Crude Oil Trades Lower as Dollar Bears Fail to Defend $75

Crude oil closed lower due to profit taking on Thursday as it consolidated some of Wednesday's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. The high range close sets the stage for a steady to higher opening on Friday.

If December extends this month's rally, the 38% retracement level of the 2008-2009 decline crossing at 84.64 is the next upside target. Closes below the 20 day moving average crossing at 73.59 would confirm that a short term top has been posted.

First resistance is Wednesday's high crossing at 82.00
Second resistance is the 38% retracement level at 84.64

First support is the 10 day moving average crossing at 77.50
Second support is the 20 day moving average crossing at 73.59

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Natural gas closed lower on Thursday and the low range close sets the stage for a steady to lower opening on Friday. Despite today's decline, stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.

If December extends the rally off September's low, June's high crossing at 6.170 is the next upside target. Closes below the reaction low crossing at 5.280 are needed to confirm that a short term top has been posted.

First resistance is Wednesday's high crossing at 5.989
Second resistance is June's high crossing at 6.170

First support is today's low crossing at 5.580
Second support is the reaction low crossing at 5.280

Today’s Stock Market Club Trading Triangles

The U.S. Dollar closed higher due to short covering on Thursday as it consolidated some of this month's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If December extends this year's decline, monthly support crossing at 73.39 is the next downside target. Closes above the 20 day moving average crossing at 76.36 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 75.79
Second resistance is the 20 day moving average crossing at 76.36

First support is Wednesday's low crossing at 75.09
Second resistance is monthly support crossing at 73.39

Weekly EIA Natural Gas Storage Report

Working gas in storage was 3,734 Bcf as of Friday, October 16, 2009, according to EIA estimates. This represents a net increase of 18 Bcf from the previous week. Stocks were 397 Bcf higher than last year at this time and 432 Bcf above the 5 year average of 3,302 Bcf. In the East Region, stocks were 114 Bcf above the 5 year average following net injections of 11 Bcf. Stocks in the Producing Region were 252 Bcf above the 5 year average of 935 Bcf after a net injection of 5 Bcf. Stocks in the West Region were 65 Bcf above the 5 year average after a net addition of 2 Bcf. At 3,734 Bcf, total working gas is above the 5 year historical range.



Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2004 through 2008.

Mid Week Oil and Natural Gas Trading Report

Commodities so far this week have not changed much. But I can point out a few things for us to watch Thursday and Friday.

Energy – Oil USO Fund – Energy Stocks XLE Fund
We are seeing a similar pattern in the energy sector. Oil had a nice move higher today while energy stocks sold off. Stocks are starting to fall out of favor.



Natural Gas – UNG Fund
Natural gas is still in a bear market and trading under a major resistance trend line. This commodity could go either way so I am going to wait for the odds to be more on my side before jumping on board with a long or a short trade.



Mid-Week Oil and Nat Gas Conclusion:
The market is starting to look and feel top heavy with many indicators and price action patterns giving cross signals. While the market could continue to rocket higher with new money getting dumped in from average investors because of solid 3rd quarter earnings, we must be cautious by tightening our stops and take some profits off the table. Until we get a short term oversold market condition I am trading very conservatively.

Waiting for a good trade is crucial in trading. If you always want to trade and force positions when the market is choppy you end up with lower probability trades.

To receive Chris Vermeulen's free trading reports just The Gold N Oil Guy.

Record Supplies Have Not Deterred Natural Gas Bulls

The old saying 'every dog has its day' could certainly apply to the Natural Gas futures market as the December futures contract has risen to highs not seen since June, despite a record amount of natural gas in storage. It is still too early to tell to what extent the recent rally may be due to speculative short covering. The most recent Commitment of Traders report shows large non commercial traders were holding a net short position of 64,050 contracts as of October 13th. This was a decline of 1,902 contracts for the week and does not take into account the activity that occurred during the nearly 0.750 point rally since the report was released. Also adding a bit of bullish fuel to the recent rally are predictions that a weak El Nino weather pattern may result in a colder than normal winter.

