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Crude oil traded little changed around $77 a barrel before a report forecast to show that higher than normal crude inventories grew last week in the U.S. The U.S. Energy Department will probably report tomorrow that stockpiles grew by 1.5 million barrels in the week ended Nov. 20, according to a Bloomberg survey. Analysts were split over the change in supplies of distillate fuels such as heating oil and diesel, which are 28 percent above the seasonal average.
“At least until the end of the year we see $80 as the top of the range,” said Tobias Merath, a commodity analyst at Credit Suisse Group in Zurich. “What’s limiting the potential in the short term is the supply glut in the distillate market.” Crude oil for January delivery traded for $77.52 a barrel on the New York Mercantile Exchange, 4 cents lower, as of 11:16 a.m. London time. Oil, which rose as high as $79.92 yesterday, has failed to close above $80 since Nov. 4. Futures have gained 73 percent this year. Oil was capped by strengthening in the U.S. dollar, which often limits the appeal of commodities for hedging inflation. The dollar traded at $1.4946 per euro at 11:15 a.m. in London, from $1.4961 yesterday in New York.....Read the entire article.
Crude oil rose as a weaker dollar heightened the appeal of commodities to investors and an Iranian military exercise bolstered concern that Middle Eastern supplies may be disrupted. Oil climbed as much as 3.2 percent and gold reached a record as the greenback dropped on speculation the Federal Reserve will keep its stimulus measures in place and ensure interest rates remain at virtually zero. Iran is testing an air defense system this week, in a military exercise to assess the vulnerability of its nuclear plants.
“The primary reason for today’s move is that the dollar is in steady retreat,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The drumbeat from Iran seems to also be giving prices a boost.” Crude oil for January delivery rose $1.64, or 2.1 percent, to $79.11 a barrel at 11:43 a.m. on the New York Mercantile Exchange. Prices are up 77 percent this year. The December contract expired on Nov. 20 at $76.72 a barrel. Oil traded between $74.79 and $82 the past five weeks after surging in early October.....Read the entire article.
Since the market crash in late 2008 we have seen investors favor quality stocks that pay dividends and have steady earnings. Fast growth companies and equities with physical resources like commodities have also done well.
Gold – Monthly Chart Looking at the monthly chart as far back as 2004, we see that gold has formed the same patterns repeatedly. This has created a stair step pattern and allows us to calculate measured moves and a time frame for this to take place.
As we can see gold has broken its 2008 high and is starting another rally which we have seen several times before. I figure we could see gold rally for another 3-5 months and possibly reach the $1500 -$1600 level before forming a multi month or year consolidation.
Investors around the world are buying gold because it is a physical product which has been proven to hold its value.
Silver & Precious Metal Stocks – Monthly Chart Silver and PM stocks have been trading in tandem since 2004 and we can see this by looking at a price performance chart of both silver and the HUI index. The interesting part is that the physical commodity silver has held its value better than the stocks during corrections. Apparently investors prefer tangible investments over stock certificates of mining companies in periods of increased volitility. Lower risk is in the commodity.
Oil – Monthly Chart Crude oil has held its value over energy stocks for the majority of the time since 2003. And currently, investors are more comfortable holding oil as a safe investment over energy stocks.
Natural Gas – Monthly Chart Natural gas is the energy sector’s underdog in my eyes. The world has found so much natural gas in the ground and discovered cost effective ways to collect gas that it will continue to see investors move away until inventory start to deplete.
Commodity Trading Conclusion: Investors around the world continue to put money into gold which is a universal hedge against inflation. The broad market appears to be trading at a major resistance level. Tops in the market generally take a much longer than to reverse directions than market bottoms. We will not knot for sure if we are entering a top for a couple months as the charts unfold. Now that commodities are trading back at reasonable levels I think they will hold up better than equities if the market starts to correct.
We continue to enter low risk setups and trade with this strong up trend but are aware that we must be protected and focus on the lower risk plays.
The markets are always interesting, but they are particularly interesting right now.
Today we’re looking at the dollar index and some important elements that we see building in this market and want to bring to your attention. In this short video we outline the key areas to watch for and one important component that you may not have seen. We think this factor could, in fact, be a short term game changer for this market.
Just click here to watch the video and as always our MarketClub videos are free to watch and there is no need to register. Please take a moment to let our readers know where you think the U.S. Dollar is headed.
Good trading, Ray C. Parrish President/CEO The Crude Oil Trader
In our new video on crude oil we update some of the thoughts we have recently published, but also some important elements that are still in play and could push this market significantly higher.
