Crude Oil and Natural Gas Technical Outlook For Saturday

Nymex Crude Oil (CL)

Crude oil finally broke 82.0 resistance to resume the medium term rally and stayed firm above this level. While some sideway trading might be seen in initially this week, outlook will remain bullish as long as 80.79 support holds. Recent rise from 68.59 is expected to resume sooner rather than later towards 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 before another rise.

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 from 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.

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.....Read the entire article.

Nymex Natural Gas (NG)

Despite edging higher to 6.108, Natural gas failed to sustain gain there and fell sharply towards the end of the week. Break of the near term rising trend line argues that a short term top is formed with bearish divergence condition in 4 hours MACD. Initial bias is milldy on the downside this week for deeper pull back towards 38.2% retracement of 4.157 to 6.108 at 5.363 first. On the upside, while some recovery might be seen, break of 6.108 high is needed to confirm that medium term rise has resumed. Otherwise, we'd expect more consolidations with risk for another fall.

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.....Read the entire article.


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Crude Oil Traders End The Week on a Cautious Note

Crude oil closed slightly higher on Friday and the mid range close sets the stage for a steady opening on Monday. 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 80.61 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 80.61
Second support is the 20 day moving average crossing at 77.13

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Natural gas closed lower due to profit taking on Friday but the mid range close sets the stage for a steady opening on Monday. 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 5.697 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 Thursday's high crossing at 6.108
Second resistance is October's high crossing at 6.300

First support is the 20 day moving average crossing at 5.697
Second support is the reaction low crossing at 5.505

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The U.S. Dollar posted a key reversal down on Friday and closed below the 20 day moving average crossing at 77.81. The low range close sets the stage for a steady to lower opening on Monday.

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 at 79.72

First support is today's low crossing at 77.55
Second support is Tuesday's low crossing at 77.39

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Volatile Oil Markets Linked to Record Inventories - UH Study

A new academic study from the Bauer College of Business at the University of Houston concludes the unprecedented volatility in the oil markets in late 2008 and early 2009 was predominantly the product of market fundamentals during a time of extreme stress.
The study, An Evaluation of the Performance of Oil Price Benchmarks during the Financial Crisis, was done by Craig Pirrong, Professor of Finance and Energy Markets Director for Global Energy Management Institute, Bauer College of Business at the University of Houston.

It analyzed the behavior of two benchmark oil futures contracts during the period of financial crisis following the collapse of Lehman Brothers. It concluded that futures markets prices generally reflected the realities in the physical market where oil is bought, sold and stored. "The behavior of the WTI futures contract during the financial crisis reflected the truly unprecedented conditions prevalent during that period, which was reflected in market volatility and prices," Pirrong said. The study also found no instances where the prices set in financial markets had gotten out of whack with the most directly related cash markets.....Read the entire article.

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Crude Oil Falls After U.S. Payrolls Unexpectedly Decline

Crude oil fell after U.S. payrolls unexpectedly declined last month, spurring concern that the economy and fuel demand will be slow to recover. Oil slipped as much as 1 percent after the Labor Department reported that the world’s biggest energy-consuming country lost 85,000 jobs in December. Futures climbed to a 14-month high this week as temperatures dropped in the Northern Hemisphere, U.S. crude-oil supplies rose and the dollar weakened, bolstering the appeal of commodities to investors. “These numbers increase skepticism about the recovery,” said Michael Fitzpatrick, vice president of energy with MF Global in New York. “There’s no rational reason for prices to be at these levels. We’ll probably soon see a good-sized setback in prices.”

Crude oil for February delivery fell 50 cents, or 0.6 percent, to $82.16 a barrel at 9:44 a.m. on the New York Mercantile Exchange. Futures are up 3.5 percent this week after touching $83.52 on Jan. 6, the highest level since Oct. 14, 2008. Payrolls were forecast to be unchanged, according to the median estimate of 76 economists surveyed by Bloomberg News. “Today’s unemployment number underscores that any recovery in payrolls will be slow,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “The recent rally was, in part, built on a much rosier outlook for the economy than these numbers paint. This will probably cool things off”.....Read the entire article.

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Salazar Threatens To Dropkick The Natural Gas Revolution

It might just be tough talk, but Interior Secretary Ken Salazar has warned the energy industry that expansion could be much harder than under the Bush administration.

Americans should be amply rewarded when companies win exploration and production rights, but let's hope this doesn't mean that new exploration will be significantly restricted.

Especially when it comes to natural gas, which could provide the U.S. with an enormous source of relatively cheap energy.....Read the entire article.

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Pivot Point, Support and Resistance Numbers For Friday Morning

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 80.59 would signal that a short term top has been posted.

Friday's pivot point, our line in the sand is 82.76

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 80.59
Second support is the 20 day moving average crossing at 77.12

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Natural gas was steady to slightly higher overnight as it consolidates some of Thursday's decline. 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 5.701 are needed to confirm that a short term top has been posted.

Natural gas pivot point for Friday is 5.892

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 5.795
econd support is the 20 day moving average crossing at 5.701

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The U.S. Dollar was higher as it extends Thursday's rally. However, stochastics and the RSI remain neutral to bearish hinting that additional weakness is still possible near term.

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 overnight high crossing at 78.32
Second resistance is the reaction high crossing at 78.77

First support is the 20 day moving average crossing at 77.84
Second support is Tuesday's low crossing at 77.39

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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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