If true, it may cause utilities Gas usage for heating demand to increase, helping to cut into the current burdensome supplies. Traders are also beginning to anticipate an uptick in industrial demand now that there are signs that the worst of the recession is behind us and an improvement in industrial production may not be far off. However, until we start to see fresh buying entering the market, any major rally attempts could be met with eager sellers, especially with futures trading above cash prices. Traders should monitor government data to gauge the extent of any economic recovery, as Natural Gas futures have been acting as a barometer to economic conditions here in the U.S......read the entire article and charts.

Oil Surges to One Year High on U.S. Gasoline Supply Decline

Crude oil rose above $81 a barrel in New York for the first time in a year and gasoline surged after a U.S. Energy Department report showed a greater than forecast drop in supplies of the motor fuel. Gasoline stockpiles fell 2.21 million barrels, more than twice the median of analyst forecasts, to 206.9 million barrels in the week ended Oct. 16, according to the department’s report. Oil also advanced as U.S. equities increased and the dollar slipped against the euro, bolstering the appeal of commodities.

“The gasoline number has clearly changed the landscape,” said John Kilduff, senior vice president of energy at MF Global in New York. “The industry is seen constraining fuel supply, which is underpinning the market.” Crude oil for December delivery climbed $2.52, or 3.2 percent, to $81.64 a barrel at 12:59 p.m. on the New York Mercantile Exchange. Futures touched $81.73, the highest since Oct. 14, 2008. Prices are up 82 percent this year.

Oil traded at $78.76 a barrel before the release of the report at 10:30 a.m. in Washington. Gasoline for November delivery climbed 5.78 cents, or 2.9 percent, to $2.0455 a gallon in New York. Futures touched $2.0534, the highest since Aug. 31. Prices are up for an eighth day.....Read the entire article.

Is the NASDAQ Now in Thin Air?

Of the three major indexes we track: DOW, NASDAQ and the S&P 500, only the NASDAQ is in thin air.

What do I mean by thin air? So far the NASDAQ is the only index to make it past the 50% Fibonacci retracement levels as measured from the highs seen in 2007 and the lows that were made in March of this year.

Both the Dow and the S&P 500 have rallied strongly from their March lows but have not made it over the 50% retracement level.

Many professional traders - myself included - are looking at the NASDAQ’s Fibonacci retracement as it represents a potentially key turning point for this year’s market.

While not all the pieces are in place to go short or get out of long positions, one of the first clues is being put in place today by the Japanese candlestick charts.

In our new video, we share with you the NASDAQ retracement levels, as well as one of the key components that could lead to a potential reversal to the downside.

Just Click Here to watch the video, and as always our videos are free to watch and there is no need to register.

Please feel free to leave a comment and let our readers know what you think of the video and the direction of the NASDAQ.

Weekly EIA Crude Oil Inventory Report

Summary of Weekly Petroleum Data for the Week Ending October 16, 2009

U.S. crude oil refinery inputs averaged 14.1 million barrels per day during the
week ending October 16, 27 thousand barrels per day under the previous week's
average. Refineries operated at 81.1 percent of their operable capacity last
week. Gasoline production was virtually unchanged last week, averaging 8.5
million barrels per day. Distillate fuel production increased slightly last
week, averaging 3.9 million barrels per day.

U.S. crude oil imports averaged 8.7 million barrels per day last week, down 32
thousand barrels per day from the previous week. Over the last four weeks,
crude oil imports have averaged 9.0 million barrels per day, 310 thousand
barrels per day below the same four week period last year. Total motor gasoline
imports (including both finished gasoline and gasoline blending components)
last week averaged 649 thousand barrels per day. Distillate fuel imports
averaged 120 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) increased by 1.3 million barrels from the previous week. At
339.1 million barrels, U.S. crude oil inventories are above the upper boundary
of the average range for this time of year. Total motor gasoline inventories
decreased by 2.3 million barrels last week, and are near the upper limit of the
average range. Finished gasoline inventories decreased while blending
components increased last week. Distillate fuel inventories decreased by 0.8
million barrels, and are above the upper boundary of the average range for this
time of year. Propane/propylene inventories decreased by 1.4 million barrels
last week and are at the upper limit of the average range. Total commercial
petroleum inventories decreased by 4.2 million barrels last week, and are above
the upper limit of the average range for this time of year.

