CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed next week.
Friday, February 5, 2010
Crude Oil Bears Take a Clear Advantage Into The Weekend
I must admit, I have been looking forward to posting my bear waiting for his steak dinner, and it looks like he is getting it. Crude oil closed lower on Friday and tested the 87% retracement level of the September-January rally crossing at 69.58. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI are diverging and are turning neutral to bearish signaling that sideways to lower prices are possible near term.
If March extends the decline off January's high, September's low crossing at 67.46 is the next downside target. Closes above the 20 day moving average crossing at 76.85 are needed to confirm that a short term low has been posted.
First resistance is the 10 day moving average crossing at 74.36
Second resistance is the 20 day moving average crossing at 76.85
First support is today's low crossing at 69.50
Second support is September's low crossing at 67.46
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Natural gas closed higher on Friday and above the 20 day moving average crossing at 5.489 confirming that a low has been posted. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
If March extends today's rally, the reaction high crossing at 5.804 is the next upside target. Closes below Thursday's low crossing at 5.227 would temper the near term friendly outlook.
First resistance is today's high crossing at 5.598
Second resistance is the reaction high crossing at 5.804
First support is Thursday's low crossing at 5.227
Second support is last week's low crossing at 5.060
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The U.S. Dollar closed higher on Friday as it extended this week's rally above the 38% retracement level of the 2009-2010 decline crossing at 79.71. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways prices are possible near term.
If March extends this winter's rally, the 50% retracement level of the 2009-2010 decline crossing at 81.32 is the next upside target. Closes below the 20 day moving average crossing at 78.47 would confirm that a short term top has been posted.
First resistance is today's high crossing at 80.82
Second resistance is the 50% retracement level of the 2009-2010 decline crossing at 81.32
First support is the 10 day moving average crossing at 79.34
Second support is the 20 day moving average crossing at 78.47
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Crude Oil Futures Fluctuate in New York After U.S. Unemployment Rate Drops
Crude oil fluctuated after a government report showed the U.S. unexpectedly lost jobs last month while the unemployment rate declined.
Oil rose as much as 1.1 percent and slipped 0.9 percent after the Labor Department report was released in Washington. Employment fell by 20,000 in January as the jobless rate dropped to 9.7 percent, the lowest level since August. Prices plunged 5 percent yesterday, the biggest decrease since July 29.
“There’s a lot of uncertainty about how to interpret the payroll data,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “After yesterday’s big drop the market looks shaky, and it will be hard to maintain any moves higher.”
Crude oil for March delivery declined 8 cents to $73.06 a barrel at 10:38 a.m. on the New York Mercantile Exchange. Futures were little changed this week and are up 77 percent from a year ago.
The Standard & Poor’s 500 Index rose 0.1 percent to 1,064.35. The dollar climbed 0.3 percent versus the euro to $1.3677, from $1.3723 yesterday.
The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010
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Goldman: Oil Will Get Expensive Now That The Tankers Are Done Hoarding It
Goldman's David Greely is making a near-term bullish case for oil. His optimism is driven by A) The strong U.S. ISM Manufacturing data we had two days back, B) the fact that renewed Nigerian violence threatens supply, and C) the reduction in overhang caused by oil hoarded at sea in tankers (floating storage).
While the relationship appears far from perfect, he argues that U.S. oil demand tends to track ISM Manufacturing Index readings:
Most interestingly for short-term traders, Falling floating storage implies a tighter market, since less supply is basically out there ready to be sold into the market.
David Greely @ Goldman: [emphasis added] The area where the improvement in near-term fundamentals has been most pronounced in recent weeks is in the amount of oil in floating storage. The use of tankers to store excess supplies of crude oil and gasoil over the past year has been emblematic of the weakness in supply demand fundamentals during the recession, and the unloading of these tankers has been broadly viewed as a necessary precursor to a cleanup over the overall oil market.
Consequently, reports that anywhere from 0 to 50 million barrels of the total oil in floating storage has been recently unloaded have suggested a potential turn around in oil market fundamentals.
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While the relationship appears far from perfect, he argues that U.S. oil demand tends to track ISM Manufacturing Index readings:
Most interestingly for short-term traders, Falling floating storage implies a tighter market, since less supply is basically out there ready to be sold into the market.
