Oil Fluctuates as Heating Oil Climbs, U.S. Dollar Gains Against Euro

Crude oil fluctuated as heating oil rose to a two-month high on forecasts for cold weather in the U.S. and the dollar strengthened against the euro, reducing the appeal of commodities as an alternative investment. Oil touched a five week high earlier today on the outlook for below normal temperatures for much of the nation next week. Reports signaling that the U.S. economy may be rebounding from the worst recession since World War II bolstered the dollar, pressuring commodities.

“Another arctic blast is supportive,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Still, we’re up a little bit on the dollar, and that’s a reason for people to get out of the upside on crude.” Crude oil for February delivery rose 2 cents to $78.79 a barrel at 12:39 p.m. on the New York Mercantile Exchange. Earlier, it touched $79.39, the highest level since Nov. 23.

Heating demand is expected to be above normal in the Northeast, Southeast and central U.S. for most of the week through Jan. 5, David Salmon, a forecaster at Weather Derivatives in Belton, Missouri, said in a report today.....Read the entire article.

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Crude Oil Technical Outlook For Tuesday

With 4 hours MACD crossed below signal line, an intraday top might be in place and bias is turned neutral for some consolidations. Nevertheless, we'd expect downside to be contained by 76.19 support and bring another rise. Current development indicates that choppy fall from 82.0 has completed at 68.59 already. Rise from there is expected to continue to retest this 82.0 resistance next.

In the bigger picture, the strong rebound from put crude oil back above 55 days EMA and dampens the bearish view that it has topped out at 33.2. We'll stay neutral for the moment with focus on 82.0 resistance. Break there will indicate that whole medium term rise from 33.2 is still in progress. Nevertheless, focus will remain on reversal signal as we'd expect such rise to conclude inside 76.77/90.24 fibo resistance zone.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Crude Oil and Natural Gas Market Commentary For Tuesday Morning

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

If February extends this rally, the reaction high crossing at 80.40 is the next upside target. Closes below the 20 day moving average crossing at 75.42 are needed to confirm that a short term top has been posted.

Monday's pivot point, our line in the sand is 78.55

First resistance is Monday's high crossing at 79.12
Second resistance is the reaction high crossing at 80.40

First support is the 10 day moving average crossing at 75.58
Second support is the 20 day moving average crossing at 75.42

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Natural gas was lower due to light profit taking overnight as it consolidates some of Monday's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends this month's rally, the 87% retracement level of the October-December decline crossing at 6.077 is the next upside target. Closes below the 20 day moving average crossing at 5.380 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 6.025
Second resistance is the 87% retracement level of the October-December decline crossing at 6.077

Natural gas pivot point for Monday is 5.938

First support is the 10 day moving average crossing at 5.774
Second support is the 20 day moving average crossing at 5.380

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The U.S. Dollar was lower overnight and trading below initial support marked by the 10 day moving average crossing at 78.02. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 77.03 would confirm that a short term top has been posted. If March renews this month's rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target.

First resistance is last Tuesday's high crossing at 78.77
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72

First support is the overnight low crossing at 77.71
Second support is the 20 day moving average crossing at 77.03

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Sharon Epperson: 2010 Oil Outlook

A look at where oil prices will be headed in 2010, with CNBC's Sharon Epperson.




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Crude Oil Closes Higher, Fourth Day in a Row!

Crude oil closed higher for the fourth day in a row on Monday as it extends last week's rally above the 20 day moving average. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If February extends today's rally, the reaction high crossing at 80.40 is the next upside target. Closes below last Tuesday's low crossing at 72.72 would confirm that a short term top has been posted.

First resistance is today's high crossing at 79.12
Second resistance is the reaction high crossing 80.40

First support is the 20 day moving average crossing at 75.41
Second support is the 10 day moving average crossing at 74.89

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Natural gas closed higher on Monday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends this month's rally, the 87% retracement level of this fall's decline crossing at 6.077 is the next upside target. Closes below the 20 day moving average crossing at 5.328 would temper the near term friendly outlook in the market.

First resistance is today's high crossing at 6.011
Second resistance is the 87% retracement level of this fall's decline crossing at 6.077

First support is the 10 day moving average crossing at 5.715
Second support is the 20 day moving average crossing at 5.328

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The U.S. Dollar closed lower due to profit taking on Monday as it consolidated some of this month's rally. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.

Closes below the 10 day moving average crossing at 77.91 would signal that a short term top has likely been posted. Closes below the 20 day moving average crossing at 76.90 would confirm that a short term top has been posted. If March extends its current rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target.

First resistance is last Tuesday's high crossing at 78.77
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72

First support is the 10 day moving average crossing at 77.91
Second support is the 20 day moving average crossing at 76.90

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Phil Flynn: Is This Santa For Real?

Oil prices get swept up in a Santa Claus rally as light volume a strong stock market as well as a surprise drawdown in inventory gives the illusion of strong demand. Ho, Ho, Ho! Yet we may find out that yes, Virginia, indeed this Santa rally, despite my better judgment, may be real if oil closes above $79 a barrel.

Last week the market got a bullish boost on a surprise draw down in oil supply when the Energy Information Agency, an arm of the Department of Energy, reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.9 million barrels from the previous week. That caught the market by surprise because we also saw a drawdown in the supply of distillates to the tune of 3.1 million barrels. Don’t try to reason that supply is way above normal or that most likely the draws are skewered due to bad weather conditions impacting imports because none of these justifications seem to matter. You just have to believe. You really will have to believe if oil closes above $79 a barrel.

