Crude Oil and Natural Gas Technical Outlook For Friday Morning

Nymex Crude Oil (CL)

Crude oil is losing some upside moment with 4 hours MACD back below signal line again. Nevertheless, another rise is still in favor with 80.79 support intact and current rise from 68.59 could extend to upper trend line resistance at 87/88 level. On the downside, break of 80.79 will argue that a short term top might be formed with bearish divergence condition in 4 hours MACD and deeper pull back could be seen.

In the bigger picture, the break of 82.0 resistance confirms that whole medium term rise from 33.2 has resumed. Nevertheless, there is no change in the view that it's a correction to fall fro 147.27. Hence, we'd continue to look for reversal signal as crude oil approaches 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level. However, break of 68.59 support is still needed to confirm that rise from 33.2 has completed. Otherwise, outlook will be neutral at worst even in case of deep pull back.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas rally stalled at 6.108 and retreated sharply and with 4 hours MACD back below signal line, intraday bias is turned neutral again. Nevertheless, another rise is still in favor as long as 5.615 minor support holds. Above 6.108 will bring rally resumption to 38.2% retracement of 13.694 to 2.409 at 6.72 next. On the downside, below 5.615 support, however, will indicate that rise from 4.157 has completed and in such case, deeper pull back could be seen to 4.157/5.318 support zone.

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 is still in progress and should target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. On the downside, break of 4.157 support is needed to indicate that medium term rise from 2.409 has completed. Otherwise, outlook is neutral at worst even in case of deep pullback.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Where is Crude Oil Headed on Friday?

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




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Crude Oil Bears Appear to Have Drawn a Line in The Sand

Crude oil closed lower due to profit taking on Thursday as it consolidates some of the rally off December's low. The mid range close sets the stage for a steady to lower opening on Friday. 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 rally, the 38% retracement level of the 2008 decline crossing at 84.82 is the next upside target. Closes below the 10 day moving average crossing at 80.02 would signal that a short term top has been posted. First resistance is Wednesday's high crossing at 83.52. Second resistance is the 38% retracement level of the 2008-decline crossing at 84.82. First support is the 10 day moving average crossing at 80.02. Second support is the 20 day moving average crossing at 76.63.

Natural gas closed lower due to profit taking on Thursday and the low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are diverging and are neutral hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 5.659 are needed to confirm that a short term top has been posted. If February extends the rally off December's low, October's high crossing at 6.300 is the next upside target. First resistance is today's high crossing at 6.108. Second resistance is October's high crossing at 6.300. First support is the 10 day moving average crossing at 5.803. Second support is the 20 day moving average crossing at 5.659.

The U.S. Dollar closed higher on Thursday, as it appears to be forming a wave 4 correction off December's high. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. Closes below Tuesday's low crossing at 77.39 would open the door for a larger degree correction during the first half of January. If March renews the rally off November's low, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target. First resistance is the reaction high crossing at 78.77. Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72. First support is Wednesday's low crossing at 77.59. Second support is Tuesday's low crossing at 77.39.


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Crude Oil Falls for First Time in 11 Days as Dollar Climbs

Crude oil declined in New York for the first time in 11 days as the dollar climbed against the euro and China moved to slow bank lending. Oil fell as much as 1.1 percent after the greenback rose as the number of Americans filing first time jobless claims climbed less than forecast. A stronger dollar curbs the appeal of commodities to investors. China’s central bank sold three month bills at a higher interest rate for the first time in 19 weeks after saying it will focus on controlling expansion in lending. “The rising dollar is the biggest influence right now,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “It’s weighing on just about all of the commodities.”

