket, right? Well for you traders out there that like me are old enough to remember the sugar market of many years ago, you have to admit natural gas and especially UNG is starting to show some similarities.

So where is UNG headed? Let's see what our MarketClub tools tell us....

UNG Smart Scan Chart Analysis is showing a downtrend with Up arrow, meaning there is some near term rallying power. However, this market remains in the confines of a longer term downtrend Downtrend, trade with tight money management stops.

Based on a pre-defined weighted trend formula for chart analysis, UNG scored -75 on a scale from -100 (strong downtrend) to +100 (strong uptrend):

-10.....Last Hour Close Below 5 hour Moving Average
-15.....New 3 Day Low on Thursday
-20.....Last Price Below 20 Day Moving Average
+25.....New 3 Week High, Week Ending October 3rd
-30.....New 3 Month Low in September
-75.....Total Score



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How to Invest in Oil & Gas Stocks

Investing in oil and gas stocks is actually quite simple, even if you don’t know anything about the energy industry. (My friends in Calgary would say I am living proof of that.)

From my experience in speaking with management teams and reading research reports, I’ve put together a basic information list for retail investors doing initial research into oil & gas companies. It’s not exhaustive, but the answers should provide the basic information to decide if you want to do more due diligence.

Either call management, or go to the company’s website and look at its corporate presentation. The Top 10 bits of information I want to find out initially is:

1. How many barrels of oil per day (bopd, or “boe” for natural gas – barrels of oil equivalent) is the company producing, and how quickly have they grown production in each of the last 3 quarters.
2. How much of their production is oil and how much is natural gas (gas prices are very low right now and doesn’t produce much if any cash flow for companies)
3. How much net cash or net debt do they have? This industry uses a lot of debt, so if a company actually has net cash, they could grow more quickly because they have an entire untapped line of credit waiting to go drilling, and grow the business. And of course no debt means no debt payments and flexibility in doing business......Read the entire article

Just Click Here to visit Keith Schaefer's Oil & Gas Investments Bulletin