Oil Falls Most in Five Weeks as China Moves to Curb Liquidity

Crude oil dropped the most in five weeks as China, the world’s second largest oil consuming country, raised bank reserve requirements to curb a credit boom and prevent the economy from overheating. Oil fell as much as 2.1 percent as China increased the proportion of deposits banks must set aside for the first time since 2008. China boosted oil purchases to a record last year, the government reported this week. Crude prices also fell amid forecasts a U.S. cold snap will abate this week. “This is a significant move on the part of the Chinese, and they’re the difference makers on whether the oil demand picture remains robust,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities. “If they’re going to try to trim the sails, it’ll be tough for crude to even keep $80 a barrel.”

Crude oil for February delivery fell 76 cents, or 0.9 percent, to $81.76 a barrel at 10:02 a.m. on the New York Mercantile Exchange. Earlier, the contract touched $80.80 in the biggest daily decline since Dec. 9. Futures rose to $83.95 a barrel yesterday, the highest since Oct. 14, 2008, following the report that China’s crude imports reached a record 203.8 million metric tons last year, or 4.1 million barrels a day.
Today’s move will help remove about 300 billion yuan of liquidity from the Chinese economy, according to estimates by Xing Ziqiang, an economist in Beijing at China International Capital Corp., ranked the top China local brokerage by Asiamoney magazine last year.....Read the entire article.

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Milder Weather, Alcoa Numbers Puts Downside Pressure on Crude Oil

Crude oil was lower due to profit taking overnight as it consolidates some of the rally off December's low. Milder weather moving across much of the upper United States this week is easing concerns over energy demand, which helped to pressure prices overnight.

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 81.37 would signal that a short term top has been posted. If February extends this rally, the 38% retracement level of the 2008 decline crossing at 84.82 is the next upside target.

Tuesday's pivot point, our line in the sand is 82.81

First resistance is Monday's high crossing at 83.95
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 81.37
Second support is the 20 day moving average crossing at 78.13

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Natural gas was lower overnight as it extends Monday's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the 50% retracement level of the December-January rally crossing at 5.314 is the next downside target. Closes above the 20 day moving average crossing at 5.712 would temper the near term bearish outlook in the market.

Natural gas pivot point for Tuesday is 5.483

First resistance is the 10 day moving average crossing at 5.707
Second resistance is the 20 day moving average crossing at 5.712

First support is Monday's low crossing at 5.371
Second support is the 50% retracement level of the December-January rally crossing at 5.314

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The U.S. Dollar was higher due to short covering overnight as it consolidated some of Monday's decline. Stochastics and the RSI remain bearish signaling that additional weakness is possible near term.

If March extends the decline off December's high, the 50% retracement level of the November-December rally crossing at 76.66 is the next downside target. Closes above last Friday's high crossing at 78.43 are needed to confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 77.87
Second resistance is last Friday's high crossing at 78.43

First support is Monday's low crossing at 76.95
Second support is the 50% retracement level of the November-December rally crossing at 76.66

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Crude Oil and Natural Gas Technical Outlook For Tuesday Morning

Nymex Crude Oil (CL)

Crude oil's break of 81.72 minor support suggests that a short term top is in place at 83.95. Intraday bias is flipped to the downside and some corrections could now be seen, probably to 38.2% retracement of 68.59 to 83.95 at 78.08. But downside should be contained by 61.8% retracement at 74.46 and bring rally resumption. Above 83.95 will target upper trend line resistance at 87/88 level again.

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..... Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas' correction from 6.108 is still in progress and dips to as low as 5.371 so far. Current fall is still expected to continue to 38.2% retracement of 4.157 to 6.108 at 5.363 first and possibly further to 61.8% retracement at 4.902. ON the upside, above 5.85 minor resistance will turn intraday bias neutral. But after all, break of 6.108 high is needed to confirm that medium term rise has resumed. Otherwise, we'd expect more consolidations with risk of 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.....Nymex Natural Gas Continuous Contract 4 Hours Chart.


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Gold, Silver, Platinum...W.T.F.?!

Today we have a great new video for you. I’m sure many of you read that title and your mind went in the gutter, but today we going to show you a whole new meaning for this acronym and how it applies to gold, silver, and platinum.

These three markets have a lot of volume, government implications, and technicals lining up for potentially great trades. Gold makes a record high, then pulls back. Silver is inching towards an all time high level and platinum is making people rethink their decision to go with a white gold wedding band.

Where do you stand in these markets and maybe more importantly, where should you stand?

Just click here to watch the video and to find out what W.T.F. really stands for and what does it have to do with gold, silver, and platinum?

You’ve got to watch the video to find out.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

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Don't Count On OPEC's Surplus For 2010

* The future of natural gas, will it a valuable transportation fuel in 10 years?
* Congress may look to pass bill that enforces strict regulations on shale rock drilling
* U.S. will drill off-shore, but at what cost.
* How expensive does oil needs to get for green energy to be cost competitive
* OPEC's over supply of oil




Can you learn to trade crude oil in just 90 seconds?


