CNBC's Bertha Coombs discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.
Wednesday, December 9, 2009
Crude Oil Closes Sharply Lower, Bears Target $68 Level
Crude oil closed sharply lower on Wednesday as it extended the decline off October's high and tested the 75% retracement level of this fall's rally crossing at 70.23. The low range close sets the stage for a steady to lower opening on Thursday.
If January extends the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target. Closes above the 20 day moving average crossing at 76.92 are needed to confirm that a short term low has been posted.
First resistance is the 10 day moving average crossing at 75.54
Second resistance is the 20 day moving average crossing at 76.92
First support is today's low crossing at 70.13
Second support is the 87% retracement level of this fall's rally crossing at 68.16
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Natural gas posted a key reversal down on Wednesday as it consolidated some of this week's rally. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain 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 4.828 would temper the near term friendly outlook in the market. 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 5.230
Second resistance is the reaction high crossing at 5.290
First support is the 10 day moving average crossing at 4.851
Second support is the 20 day moving average crossing at 4.828
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The U.S. Dollar closed lower due to profit taking on Wednesday as it consolidates some of this week's rally. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
If March extends its current rally, November's high crossing at 77.27 is the next upside target. Closes below the 20 day moving average crossing at 75.60 would temper the near term friendly outlook in the Dollar.
First resistance is today's high crossing at 76.66
Second resistance is November's high crossing at 77.27
First support is the 10 day moving average crossing at 75.62
Second support is the 20 day moving average crossing at 75.60
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EIA Weekly Petroleum Status Report
U.S. crude oil refinery inputs averaged 13.9 million barrels per day during the week ending December 4, 77 thousand barrels per day above the previous week’s average. Refineries operated at 81.1 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.2 million barrels per day. Distillate fuel production increased last week, averaging 4.0 million barrels per day.
U.S. crude oil imports averaged 8.1 million barrels per day last week, down 264 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.5 million barrels per day, 1.4 million 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 750 thousand barrels per day. Distillate fuel imports averaged 185 thousand barrels per day last week.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.8 million barrels from the previous week. At 336.1 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 2.2 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week.
Distillate fuel inventories increased by 1.6 million barrels, and are above the upper boundary of the average range for this time of year. Propane/propylene inventories decreased by 1.3 million barrels last week and are near the lower limit of the average range. Total commercial petroleum inventories decreased by 4.3 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 18.5 million barrels per day, down by 3.0 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 9.0 million barrels per day, up by 1.2 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 8.3 percent from the same period last year. Jet fuel demand is 0.7 percent lower over the last four weeks compared to the same four week period last year.
The average world crude oil price on December 4, 2009 was $76.18 per barrel, $0.43 more than last week’s price and $33.06 above a year ago. WTI was $75.41 per barrel on December 4, 2009, $0.54 less than last week’s price but $34.40 above a year ago. The spot price for conventional gasoline in the New York Harbor was 196.46 cents per gallon, 2.11 cents more than last week’s price and 105.66 cents above last year. The spot price for No. 2 heating oil in the New York Harbor was 199.30 cents per gallon, 5.85 cents more than last week’s price and 58.83 cents above a year ago.
The national average retail regular gasoline price increased to 263.4 cents per gallon on December 7, 2009, 0.5 cent per gallon more than last week and 93.5 cents above a year ago. The national average retail diesel fuel price decreased for the fifth week in a row to 277.2 cents per gallon, 0.3 cent per gallon less than last week but 25.7 cents above a year ago.
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Natural Gas Falls, Report Tomorrow Seen Showing Below Average Supply Drop
Natural gas futures declined in New York before a government report tomorrow that will probably show that supplies fell less than average last week. The Energy Department may say supplies declined 48 billion cubic feet, based on the median of 12 analyst estimates compiled by Bloomberg. The five year average drop for the week is 90 billion. Gas futures gained 15 percent in the previous three days on forecasts for colder weather.
“The withdrawal will be relatively modest,” said Phil Flynn, vice president of research at PFGBest in Chicago. “We’re still very well supplied. If the cold front doesn’t live up to its billing, we could fall pretty dramatically.” Natural gas for January delivery fell 2.6 cents, or 0.5 percent, to $5.088 per million British thermal units at 10:45 a.m. on the New York Mercantile Exchange. Prices have declined 9.5 percent this year. The contract has traded between $5.04 and $5.23 per million Btu today. U.S. gas stockpiles rose 2 billion cubic feet to a record 3.837 trillion cubic feet in the week ended Nov. 27, according to department data.....Read the entire article.
