Transocean Rents Seen Sinking on Deepwater Rig Glut

Transocean Ltd. and Diamond Offshore Drilling Inc., [RIG] and [DO] the world’s biggest deepwater oil drillers, may face a drop in rig-rental revenue because of a glut of vessels that can operate in oceans two miles (3.2 kilometers) deep. The oversupply will develop in 2011 as rigs that drillers started building when oil prices surged to a record last year are completed, said Jud Bailey, an analyst at investment bank Jefferies & Co. in Houston. Rig rents are likely to drop 10 to 15 percent and stay down until new deepwater developments create enough demand to end the surplus in 2012 or 2013, he said.

“It was a classic case of panic on the part of operators when oil was over $100,” Bailey said. “A part of that panic was just the fact that they couldn’t get a rig. When that psychology reverses, it can be a pretty powerful dynamic.” Of the so called ultra deepwater rigs scheduled for completion between now and the end of 2011, 22 don’t have contracts to drill, according to researcher ODS-Petrodata Inc. in Houston. The most ultra-deepwater rigs to sit without a contract was three in April 2004, said Tom Kellock, head of consulting and research at ODS. Today there is just one......Read the entire article.

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Crude Oil Bears Appear to Have a Clear Near Term Advantage

Crude oil was lower overnight as it extends the decline off October's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the 20 day moving average crossing at 77.42 are needed to confirm that a short term low has been posted.

Tuesday's pivot point, our line in the sand is 74.58

First resistance is the 10 day moving average crossing at 76.18
Second resistance is the 20 day moving average crossing at 77.42

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

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Natural gas was higher overnight as it extends Monday's rally above the 20 day moving average. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term.

If January extends this week's rally, the reaction high crossing at 5.290 is the next upside target. Closes below the 20 day moving average crossing at 4.821 would temper the near term bullish outlook in the market.

Natural gas pivot for Tuesday is 4.875

First resistance is the overnight high crossing at 5.060.
Second resistance is the reaction high crossing at 5.290.

First support is the 20 day moving average crossing at 4.821.
Second support is last week's low crossing at 4.432.

What do all market wizards have in common?

The U.S. Dollar was higher overnight and is poised to extend last Friday's short covering rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If March extends last Friday's rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.39 would temper the near term bullish outlook in the market.

First resistance is Monday's high crossing at 76.58
Second resistance is November's high crossing at 77.27

First support is the 20 day moving average crossing at 75.53
Second support is the 10 day moving average crossing at 75.39

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Crude Oil and Natural Gas Technical Outlook For Tuesday Morning

Nymex Crude Oil (CL)

Intraday bias in crude oil remains on the downside for the moment with 76.30 minor resistance intact and further fall is still in favor for 72.39 support. Break there will target trend line support at 71.16 next. On the upside, above 76.30 minor resistance will turn intraday bias neutral first. But note that choppy fall from 82.0 is still in favor to continue as long as 79.04 resistance holds.

In the bigger picture, question remains on whether crude oil's medium term rebound from 33.2 has completed at 82.0 already and the outlook is quite mixed so far. Nevertheless, now, as long as 79.04 resistance holds, fall from 82.0 will remain in favor to continue and we'd slightly prefer the bearish case that crude oil has topped out at 82.0 already. Sustained trading below the trend line support (now at 71.16) will add more credence to this case and target 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation.

On the upside, though, above 79.04 resistance will suggest that recent choppy price actions from 82.0 are merely consolidations in the medium term rise from 33.2. In such case, the rise from 33.2 might be ready to resume for another high above 82.0. 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 in this case.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas' rebound from 4.432 extends further as expected the the break of 4.90 minor resistance confirms that prior fall has completed. Further rise should be seen to retest upper end of recent range at 5.318 first. As noted before, recent price actions are merely consolidations to the rebound from 2.409. Decisive break of 5.318 will indicate that whole rise from 2.409 has resumed for 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next. On the downside, below 4.65 will indicate that rebound from 4.432 has completed and will suggest that more sideway trading could be seen between 4.157 and 5.318 before an eventual upside breakout.

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 and might have completed at 2.409 already. Rise from 2.409 should not be completed yet and we would continue to anticipate an upside break out of the recent range of 4.157/5.138 eventually. Above 5.318 will target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will dampen this bullish case and turn outlook mixed again.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Crude Oil Rises for First Time in Five Days on Dollar Decline

Crude oil rose for the first time in five days as the dollar weakened and some investors took the view a decline below $75 made it an attractive investment. Oil snapped four days of losses as the dollar fell against the euro, increasing the appeal of commodities as an alternative investment. The contract has traded between $75 and $81 for almost eight weeks and yesterday settled below $75 for the first time since Oct. 13.

“Markets had for a while started to get used to the $75 to $80 a barrel range for oil, and the move to the lower part of that range is probably attracting some buying,” David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney, said by telephone. “The U.S. dollar eased back and that’s been another factor why the oil price has lifted.”

Crude oil for January delivery gained as much as 46 cents, or 0.6 percent, to $74.39 a barrel in electronic trading on the New York Mercantile Exchange. It was at $74.12 a barrel at 11:58 a.m. Singapore time. Yesterday, the contract fell $1.54, or 2 percent, to $73.93. Prices have climbed 67 percent this year.The dollar traded at $1.4841 per euro at 12:05 p.m. in Singapore, from $1.4827 yesterday.