Total products supplied over the last four week period has averaged 18.8
million barrels per day, down by 0.1 percent compared to the similar period
last year. Over the last four weeks, motor gasoline demand has averaged about
9.2 million barrels per day, up by 4.2 percent from the same period last year.
Distillate fuel demand has averaged 3.5 million barrels per day over the last
four weeks, down by 12.1 percent from the same period last year. Jet fuel
demand is 3.2 percent lower over the last four weeks compared to the same
four week period last year.

Crude Oil Lower on Profit Taking, Euro Weakness

Crude oil was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.

While the Euro was slightly higher overnight day traders are looking at bearish set ups in the Euro with a possibility of trading as low as 148.34 putting additional pressure on crude oil.

If December extends this rally, weekly resistance crossing at 84.83 is the next upside target. Closes below the 20 day moving average crossing at 72.69 would confirm that a short term top has been posted.

Wednesday's pivot point, our line in the sand is 79.12

First resistance is Tuesday's high crossing at 80.40
Second resistance is weekly resistance crossing at 84.83

First support is the 10 day moving average crossing at 76.27
Second support is the 20 day moving average crossing at 72.69

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

If December extends this rally, June's high crossing at 6.170 then the 25% retracement level of the 2008-2009 decline crossing at 6.450 are the next upside targets. Closes below the reaction low crossing at 5.200 are needed to confirm that a short term top has been posted.

Natural gas pivot point for Wednesday is 5.077

First resistance is the overnight high crossing at 5.989
Second resistance is June's high crossing at 6.170

First support is the 20 day moving average crossing at 5.634
Second support is last Thursday's low crossing at 5.280

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The U.S. Dollar was lower overnight as it extends last week's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If December extends this year's decline, monthly support crossing at 73.39 is the next downside target. Closes above the 20 day moving average crossing at 76.47 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 75.91
Second resistance is the 20 day moving average crossing at 76.47

First support is Monday's low crossing at 75.25
Second support is monthly support crossing at 73.39

Oil Falls From a One Year High as Stocks Decline, Dollar Climbs

Crude oil fell from a one year high as U.S. equities dropped and the dollar rebounded, reducing the appeal of commodities as an alternative investment. Oil declined for the first time in nine days as a disappointing report on housing starts overshadowed better than estimated earnings at companies from Apple Inc. to Pfizer Inc. Futures traded above $80 early today as the Dollar Index, which measures the greenback against six major currencies, weakened to its lowest level since August 2008.

“Oil is mainly taking its cue from what’s happening in the financial markets,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consultant. “This shouldn’t be too much of a surprise after the good run we’ve had to the upside.” Crude oil for November delivery fell 81 cents, or 1 percent, to $78.80 a barrel at 10:39 a.m. on the New York Mercantile Exchange. Earlier, prices rose as much as 0.6 percent to $80.05 a barrel, the first time the front-month contract has traded above $80 since Oct. 14, 2008. Futures are heading for the biggest drop since Oct. 7. The November contract expires today. More active December futures declined 84 cents.....Read the entire article.

Bloomberg Analysis: Oil Breaks Resistance, May Climb to $90

Crude oil has breached a key resistance level of $76.28 a barrel, giving it the “capacity” to rise to just under $90 based on Fibonacci retracements, Australia & New Zealand Banking Group Ltd. said. Oil, which is trading near a one year high in New York, is “taking a pause” to consolidate before moving up toward $89.85 a barrel, said Geoff Clear, the Singapore based head of Asian commodities at ANZ.

“We saw a break above $76.28 a barrel, that was the big ‘break up’ level,” Clear said. “We’re in a new range.” Crude prices have surged 83 percent since March 5 while the Dollar Index, which tracks the currency against those of six major U.S. trading partners, has fallen 16 percent since then. The sliding U.S. dollar and a recovery in equity markets prompted investors to buy commodities as an inflation hedge.

Crude may encounter its next resistance level at $83.60, according to Clear. “If we start to get close to the $83.60 level, it’s the next targeted Fibonacci retracement that I can see in the market,” Clear said. “Prices will do a bit of work below $83.60 initially, and then we’ll go on from there”.....Read the entire article.