Crude Oil Slightly Higher on Overnight Short Covering

Crude oil was higher due to short covering overnight as it consolidates some of this week's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

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 76.48 are needed to confirm that a short term low has been posted.

Thursday's pivot point, our line in the sand is 71.56

First resistance is the 10 day moving average crossing at 74.85
Second resistance is the 20 day moving average crossing at 76.48

First support is Wednesday'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 was higher due to short covering overnight as it consolidates some of Wednesday's key reversal down. 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 4.830 would temper the near term bullish outlook in the market.

Nat gas pivot for Thursday is 4.992

First resistance is Wednesday'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 4.830
econd support is the 20 day moving average crossing at 4.830

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The U.S. 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 20 day moving average crossing at 75.62 would temper the near term bullish outlook in the market.

First resistance is Wednesday'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 75.73
Second support is the 20 day moving average crossing at 75.62

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Crude Oil and Natural Gas Technical Outlook For Thursday Morning

Nymex Crude Oil (CL)

Crude oil dives to as low as 70.13 so far and at this point, intraday bias remains on the downside. The break of 72.39 support confirms that decline from 82.0 has resumed and should now be targeting 65.05 support next. On the upside, above 73.87 minor resistance will turn intraday bias neutral and bring consolidations. But upside should be limited below 79.04 resistance and bring fall resumption.

In the bigger picture, the break of trend line support (now at 71.86) affirms that case that medium term rebound from 33.2 has completed earlier at 82.00 already. Further decline is now expected to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. Firm break there will target a retest of 33.2 low next. On the upside, break of 79.04 resistance is needed to invalidate this bearish view. Otherwise, outlook will remain bearish in case of recovery.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas's pull back and break of 4.960 minor support suggests that recent consolidation is still in progress and turns intraday bias neutral again. Choppy sideway trading could still be seen between 4.157 and 5.318 but after all, we'd continue to anticipate an upside breakout eventually. Decisive break of 5.318 resistance 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.

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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ETF Trading: Gold, Silver, Oil and the Dow Index

Etf trading has made it so easy for traders and investors to get maximum exposure to the entire market without the high fees of mutual funds and manager. There are now etfs covering almost every investment type whether it’s stocks, indexes, sectors, commodities, bonds, real estate, currencies etc…

In this short report I will quickly show a few charts on what is happening for precious metals and energy.

HUI – Gold Stock
This monthly chart of the gold stocks index you can see how easy it is to trade the market and avoid large sell offs when using technical analysis. Currently gold stocks are in a bull market, testing the 2008 highs. Until we are proven wrong buying stocks after a pullback is a winning strategy.



Trading the GLD ETF
We have been in the GLD etf for a few months as we ride this bull to new highs. This chart clearly shows how buying dips in a bull market can really pay off. I do have certain criteria which must be met before buying dips so I know the odds are in my favor.



ETF Trade Silver
Silver along with gold and oil are looking ready for an oversold bounce. I don’t think prices will jump and rally higher right out of the gate but eventually I feel the will head higher.



Crude Oil Fund - USO
Crude oil looks prime for the picking. It is currently oversold and testing 2 support levels. The downside momentum is still strong so this selling could last another 1-2 days but I’m expecting it to soon.

This is not a low risk setup. This is more of a short term aggressive contrarian play. For those of you who like heart pounding plays.



Natural Gas Fund - UNG
Natural gas has been taking its time to bottom. Virtually every bottom picker has been burned this year. I am starting to hear everyone get more bearish on it again which is great! It should bottom any day then! LOL….

Seriously it cannot get much more bearish for gas. We don’t have enough space to store it and companies are finding more natural gas in the ground every day. Because it sounds like a terrible investment it must be getting close to a bottom. If this is the start of a flat basing pattern, then I expect it could drag out for a few months before actually making a nice move up.



Dow Jones ETF - DIA
The Dow looks similar to gold and silver. I feel we are ready for a 1-2 day bounce then we go a little lower to shake traders out of the market before heading higher.



ETF Trading Conclusion
Gold stocks and the broad market are in a bull market. The recent pullback has many traders worried. I think this an opportunity to bet into some positions before the next rally. Buying the dips in a bull market is a low risk trade until proven wrong. I think we still have more of a pullback yet but then we could have a very profitable year end Xmas rally.

Natural Gas is just bumping along bottom I think. Not expecting any trade for a few weeks anyways.

Crude Oil looks like its ready for a move whether it is a 1-2 day bounce or the start of a new leg higher. If you loot at late Sept you can see USO broke down on heavy volume shaking most traders out of their positions just before the next leg higher, and this is what I feel it is doing now. Only time will tell.

Let’s see how the second half of this week unfolds.

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Crude Hovers Near $70 Despite Surprise Drawdown

Despite a surprise drawdown in domestic crude stocks reported today, U.S. crude oil futures fell once more on the New York Mercantile Exchange Wednesday, pressured by oil traders' increasingly bearish outlook regarding the market's underlying fundamentals, as well as concerns about the global economy's recovery. Recording a negative movement on the NYMEX for the sixth consecutive session, the price of light, sweet crude oil closed nearly $2 less than its previous settlement to $70.67 a barrel. Additionally, natural gas spot prices at the Henry Hub reversed to just under the $5-threshold to settle at $4.898 per thousand cubic feet.

"We have broken out to the downside of this $75-$80 range in the crude oil market that had been holding since the middle of October," noted Bill O'Grady, the chief markets strategist at St.Louis based Confluence Investment Management LLC. "We fell out of it yesterday and accelerated today on government data that wasn't really all that bearish, you had a bullish crude number, but the product numbers were not very strong." Interestingly, the dollar's three day advance collapsed against the euro on Wednesday, which did little to prop up energy prices. Typically, a weaker greenback loses its safe haven appeal, spurring traders toward cheaper dollar denominated commodities.....Read the entire article.


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Where is Crude Oil and Gold Headed on Thursday?

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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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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