Where is Crude 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.




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General Stock Market Commentary For Monday Evening

The U.S. stock indexes closed firmer today after being under modest selling pressure much of the session. Prices rebounded from Friday's sell off as worries about the Dubai debt crisis eased a bit.

The stock index bulls still have the overall near term technical advantage. However, don't be surprised to see some more profit taking pressure in the stock indexes heading into the holidays. Traders are awaiting Friday morning's important U.S. jobs data.

Monday evening's crude oil pivot point 76.85
1st resistance 78.57 2nd 79.72 3rd 81.44
1st support 75.70 2nd 73.98 3rd 72.83

Natural gas pivot point 4.947
1st resistance 5.075 2nd 79.72 3rd 5.447
1st support 4.703 2nd 4.575 3rd 4.331

The U.S. dollar index closed down 22 points at 75.18 today. Prices closed nearer the session high today. Bears still have the solid overall near term technical advantage.

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Crude Oil Rises as U.S. Business Activity Gains a Second Month

Crude oil rose after a report showed that U.S. business activity gained for a second month, bolstering optimism that the economic recovery in the world’s biggest energy consuming country will accelerate. Oil rebounded after the Institute for Supply Management Chicago Inc. said today its business barometer increased to 56.1, the highest level since August 2008. Readings above 50 signal expansion. Prices dropped earlier as Dubai’s government said it hasn’t guaranteed the debt of Dubai World, a state controlled company struggling with $59 billion in liabilities.

“These are very good numbers,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas based energy consultant. “Any number above 50 points to an expanding U.S. economy and that’s very good for oil demand.” Crude oil for January delivery increased 37 cents, or 0.5 percent, to $76.42 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Futures are up 71 percent this year. Economists projected the Chicago index would drop to 53, based on the median of 53 estimates in a Bloomberg News survey.

Oil in New York declined 2.5 percent on Nov. 27 as Dubai World’s attempt to reschedule its debt bolstered the dollar. “The dollar is weakening again, which is giving oil support,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “Any big dip in prices is being seen as an opportunity to get into the market”.....Read the entire article.

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Crude Oil Trading Slightly Lower, Do we Have a Near Term Bottom?

Crude oil was slightly lower overnight as it extends last Friday's decline. Stochastics and the RSI are turning bullish signaling that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 78.56 would confirm that a short term low has been posted. If January extends this month's decline, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target.

Monday's pivot point, our line in the sand is 75.43

First resistance is the 10 day moving average crossing at 77.84
Second resistance is the 20 day moving average crossing at 78.56

First support is last Friday's low crossing at 72.39
Second support is the 75% retracement level of this fall's rally crossing at 70.23

Today’s Stock Market Club Trading Triangles

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

If January extends last week's rally, the 50% retracement level of the October-November decline crossing at 5.413 is the next upside target. Closes below the 10 day moving average crossing at 4.901 are needed to confirm that a short term top has been posted.

Natural gas pivot for Monday is 5.086

First resistance is last Friday's high crossing at 5.290
Second resistance is the 50% retracement level of the October-November decline crossing at 5.413

First support is the 20 day moving average crossing at 4.946
Second support is the 10 day moving average crossing at 4.901

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The U.S. Dollar was lower overnight as it consolidates below the 10 day moving average crossing at 75.11. Stochastics and the RSI are turning neutral to bullish hinting that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 75.35 would temper the near term bearish outlook in the market. If December extends this month's decline, monthly support crossing at 73.39 is the next downside target.

First resistance is the 10 day moving average crossing at 75.11
Second resistance is the 20 day moving average crossing at 75.35

First support is last week's low crossing at 74.21
Second support is monthly support crossing at 73.39

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Crude Oil and Natural Gas Technical Outlook For Monday Morning

Nymex Crude Oil (CL)

Intraday bias in crude oil remains neutral for the moment and some more sideway trading might be seen. But after all, risk will continue to remain on the downside as long as 80.51 resistance holds and fall from 82.00 is still in favor to continue. Below 72.39 will target 61.8% retracement of 65.05 to 82 at 71.52 next and then trend line support at 70.76.