Now some think the rally is for real because of the early blast of winter. Despite the worries over global warming, it is cold weather that is inspiring demand. In other words even though supplies are above the five year average, weather may be colder this winter than the five year average. The EIA on demand said that over last four weeks, total products supplied by refiners came in at an average 18.9 million barrels per day which was down by 1.1 percent compared to last year. For gasoline, over the last four weeks demand averaged 9.0 million barrels per day, up by 0.8 percent from the same period last year. Distillate fuel demand has averaged 3.7 million barrels per day over the last four weeks, down by 3.9 percent from the same period last year despite the fact that it was colder.....Read the entire article.

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Large Part of Crude Rally Was Due to Investment Flow

Commodity prices stay strong in European session as USD retreats against major currencies. The benchmark contract for gold climbs to 1113 and is likely to record a third day of increases. On weekly basis, the yellow metal is anticipated to gain for the first time in 5 weeks.

Base metals stay strong after rallying for 2 weeks. While the LME is still closed, copper futures in Comex and Shanghai Futures Exchange (SFE) advance. Strong industrial production in Japan and labor action in copper mine suggest supply/demand condition to tighten further.

Copper price April delivery on the SFE surged to a 16 month high at RMB 59180 (+2.3%) after Japan's IP report, the contract closed at RMB 5830, up +1.1%, for the day. In Chile, workers at Codelco's Chuquicamata mine decided to go on strike next month as they are discontent with the company's wage offer. The company offered a +3.8% wage increase and benefits worth 14.5 peso to sign a new 3 year contract but this has been rejected by the workers already.....Read the entire article.

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Tanker Glut Signals 25% Freight Decline as 26 Miles of Ships Meet Demand

A 26 mile long line of idled oil tankers, enough to blockade the English Channel, may signal a 25 percent slump in freight rates next year. The ships will unload 26 percent of the crude and oil products they are storing in six months, adding to vessel supply and pushing rates for supertankers down to an average of $30,000 a day next year, compared with $40,212 now, according to the median estimate in a Bloomberg News survey of 15 analysts, traders and shipbrokers. That’s below what Frontline Ltd., the biggest operator of the ships, says it needs to break even.

Traders booked a record number of ships for storage this year, seeking to profit from longer dated energy futures trading at a premium to contracts for immediate delivery, according to SSY Consultancy & Research Ltd., a unit of the world’s second largest shipbroker. Ships taken out of that trade would return to compete for cargoes just as deliveries from shipyards’ largest ever order book swell the global fleet.

“The tanker market has been defying gravity,” said Martin Stopford, a London based director at Clarkson Plc, the world’s largest shipbroker. Stopford has covered shipping since 1971. More than half of the ships are in European waters, with the rest spread out across Asia, the U.S. and West Africa. Lined up end to end, they would stretch for about 26 miles.....Read the entire article.

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Crude Oil Bulls Maintain The "Holiday Advantage"

Crude oil was higher overnight as it extends last week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If February extends this rally, the reaction high crossing at 80.40 is the next upside target. Closes below the 10 day moving average crossing at 74.85 are needed to confirm that a short term top has been posted.

Monday's pivot point, our line in the sand is 77.50

First resistance is the overnight high crossing at 78.68
Second resistance is the reaction high crossing at 80.40

First support is the 20 day moving average crossing at 75.39
Second support is the 10 day moving average crossing at 74.85
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Natural gas was higher overnight as it consolidates some of last Thursday's decline. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends this month's rally, the 87% retracement level of the October-December decline crossing at 6.077 is the next upside target. Closes below the 20 day moving average crossing at 5.322 would confirm that a short term top has been posted.

Natural gas pivot point for Monday is 5.723

First resistance is last Thursday's high crossing at 5.984
Second resistance is the 87% retracement level of the October-December decline crossing at 6.077

First support is the 10 day moving average crossing at 5.704
Second support is the 20 day moving average crossing at 5.322

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The U.S. Dollar was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 76.90 would confirm that a short term top has been posted. If March extends this month's rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target.

First resistance is last Tuesday's high crossing at 78.77
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72

First support is the 10 day moving average crossing at 77.90
Second support is the 20 day moving average crossing at 76.90

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Crude Oil and Natural Gas Technical Outlook For Monday Morning

Nymex Crude Oil (CL)

Crude oil's rise from 68.59 extended further to as high as 78.68 so far. The strong break of 61.8% retracement of 82.0 to 68.58 at 76.87 suggests that choppy fall from 82.0 has completed. Intraday bias remains on the upside and further rise could be seen to to retest 82.0. On the downside, below 76.29 minor support will turn intraday bias neutral first. But another rise is now in favor as long as 71.21 support holds.

In the bigger picture, the strong rebound from put crude oil back above 55 days EMA and dampens the bearish view that it has topped out at 33.2. We'll stay neutral for the moment with focus on 82.0 resistance. Break there will indicate that whole medium term rise from 33.2 is still in progress. Nevertheless, focus will remain on reversal signal as we'd expect such rise to conclude inside 76.77/90.24 fibo resistance zone.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

At this point, natural gas is still limited by 5.929 resitance and consolidation from there is possibly still in progress. Another fall might be seen to 38.2% retracement of 4.157 to 5.929 at 5.25. But downside is expected to be contained well above 4.837 support (61.8% retracement of 4.157 to 5.929 at 4.834) and bring rally resumption. Break of 5.929 will target 38.2% retracement of 13.694 to 2.409 at 6.72 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 breakout 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 4.432 support will dampen this bullish case and turn outlook mixed again.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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