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Crude Oil Higher on Short Covering, Bears Maintain The Near Term Advantage
Crude oil was higher due to short covering overnight as it consolidates some of this week's decline. 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 20day moving average crossing at 77.07 are needed to confirm that a short term low has been posted.
Wednesday's pivot point, our line in the sand is 73.15
First resistance is the 10 day moving average crossing at 75.84
Second resistance is the 20 day moving average crossing at 77.07
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 this week's rally above the 20 day moving average. Stochastics and the RSI are 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 4.844 would temper the near term bullish outlook in the market.
Nat gas pivot point for Wednesday is 5.078
First resistance is the overnight high crossing at 5.222
Second resistance is the reaction high crossing at 5.290
First support is the 10 day moving average crossing at 4.884
Second support is the 20 day moving average crossing at 4.844
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The March Dollar was lower due to profit taking overnight as it consolidates some of Tuesday's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
If March extends this week's rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.60 would temper the near term bullish outlook in the market.
First resistance is Tuesday's high crossing at 76.65
Second resistance is November's high crossing at 77.27
First support is the 10 day moving average crossing at 75.60
Second support is the reaction low crossing at 74.66
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Crude Oil and Natural Gas Technical Outlook For Wednesday Morning
Nymex Crude Oil (CL)
At this point, intraday bias in crude oil will remain on the downside as long as 75.36 minor resistance holds. Further fall is in favor to trend line support at 71.86. Break there will be another signal of medium term topping and will bring deeper decline to 65.05 support next. On the upside, above 75.36 will turn intraday bias neutral and bring recovery. 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 71.86) 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' rise from 4.432 continues as expected and at this point, intraday bias remains on the upside for 5.318 resistance. As noted before, decisive break there will confirm that recent consolidations have completed and 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 4.96 minor support will turn intraday bias neutral again and bring some more consolidations 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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Tuesday, December 8, 2009
Where is Crude Oil Headed on Wednesday?
CNBC's Bertha Coombs discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.
Crude Oil Closes Lower as it Extends Last Week's Decline
Crude oil closed lower on Tuesday as it extends last week's decline. The low range close sets the stage for a steady to lower opening on Wednesday.
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 76.08
Second resistance is the 20 day moving average crossing at 77.37
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 closed higher on Tuesday as it extended Monday's rally above the 20 day moving average. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning 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. 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 5.152
Second resistance is the reaction high crossing at 5.290
First support is the 20-day moving average crossing at 4.827
Second support is last Thursday's low crossing at 4.432
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The March Dollar closed higher on Tuesday as it extended last Friday's rally but remains above the 20 day moving average. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
If March extends its current rally, November's high crossing at 77.27 is the next upside target. Closes below the 10 day moving average crossing at 75.43 would temper the near term friendly outlook in the Dollar.
First resistance is today's high crossing at 76.61
Second resistance is November's high crossing at 77.27
First support is the 20 day moving average crossing at 75.55
Second support is the 10 day moving average crossing at 75.43
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Gold : A Minor Pullback or a Major Correction?
Wow....what a week it was in the world of Gold! After charging above $1,200 on the front month futures contract earlier in the week, Gold finally finished the week on a very weak note, closing below $1,150, which was right above the low established a week earlier in the wake of the Dubai debt debacle. Clearly, Gold is beginning a trend reversal on a daily based time frame, but the technical picture is less clear over the long term. Let’s examine a weekly chart for GLD (one of the financial instruments that holds actual Gold) to get a better fix on what might be expected in this volatile market over the next month or so.
Graphic credit: Metastock v.11
Before going any further, I must admit to being a Gold Bug, having been afflicted with this wonderful malady for many years, including the time period prior to the recent bull run in Gold from 2001-present. Long term, and given the abysmal long term outlook for the US Dollar (and all fiat currencies for that matter), declining mine production (most of the high quality, easier to mine deposits are used up already) and greater awareness among investors regarding the inclusion of Gold in their portfolios, I believe that Gold will easily make it to $2,500 to $3,000 at some point in the next five years, despite several massive sell offs along the way to the eventual summit. However, in the here and now, we need to also rely on our charts, technical indicators and COT futures market data (Commitment of Traders report, published weekly by the CFTC) in order to minimize losses and maximize gains by waiting for more opportune times to add to long term holdings of Gold and/or to capitalize on high probability, short term moves (up and down) that will likely commence from solid support/resistance (S/R) levels in the weeks ahead.