Crude oil for February delivery declined 52 cents, or 0.6 percent, to $82.66 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Oil climbed to $83.52 yesterday, the highest level since Oct. 14, 2008. The U.S. currency increased 0.6 percent versus the euro to $1.4323, from $1.4408 yesterday. The Dollar Index, which tracks the dollar against currencies including the yen, pound and Swedish krona, rose 0.6 percent to 77.933. The Reuters/Jefferies CRB Index of 19 commodities fell 1 percent to 290.93, the first decline this year. “Today’s small move is nothing after 10 days of gains,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “We could fall for a couple days and it would still be the bulls just catching their breath”.....Read the entire article.


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Phil Flynn: As the Oil Turns

Ok, the easy way to start today’s report is to say that oil hit a 15 month high in yesterday’s trade. Yet how we got there and why we are pulling back has more subplots than a daily television soap opera. There were so many stories pulling at the heart strings of the oil trader it is hard for anyone to keep them all straight. Some happy and some sad and some just plain freaky. Over night oil is pulling back on news that China's central bank raised interest rates on its three month bills for the first time since August, a day after it promised to keep credit growth in check. This slowdown helped end some bullish momentum that was achieved in yesterday’s session.

Of course any good energy report should start with an analysis of the weekly inventories from the Energy Information Agency which is always a factor in the decisions of both the buyers and the sellers. This inventory report, like some of the others before it, was supposed to be all about the impact of colder weather. Heating oil bulls were hoping that this recent cold snap would lead to another large drawdown in overall distillate supply. Yet the EIA reported that distillate inventories fell only by a mere 300,000 barrels. This was a disappointment to the bulls that were hoping supplies had melted away faster than the polar ice caps. When they failed to live up to expectations, the entire petroleum complex that had rallied in anticipation of this report, broke hard in an instant.....Read the entire article.

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Peter Beutel, President of Cameron Hanover, Talks Oil and Natural Gas Inventories

Peter Beutel, president of Cameron Hanover, talks oil and natural gas inventories as crude backs off a two week rally. Chinese cities are extending gas and electricity rationing in their coldest winter in decades. The military says a natural gas pipeline explosion at Barksdale Air Force Base in Louisiana has killed a civilian. Google tries to get into the wholesale electricity market. And Clean Skies' Tyler Suiters takes a look at how Iceland may hold some answers for the U.S. When it comes to effectively utilizing the earth's energy resources.



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Iraq, Iran Agree to Solve Dispute over Border Oil Field

Iraqi and Iranian officials will meet next week to try to solve their border issues, including the dispute over a southern Iraqi oil well which Iranian forces occupied last month, foreign ministers of the two neighboring countries said Thursday. Iranian Foreign Minister Manouchehr Mottaki made the announcement after meeting his Iraqi counterpart, Hoshyar Zebari, in Baghdad. "Everything will be solved," Mottaki told a joint news conference. "Joint technical committees will start meetings in a week from now, and the borders between the two brotherly countries will be marked," he added.

"We have agreed to normalize the situation on the two countries' borders and bring it back to where it was standing before," Zebari said. The issue of the oil well and all other issues can be solved bilaterally between the two countries, he added. Iraqi officials said last month that Iranian forces occupied Well No. 4 on the al-Fakkah field, in Missan Province in southern Iraq, which straddles the two countries' frontier. The field has estimated reserves of 1.55 million barrels and is part of a cluster of fields Iraq unsuccessfully put up for auction last June.

Iraqi officials said Iranian forces have since withdrawn 50 meters away from the well but they still control the area and are preventing Iraqi oil workers from reaching the well.....Read the entire article.


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Jeff Rubin, Oil Rally Predictor, Sees $100 Crude in 2010

Jeff Rubin, the former CIBC World Markets Inc. chief economist who accurately predicted oil’s surge during the last decade, expects crude to reach $90 a barrel this quarter and $100 by the year’s end. Accelerating demand in Asia and the Middle East will force consumers to rely on costlier non-conventional energy sources such as oil sands, said Rubin, who spent 20 years with the Toronto based bank and last year published a book on energy economics, “Why Your World is About to Get a Whole Lot Smaller.” Rubin correctly forecast in 2007 that crude would reach $100.