In the bigger picture, the resumption of fall from 82.00 last week was inline with our preferred bearish view. That is, a medium term top is formed at 82.0 on bearish divergence conditions in daily MACD as whole rise from 33.2 has completed. Break of trend line support (now at 70.76) will add more credence to this case and bring deeper fall to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. However, break of 80.51 will indicate that price actions from 82.0 are merely consolidations in the medium term rise only. Further break of 82.0 will bring medium term rise resumption. However, as we expect such rise to conclude inside resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2), focus will remain on loss of momentum and reversal signal even in case of another rise.....Here is the charts!

Nymex Natural Gas (NG)

Natural gas fails below 5.318 again and intraday bias is turned neutral for the moment. While some more retreat might be seen, as recent price actions suggest natural gas is consolidations only, hence, we'd look forward to an upside break out. Above 5.318 will confirm that whole rebound from 2.409 has resumed and should target 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. Further will now remain in favor as long as 4.157 support holds, towards 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will indicate dampen this bullish case and turn outlook mixed again.....Here is the charts!

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The Dow, Dollar & Gold – What Goes Down Must Come Up

This year has been a very exiting time for traders and investors. We have seen a steady climb in prices with controlled pullbacks in the broad market and gold.

Using technical analysis we are able to quickly and accurately make informed decisions just from looking at the charts. In the charts below you will see how simple chart patterns along with support & resistance levels can provide excellent low risk entry points. Also you will see how candle stick charts can be an early indicator for prices to reverse direction.

DIA ETF – Daily
The DIA (Dow Jones Index Fund) is trending higher. By applying some basic technical analysis you are able to time your entry points having the odds in your favor.

In this chart I use two simple forms of analysis. The broadening formation (red trend lines), and horizontal support zones shown in blue.

Broadening Formations: This is when the price becomes more volatile making higher highs and lower lows. I think of it as one of those Megaphones for talking to large groups of people. So when a chart has this pattern it’s virtually yelling at me and I start taking profits or tightening my stops.

Horizontal Support Zones: I like to focus on support or resistance zones which are a little different than most traders. I do not use the top and bottoms of previous waves for these levels. Instead I take the average price then expect the support level to be penetrated somewhat as the level is tested. This is how the market keeps you out of the good trades. I cover this in great detail in my Stock Market Trading Education Course available in January.

Analysis: The DIA ETF looks ready for a pullback to the $99- 100 level.



GLD Exchange Traded Fund – Weekly
Gold has been on fire and riding this wave up has been very profitable thus far. Last week a doji candle was formed on the chart and this can signal a change in short term price action.

This chart shows some of the past doji candles and what happened to the price of gold soon after. What this candle is telling us is that the buying and selling pressure is equal. So we know momentum is slowing and we should expect a consolidation or correction.

Because gold has rocketed higher, indeed going almost straight up in the recent weeks, I expect a pullback to be very quick. A drop to the $110 or even the $100 level in the coming weeks is not out of the question, but we all know commodities can go parabolic for several months (straight up). This is why we continue to tighten our stops and keep holding out long positions.



US Dollar – Weekly
The US dollar has been up and down like a yo-yo in the past 15 months. The chart below clearly shows what has been happening with this currency and what I think we could see very soon.

The blue support zone (73-74) is a key pivot point for the dollar. That being said lets take a look at the chart.

During the time when the price is trending higher July 2008 – Feb 2009 we see lower wicks appear more often. This tells me that sellers pushed the price down early in the week but were then overcome by buyers nearer the end of the week. This is bullish price action. Also the broadening patterns during this timeframe’s tops indicate increased volatility and we know that is a sign of weakness.

From March 2009 – Sept 2009 the trend was down and there are longer upper wicks telling us buyers became over powered by sellers each time the price rallied.

In the recent 3 months we observe lower wicks meaning buyers are moving into the US dollar again. Knowing that there is major support below the current price I have to think the dollar could start to bottom around this level.



Trading Conclusion:
The broad market is becoming unstable and looks like it could have more of a pullback this week. I would not be adding to any long positions until we see the market trading near support. Three out of four stocks move with the market so it is crucial to understand the overall market direction when buying and selling stocks and commodities.