OK, now on to what the weekly chart of GLD is telegraphing to astute traders and investors here:
1. $1,200 was a key Fibonacci extension/Keltner Band resistance area on both a weekly and monthly time frame; major turbulence was expected well in advance, thus the recent tumble came as no surprise to experienced technical traders.
2. Note this week’s wide range weekly reversal candle, one that printed on extremely heavy volume (see circle at bottom of chart); this is a major reversal signal, especially for daily based traders, coming in the wake of such a high profile resistance barrier($1,200).
3. Look now at the short-term and long term money flows (lower portion of the chart); both of the Chaikin money flow indicators (CMF)(34) and (CMF)(144) are revealing pronounced negative divergences with the actual price trends of GLD, which means that the raw fuel (money flowing into GLD and Gold) needed to drive Gold higher is beginning to dry up, for the time being.
OK, so what? What’s a trader and/or investor to do now, given this information? Well, if you’re a long term Gold Bug, simply hold your core investment positions for the long haul; that $100+ trillion US national debt/unfunded liability problem ain’t paid off just yet (and likely will never be), so the future for Gold has never looked better, especially for those wishing to diversify out of the Greenback. Let this corrective move play out and trhen consider adding more at lower price levels, $1,050 might be one such a price zone, which happens to be the current 21 week exponential moving average (EMA) price for cash Gold. For those investing via shares in GLD, the area near $104 also coincides with its own 21 week EMA. More cautious investors might wait for a move lower toward the 50 week EMA, which comes in at about $96 for GLD and $975 for cash Gold. The 21 and 50 week EMA’s acts as strong S/R barriers in nearly every kind of market, and Gold is no exception, so you may wish to do further analysis to see if adding on at those particular price areas makes sense for your financial situation.
Traders can be a bit more aggressive; expect to see some sort of a reaction move higher once GLD/Gold hit their 21 week EMA (green box on the chart shows the likely time/price zone in which to anticipate a reversal higher) this will most likely be a high-probability swing trade play, one that also needs to have a logical stop loss and profit target as well. Daily based traders can do the same thing, plan on on the 21 day EMA offering some sort of a floor from which a short term tradable bounce will commence. But be very nimble, with firm stop-loss and profit targets in place before you enter the trade.
Yes, this is a real correction in Gold, but no one really knows how far the price might fall. Even the strongest bull markets need to pause and correct before moving higher, and perhaps this is the case with the Gold market right now. We should know more as the weeks ahead play out, as always, use common sense, be patient and learn to focus on what the charts and long term fundamental factors are saying, rather than giving in to fear, doubt or the opinions of those who may not have your best interests in mind.
Courtesy of Donald W. Pendergast Jr. - ETF Trading Partner
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Graphic credit: Metastock v.11
Before going any further, I must admit to being a Gold Bug, having been afflicted with this wonderful malady for many years, including the time period prior to the recent bull run in Gold from 2001-present. Long term, and given the abysmal long term outlook for the US Dollar (and all fiat currencies for that matter), declining mine production (most of the high quality, easier to mine deposits are used up already) and greater awareness among investors regarding the inclusion of Gold in their portfolios, I believe that Gold will easily make it to $2,500 to $3,000 at some point in the next five years, despite several massive sell offs along the way to the eventual summit. However, in the here and now, we need to also rely on our charts, technical indicators and COT futures market data (Commitment of Traders report, published weekly by the CFTC) in order to minimize losses and maximize gains by waiting for more opportune times to add to long term holdings of Gold and/or to capitalize on high probability, short term moves (up and down) that will likely commence from solid support/resistance (S/R) levels in the weeks ahead.
OK, now on to what the weekly chart of GLD is telegraphing to astute traders and investors here:
1. $1,200 was a key Fibonacci extension/Keltner Band resistance area on both a weekly and monthly time frame; major turbulence was expected well in advance, thus the recent tumble came as no surprise to experienced technical traders.
2. Note this week’s wide range weekly reversal candle, one that printed on extremely heavy volume (see circle at bottom of chart); this is a major reversal signal, especially for daily based traders, coming in the wake of such a high profile resistance barrier($1,200).
3. Look now at the short-term and long term money flows (lower portion of the chart); both of the Chaikin money flow indicators (CMF)(34) and (CMF)(144) are revealing pronounced negative divergences with the actual price trends of GLD, which means that the raw fuel (money flowing into GLD and Gold) needed to drive Gold higher is beginning to dry up, for the time being.