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Where is Crude Oil and Commodities Headed on Tuesday?

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




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Low Range Crude Oil Close Sets The Stage For Lower Open on Tuesday

Crude oil closed lower on Monday due to profit taking as milder weather is expected to move across much of the US this week. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning neutral to bearish with today's decline hinting that a short term top might be in or is near.

Closes below the 10 day moving average crossing at 81.04 would signal that a short term top has been posted. If February extends this winter's rally, the 38% retracement level of the 2008 decline crossing at 84.82 is the next upside target.

First resistance is today's high crossing at 83.95
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 81.04
Second support is the 20 day moving average crossing at 77.63

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Natural gas closed sharply lower on bearish weather forecast for the U.S. on Monday. Today's close below the 20 day moving average crossing at 5.703 confirms that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Tuesday.

Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If February extends today's decline, the 50% retracement level of the December-January rally crossing at 5.314 is the next downside target.

First resistance is the 20 day moving average crossing at 5.703
Second resistance is the 10 day moving average crossing at 5.765

First support is today's low crossing at 5.371
Second support is the 50% retracement level of the December-January rally crossing at 5.314

Just click here for your FREE trend analysis of UNG


The U.S. Dollar closed sharply lower on Monday confirming last Friday's key reversal down. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If March extends today's decline, the 50% retracement level of the November-December rally crossing at 76.66 is the next downside target. Closes above last Friday's high crossing at 78.44 would confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 77.85
Second resistance is the 10 day moving average crossing at 77.89

First support is today's low crossing at 76.95
Second support is the 50% retracement level of the November- December rally crossing at 76.66



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Oil Retreats From 15 Month High on Forecasts for Warmer Weather

Oil retreated after touching a 15 month high amid forecasts that cold weather in the eastern U.S. will abate this week, curbing demand for heating fuel. Oil fell for the second time in 13 days as above normal temperatures were forecast to begin moving into eastern cities such as New York and Boston later this week, according to MDA Federal Inc.’s EarthSat Energy Weather. The Northeast is responsible for about four-fifths of U.S. heating oil use.

“Last week, we really pumped up on the cold weather,” said Phil Flynn, vice president of research at PFGBest in Chicago. “When you take that demand away, we realize there’s plenty of oversupply.” Crude oil for February delivery fell 12 cents to $82.63 a barrel at 11:41 a.m. on the New York Mercantile Exchange. Earlier, it touched, $83.95, the highest level since Oct. 14, 2008, on a report that China, the world’s second largest energy consuming country, boosted crude purchases to a record last year and as the dollar fell against the euro.....Read the entire article.

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Market Meltdowns, Inflation, Protecting Capital & Trading Commodities

The purpose in owning commodities like gold, silver and oil is to protect oneself from the effect of inflation that I believe will begin to assert itself in the coming months.

Unfortunately, the United States has taken a monetary policy of printing massive amounts of money to attempt an escape of deflation. In just the past 16 months, the monetary base has ballooned from $908 billion to $2.0 trillion. Bailout funds in the past 2 years total $8.1 trillion….. That is 78 times more than what they spent to bail out WorldCom…… and 123 times more than they spent on Enron. U.S. debt has risen sharply, from $6.2 trillion in 2002 to $12.1 trillion today. These are scary numbers!

The illusion of economic recovery in the U.S. is simply the function of the FED making billions and trillions of newly printed money available at literally ZERO percent interest to the largest financial institutions. The idea that you really can get something for nothing is fantasy. But that’s what’s happening – Money created out of thin air, instead of created by PRODUCTION.

A painful reality check will appear when these quantitative easing policies create inflation without employment or productivity gains. Commodities – hard assets – will outperform everything in this type of environment. To some people commodity investments may sound like a no brainer investment, however without a sound money and risk management system in place there really is no such investment.

This is why I focus on technical analysis as it provides price points for investments when we should be putting our money to work on a weekly or monthly basis. When volatility is rising I put less money to work to protect my portfolio from sharp price movements (risk). And during low volatility I push more money into the market catching trends with lowered risks.

What really blows my mind is how almost everyone I know who employed a broker or financial advisor lost between 30-70% of their portfolios during the market crash. What the heck was everyone paying for?

What I am trying to say is everyone can make money in a bull market. The question is, do either you or your financial advisor know when to take some profits to lower overall risk? How much money will you give back when the market corrects, starts another bear market or is affected by a terrorist attack? Do you have protective stops in place?


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Crude Oil and Natural Gas Technical Outlook For Monday Morning

Nymex Crude Oil (CL)

Crude oil edges higher to 83.67 earlier today and at this point, intraday bias remains on the downside as long as 81.72 minor support holds. Current rise from 68.59 is still expected to continue to upper trend line resistance at 87/88 level. On the downside, break of 81.72 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......Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas's consolidation continues and with a short term top in place at 6.108, deeper retreat could be seen to 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.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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