“It’s safe to say that we’ll see triple digit oil prices by the fourth quarter of this year,” Rubin, 55, said in a telephone interview yesterday. “I would expect prices to move pretty close to that level, and be in the $90 range probably by the end of March.” Crude oil futures rose as high as $83.52 a barrel yesterday, surpassing last year’s peak of $82, after the U.S. Energy Department reported a decline in inventories of distillate fuels like heating oil. In 2008, oil reached an all time high of $147.27. It last traded at $82.40 as of 12:05 p.m. London time. The increase in oil consumption will be driven by emerging economies such as China and India rather than the industrialized nations of western Europe and the U.S., where demand has probably already peaked, according to Rubin.....Read the entire article.

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Crude Oil and Natural Gas Technical Outlook For Thursday Morning

Nymex Crude Oil (CL)

Crude oil surges to as high as 83.52 and the firm break of 82.0 resistance confirms that whole medium term rise from 33.2 has resumed. Intraday bias will now remain on the upside as long as 80.79 minor support holds. Current rise should now be upper trend line resistance at 87/88 level. On the downside, below 80.79 will indicate that an intraday top is formed and bring retreat, probably to 4 hours 55 EMA (now at 79.72, before rally resumption.

In the bigger picture, the break of 82.0 resistance confirms that whole medium term rise from 33.2 has resumed. Nevertheless, there is no change in the view that it's a correction to fall fro 147.27. Hence, we'd continue to look for reversal signal as crude oil approaches 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level. However, break of 68.59 support is still needed to confirm that rise from 33.2 has completed. Otherwise, outlook will be neutral at worst even in case of deep pull back.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas' break of 6.035 indicates that consolidations has completed at 5.505 already and whole rally from 4.157 has resumed. Intraday bias now remains on the upside and further rise should be seen to 6.035 will target 38.2% retracement of 13.694 to 2.409 at 6.72 next. On the downside, below 5.615 support, however, will indicate that rise from 4.157 has completed and in such case, deeper pull back could be seen to 4.157/5.318 support zone.

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 is still in progress and should target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. On the downside, break of 4.157 support is needed to indicate that medium term rise from 2.409 has completed. Otherwise, outlook is neutral at worst even in case of deep pullback.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Crude Oil Slips Overnight as the Dollar Edges Higher

Crude oil was lower due to profit taking overnight as it consolidates some of the rally off December's low. 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 rally, the 38% retracement level of the 2008 decline crossing at 84.82 is the next upside target. Closes below the 10 day moving average crossing at 79.98 would signal that a short term top has been posted.

Thursday's pivot point, our line in the sand is 82.52

First resistance is Wednesday's high crossing at 83.52
Second resistance is the 38% retracement level of the 2008 decline crossing at 84.82

First support is the 10 day moving average crossing at 79.98
Second support is the 20 day moving average crossing at 76.61

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Natural gas was higher overnight as it extends the rally off December's low. Stochastics and the RSI are diverging but are turning neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends December's rally, October's high crossing at 6.300 is the next upside target. Closes below the 20 day moving average crossing at 5.670 are needed to confirm that a short term top has been posted.

Natural gas pivot point for Thursday is 5.911

First resistance is the 87% retracement level of the October-December decline crossing at 6.077
Second resistance is October's high crossing at 6.300

First support is the 10 day moving average crossing at 5.825
Second support is the 20 day moving average crossing at 5.670

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The U.S. Dollar was higher due to short covering overnight. However, stochastics and the RSI remain bearish hinting that a short term top might be in or is near. Closes below Tuesday's low crossing at 77.39 are needed to confirm that a short term top has been posted. If March renews last month's rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target.

First resistance is the 10 day moving average crossing at 78.05
Second resistance is the reaction high crossing at 78.77

First support is the 20 day moving average crossing at 77.75
Second support is Tuesday's low crossing at 77.39

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