OK, so what? What’s a trader and/or investor to do now, given this information? Well, if you’re a long term Gold Bug, simply hold your core investment positions for the long haul; that $100+ trillion US national debt/unfunded liability problem ain’t paid off just yet (and likely will never be), so the future for Gold has never looked better, especially for those wishing to diversify out of the Greenback. Let this corrective move play out and trhen consider adding more at lower price levels, $1,050 might be one such a price zone, which happens to be the current 21 week exponential moving average (EMA) price for cash Gold. For those investing via shares in GLD, the area near $104 also coincides with its own 21 week EMA. More cautious investors might wait for a move lower toward the 50 week EMA, which comes in at about $96 for GLD and $975 for cash Gold. The 21 and 50 week EMA’s acts as strong S/R barriers in nearly every kind of market, and Gold is no exception, so you may wish to do further analysis to see if adding on at those particular price areas makes sense for your financial situation.
Traders can be a bit more aggressive; expect to see some sort of a reaction move higher once GLD/Gold hit their 21 week EMA (green box on the chart shows the likely time/price zone in which to anticipate a reversal higher) this will most likely be a high-probability swing trade play, one that also needs to have a logical stop loss and profit target as well. Daily based traders can do the same thing, plan on on the 21 day EMA offering some sort of a floor from which a short term tradable bounce will commence. But be very nimble, with firm stop-loss and profit targets in place before you enter the trade.
Yes, this is a real correction in Gold, but no one really knows how far the price might fall. Even the strongest bull markets need to pause and correct before moving higher, and perhaps this is the case with the Gold market right now. We should know more as the weeks ahead play out, as always, use common sense, be patient and learn to focus on what the charts and long term fundamental factors are saying, rather than giving in to fear, doubt or the opinions of those who may not have your best interests in mind.
Courtesy of Donald W. Pendergast Jr. - ETF Trading Partner
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Do Oil prices Really have an Impact on Financial Markets? Yes and No
Stock market commentators like to draw parallels between the behavior of oil prices and stock prices on any given day. After all, who hasn’t seen a headline like this: “Oil Spike Pummels Stock Market”? But evidence shows that a change in oil prices does not necessarily affect the stock market in any predictable and meaningful way.
Before we explain why, let’s look at the traditional wisdom, which holds that when oil prices rise, stocks fall, and vice versa. When oil prices rise, gasoline prices follow. Higher gas prices hurt consumers, who then have less money to spend on other goods and services. A decline in consumer spending causes businesses to see decreasing sales. At the same time, businesses are also hurt by higher oil prices because they use oil for gas and other goods as well, and must pay higher prices for it. As a result, high oil prices can create a drag on corporate earnings and businesses often end up passing those costs onto already strapped consumers. It’s a vicious cycle, and it seems obvious that it would cause stocks to decline. The opposite is true when oil prices fall.
That seems reasonable enough. So why do we say the traditional wisdom isn’t always true? Because higher oil prices don’t always result in a drag on corporate earnings. There a number of reasons for this. For example, the U.S. economy is less dependent on oil than it used to be: Each dollar of U.S. gross domestic product produced today takes about half the oil it did 30 years ago. Additionally, much of the oil used by American businesses at any given time has been purchased under fixed prices contracts that were negotiated when oil prices were much lower.
So, we have two ways of looking at the same situation. The traditional wisdom holds that higher oil prices hurt stocks. But when we look a little deeper, we can see that isn’t always the case. That’s quite a muddle, and it piqued the interest of economists—two of whom set out to find out which is the case: Do higher oil prices hurt stocks, or don’t they?
These economists, based at the Federal Reserve Bank of Cleveland, looked at both oil prices and the S&P 500 Index, which is widely considered a broad indicator of stock market performance. The economists found, that over the past 10 years, oil prices and stock prices have mostly risen but there has been little correlation between them. That was the case even during periods of peak oil prices, when we might expect stocks to really suffer.
The economists did find, however, that certain segments of the stock market were correlated with oil prices. For example, the Dow Jones Transportation Index rose when oil process rose, and fell when oil prices fell—presumably because changes in oil prices have a significant effect on transportation companies. On the other hand, the Dow Jones Financials Index rose when oil prices fell, and fell when oil prices rose—presumably because the financial industry is not directly affected by oil prices.
That information may offer investors some insight when it comes to buying and selling stocks during periods of high and low oil prices. When oil prices are high, you might want to sell (or short) airline stocks. When oil prices are low, you might want to buy energy stocks. Savvy stock pickers could potentially benefit in this way.
Contributed By Oil Price .Com
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