Oil dropped yesterday as Federal Reserve Chairman Ben S. Bernanke said the U.S. economy will face a weak labor market and tight credit, signaling fuel demand will be slow to recover. Bernanke’s comments “gave markets a bit of a reality check and made people reassess how they thought the recovery is going to pan out,” Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne, said by phone. “As a result oil got sold off”.....Read the entire article.


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Where is Crude Oil Headed on Tuesday?

CNBC's Bertha Coombs discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Can it be....Crude Oil AND U.S. Dollar set for Lower Open on Tuesday

Crude oil closed lower on Monday as it extends last week's decline. The low range close sets the stage for a steady to lower opening on Tuesday. If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the reaction high crossing at 79.04 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 76.56
Second resistance is the 20 day moving average crossing at 77.74

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

What do Super Traders have in common?

Natural gas closed higher due to short covering on Monday and above the 20 day moving average crossing at 4.822 confirming that a short term low has been posted. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold and are turning bullish signaling that sideways to higher prices are possible near term.

If January extends today's rally, the reaction high crossing at 5.290 is the next upside target. If January renews this year's decline, weekly support crossing at 4.157 is the next downside target.

First resistance is today's high crossing at 5.009
Second resistance is the reaction high crossing at 5.290

First support is last Thursday's low crossing at 4.432
Second support is weekly support crossing at 4.157

Double Tops and Pivot Points Explained

The U.S. Dollar closed lower due to profit taking on Monday as it consolidated some of last Friday's rally but remains above the 20 day moving average crossing at 75.49. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If March extends last week's rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.32 would temper the near term friendly outlook in the Dollar.

First resistance is today's high crossing at 76.57
Second resistance is November's high crossing at 77.27

First support is the 20 day moving average crossing at 75.49
Second support is the 10 day moving average crossing at 75.32

The Buy and Hold Myth.....Is Buy and Hold Back?

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Crude Oil Drops for a Fourth Day, Trades Below $75 as Dollar Strengthens

Crude oil dropped for a fourth day, trading below $75 a barrel as the dollar gained amid speculation the U.S. Federal Reserve will start raising interest rates. Oil closed at its lowest level since Oct. 14 last week after a better than forecast U.S. jobless report bolstered the dollar. Commodities including gold and oil typically weaken when the dollar appreciates. Traders have raised their expectations that the Fed will lift interest rates early next year.

“We’re seeing continued follow-through from the jobs data, fueling talk that the Federal Reserve may need to consider raising interest rates, strengthening the dollar,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. Crude oil for January delivery fell $1.02, or 1.4 percent, to $74.45 a barrel at 10:55 a.m. on the New York Mercantile Exchange, marking the first four day decline since August. Prices have climbed 67 percent this year.

The dollar increased to $1.4827 per euro from $1.4858 in New York at the end of last week. The dollar weakened this year as the Federal Reserve kept benchmark interest rates near zero since December 2008 to revive lending after the worst financial crisis since World War II.....Read the entire article.

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Crude Oil, Commodities Fall on Fed Rate Speculation

Crude oil was lower overnight as it extends the decline off October's high. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

If January extends the decline off October's high, the 75% retracement level of this fall's rally crossing at 70.23 is the next downside target. Closes above the 20 day moving average crossing at 77.78 are needed to confirm that a short term low has been posted.

Monday's pivot point, our line in the sand is 76.07

First resistance is the 10 day moving average crossing at 76.65.
Second resistance is the 20 day moving average crossing at 77.78.

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

What do all market wizards have in common?

Natural gas was higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI are oversold and are turning neutral hinting that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 4.810 would temper the near term bearish outlook in the market. If January extends this year's decline, weekly support crossing at 4.157 is the next downside target.

Natural gas pivot point for Monday is 4.569

First resistance is the 10 day moving average crossing at 4.782
Second resistance is the 20 day moving average crossing at 4.810

First support is last Thursday's low crossing at 4.432
Second support is weekly support crossing at 4.157

How To Find Winning Trades In Any Market

The U.S. Dollar was higher overnight as it extends last Friday's short covering rally. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If March extends last Friday's rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.35 would temper the near term bullish outlook in the market.

First resistance is the overnight high crossing at 76.60
Second resistance is November's high crossing at 77.27

First support is the 20 day moving average crossing at 75.51
Second support is the 10 day moving average crossing at 75.35

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Crude Oil Weekly Technical Outlook

Crude oil's rebound from 72.39 was limited at 79.04 and well below mentioned 80.51 resistance. Crude oil then weakened again with a break of 75.18 minor support on Friday. The development firstly indicates that recovery from 72.39 has completed and thus flip the bias back to the downside for a retest on 72.39 initially this week. Secondly, there is no indication that choppy fall from 82.0 has finished and thus more downside will remain in favor in near term. Break of 72.39 will target trend line support at 71.16 next.

In the bigger picture, question remains on whether crude oil's medium term rebound from 33.2 has completed at 82.0 already and the outlook is quite mixed so far. Nevertheless, now, as long as 79.04 resistance holds, fall from 82.0 will remain in favor to continue and we'd slightly prefer the bearish case that crude oil has topped out at 82.0 already. Sustained trading below the trend line support (now at 71.16) will add more credence to this case and target 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation.

On the upside, though, above 79.04 resistance will suggest that recent choppy price actions from 82.0 are merely consolidations in the medium term rise from 33.2. In such case, the rise from 33.2 might be ready to resume for another high above 82.0. 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 in this case.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27......Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Where is Crude Oil Headed This Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed next week.




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