Gold is trading at a level which is fuzzy. The weekly chart is neutral and the daily chart is still on fire as it moves up. All we can do is ride our positions and keep raising our stop prices.

The US dollar could start to bottom over the next few weeks. Depending what happens with Dubai this week we could be in for a big bounce in the dollar as investors flock to safety as the US dollar is still the currency of choice if/when other countries start to have a financial melt down again.

Just click here to receive free weekly trading reports from The Gold and Oil Guy.

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Oil Rises on U.A.E. Backing for Dubai’s Banks, Weaker Dollar

Crude oil rose in New York after the United Arab Emirates’ central bank said it “stands behind” the country’s banks, easing concerns about a possible default by Dubai World. Oil gained as much as 0.9 percent after the Abu Dhabi based U.A.E. central bank said yesterday lenders will be able to borrow using a special facility tied to their current accounts. The dollar declined against the euro, bolstering the attraction of commodities as an alternative investment.

“The market is still coming to terms with the implications of the Dubai debt scare for oil,” said Toby Hassall, research analyst with CWA Global Markets Pty in Sydney. The move by the U.A.E central bank could be a “positive sign,” he said. Crude oil for January delivery gained 45 cents, or 0.6 percent, to $76.50 a barrel in electronic trading on the New York Mercantile Exchange at 12:09 p.m. Sydney time. It earlier dropped as much as 0.3 percent.....Read the entire article.

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U.S. Crude Oil Production Poised for Biggest Jump Since 1970

United States crude oil production for 2009 is on target to have its biggest one year jump since 1970, according to a Platts analysis of industry data. With U.S. oil production averaging 5.268 million barrels per day (b/d) through October, the gain in U.S. output will be the most since the country produced 9.637 million b/d in 1970, which turned out to be the peak year of U.S. crude output, according to Platts' analysis of data published by the U.S. Energy Information Administration (EIA). If that 5.268 million b/d figure holds through December, this year would show a 6.4% boost from the 4.95 million b/d average of 2008 and rank as the best U.S. oil production year since 2004, when output averaged 5.419 million b/d.

For comparison, in the 40 years since U.S. oil production peaked annual output has jumped only eight times. Seven of those increases were minimal; only in 1978 was there a jump of significant magnitude, an increase of 5.6%, to 8.7 million b/d. Last year's hurricane curtailments distorted the production numbers somewhat for the 2008 comparison, given that 183,000 b/d of Gulf of Mexico output was still offline at the end of that year. However, 2009 is still expected to post increases of 3% and 4% from the relatively storm free years of 2006 and 2007, respectively.

Projections from the U.S. Minerals Management Service (MMS) indicate that the primary driver for this year's U.S. oil production resurgence is actually just getting started. That driver is the Gulf of Mexico, where operators have begun launching a group of new fields, fulfilling what has been a decade long focus on unlocking the promise of deepwater exploration there.....Read the entire article.

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Crude Oil Futures Tumble to Six Week Low on Dubai Debt Crisis

Crude oil in New York fell to the lowest level in six weeks as Dubai’s attempt to reschedule its debt bolstered the dollar and prompted investors to sell commodities.
Oil dropped as much as 7.1 percent as the U.S. currency climbed, dulling the appeal of raw materials as an alternative investment, and equities tumbled. Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayments, raising concern that worsening defaults may hold back the global recovery.

“The situation in Dubai revives worries about the recovery of the economy,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “The strength of the recovery has an obvious and immediate impact on both oil demand and prices.” Crude oil for January delivery declined $2.28, or 2.9 percent, to $75.68 a barrel at 12:09 p.m. on the New York Mercantile Exchange. Futures touched $72.39, the lowest since Oct. 12. On a closing basis the market is heading for the biggest drop since Nov. 12. New York oil futures didn’t settle yesterday because of the Thanksgiving holiday. Floor trading and electronic trading will end at 1:45 p.m. today, instead of the normal closures at 2:30 and 5:15 p.m......Read the entire article.

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