In this new video we outline the key support zone that we see and also highlight some other technical elements could come into play to push this market higher.
Just click here to watch the video, and as always our videos are free to watch and there is no need to register. Please take a moment to leave a comment and let our readers where you think oil is headed.
Good trading, Ray C. Parrish President/CEO The Crude Oil Trader
Crude oil fell for a second day as the dollar strengthened against the euro and global equity markets declined. Oil slipped as much as 1.6 percent as the U.S. currency advanced for the third time in four days. Stocks and equity futures retreated after European Central Bank President Jean-Claude Trichet said policy makers will withdraw emergency cash gradually to avoid fueling inflation, and Dell Inc.’s earnings trailed analysts’ estimates.
“We will take oil prices down another notch because of the strengthening dollar,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consultant. “Things are bearish everywhere you look.” Crude oil for December delivery fell $1.20, or 1.6 percent, to $76.26 a barrel at 9:11 a.m. on the New York Mercantile Exchange. Prices are little changed this week and 71 percent higher this year. The December contract expires today. The more actively traded January contract fell $1.09, or 1.4 percent, to $76.96 a barrel. Oil dropped 2.7 percent yesterday as the greenback gained and on concern the rally in commodities and equities has outpaced the prospects for economic growth.....Read the entire article.
Crude oil closed down $1.87 at $77.71 a barrel today. Prices closed nearer the session low today amid a rebound in the U.S. dollar index and solidly lower U.S. stock index futures prices. Crude oil bulls still have the overall near term technical advantage. However, the bulls do not want to see a bearish weekly low close on Friday.
Unleaded gasoline (RBOB) closed down 381 points at $.19733 today. Prices closed nearer the session low today. Bulls still have the overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the October high of $2.1015.
Natural gas closed up 8.9 cents at $4.343 today. Prices closed near the session high after hitting a fresh contract low early on today. Short covering in a bear market was seen today. Serious near term chart damage has occurred recently. Bears have the solid near term technical advantage.
The U.S. dollar index closed up 14 points at 75.40 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage, amid no early clues of a market bottom being close at hand.
Overview for the week ending Wednesday, November 18, 2009
Since Wednesday, November 11, natural gas spot prices rose at nearly all market locations in the lower 48 States, with increases of up to 55 cents per million Btu (MMBtu). Prices at the Henry Hub climbed $0.15 per MMBtu, or about 4 percent, to $3.74 per MMBtu.
At the New York Mercantile Exchange (NYMEX), the futures contract for December delivery at the Henry Hub settled yesterday, November 18, at $4.254 per MMBtu. The price of the near month contract decreased by 25 cents or about 6 percent during the report week.
Natural gas in storage was a record setting 3,833 billion cubic feet (Bcf) as of November 13, which is about 12 percent above the 5 year average (2004-2008). The implied net injection for the week was 20 Bcf.
The spot price for West Texas Intermediate (WTI) crude oil increased by $0.39 per barrel since Wednesday, November 11, to $79.55 per barrel or $13.72 per MMBtu.
In our latest video we hope to answer those questions and show you what we think could happen to this market in the near term.
There is a fascinating cycle at work that we want to share with you. If this cycle remains in effect, we could be looking at the beginning of a turn down for this index.
Just click here to watch the video and as always our MarketClub videos are free to watch and there is no need to register.
Please take a moment to leave a comment and let us know what you think about the direction of the market.
Good trading, Ray C. Parrish President/CEO The Crude Oil Trader
Have you been worried about the dramatic drop in the dollar? Are you worried that the dollar is falling because of our ballooning deficit or the fact that this country is printing money like there is no tomorrow? Well if the Fed is not worried maybe you shouldn’t be either.
Panic time is over! The President of the Philadelphia Fed, Charles Plosser, says the drop in the dollar reflects the end of panic. In fact he even says its drop in value should not be a surprise and was even expected. Well yeah if you keep printing money and keep rates below zero. Take that Nouriel Roubini! Mr. Plosser says that there is no particular reason why you wouldn't expect the dollar to go back to where it was before the panic set in.
He says that the U.S. government has historically let the dollar fluctuate, and a weaker dollar in recent years can be understood as a market response to imbalances in the U.S. current account. The dollar as an instrument to tackle asset price bubbles, monetary policy alone isn't adequate, and that more research should be made on the issue of whether there's a connection between policy rates and such bubbles.....Read the entire article.