David Greely @ Goldman: [emphasis added] The area where the improvement in near-term fundamentals has been most pronounced in recent weeks is in the amount of oil in floating storage. The use of tankers to store excess supplies of crude oil and gasoil over the past year has been emblematic of the weakness in supply demand fundamentals during the recession, and the unloading of these tankers has been broadly viewed as a necessary precursor to a cleanup over the overall oil market.
Consequently, reports that anywhere from 0 to 50 million barrels of the total oil in floating storage has been recently unloaded have suggested a potential turn around in oil market fundamentals.
Follow guest blogger Vince Fernando at twitter @vincefernando
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Crude Oil Higher on Better then Expected Unemployment Numbers, Short Covering
Crude oil was higher due to short covering overnight as it consolidates some of Thursday's decline. Stochastics and the RSI are diverging but are turning neutral to bearish signaling that sideways to lower prices are possible near term.
If March extends this week's decline, the 75% retracement level of the September-January rally crossing at 71.70 is the next downside target. Closes above the 20 day moving average crossing at 76.94 are needed to confirm that a short term low has been posted.
Crude oil pivot point, our line in the sand is 74.24
First resistance is the 10 day moving average crossing at 74.53
Second resistance is the 20 day moving average crossing at 76.94
First support is Thursday's low crossing at 72.42
Second support is the 75% retracement level of the September-January rally crossing at 71.70
The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010
Natural gas was higher due to short covering overnight as it consolidates above the 10 day moving average crossing at 5.378. Stochastics and the RSI remain neutral to bullish signaling that additional strength is possible near term.
Closes above the 20 day moving average crossing at 5.487 are needed to confirm that a short term low has been posted. If March renews the decline off January's high, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target.
Friday's pivot point for natural gas is 5.381
First resistance is the 20 day moving average crossing at 5.487
Second resistance is Wednesday's high crossing at 5.558
First support is last Thursday's low crossing at 5.060
Second support is the 75% retracement level of the December-January rally crossing at 4.919
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The U.S. Dollar was higher overnight as it extends this week's rally above the 38% retracement level of the 2009 decline crossing at 79.71. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.
If March extends this winter's rally, the 50% retracement level of the 2009 decline crossing at 81.32 is the next upside target. Closes below the 20 day moving average crossing at 78.45 would confirm that a short term top has been posted.
First resistance is the overnight high crossing at 80.59
Second resistance is the 50% retracement level of the 2009 decline crossing at 81.32
First support is the 10 day moving average crossing at 79.31
econd support is the 20 day moving average crossing at 78.45
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Crude Oil Daily Technical Outlook For Friday
Crude oil's rebound from 72.43 should have completed at 78.04 already and fall from 83.95 is resuming. Break of 72.43 low will target 68.59 support next. On the upside, above 74.50 will turn intraday bias neutral and bring recovery. But upside should be limited below 78.04 resistance and bring fall resumption.
In the bigger picture, current development revives the case that medium term rise from 33.2 has topped out at 83.95 on bearish divergence condition in daily MACD. Break of 68.59 will confirm this case and target 58.32 support next. On the upside, however, above 78.04 resistance will dampen this view and argue that the medium term rise might still be in progress. Nevertheless, even in case of another high above 83.95, we'd continue to look of reversal signal as crude oil approaches 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
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Thursday, February 4, 2010
Despite Sell Off in Oil, Bulls Maintain a Slight Near Term Advantage
Crude oil closed sharply lower on Thursday as a result of today's bearish jobs data, which leaves any economic recovery in question. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain bullish despite today's decline signaling that a low might be near.
Closes above the 20 day moving average crossing at 77.42 are needed to confirm that a short term low has been posted. If March renews the decline off January's high, the 75% retracement level of the September-January rally crossing at 71.70 is the next downside target.
Crude oil's pivot point for Thursday evening is 74.19
First resistance is the 20 day moving average crossing at 77.42
Second resistance is the 50% retracement level of January's decline crossing at 78.43
First support is today's low crossing at 72.42
Second support is the 75% retracement level of the September-January rally crossing at 71.71
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Natural gas closed slightly higher on Thursday as it consolidates above the 10 day moving average crossing at 5.407. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
Closes above the 20 day moving average crossing at 5.501 are needed to confirm that a low has been posted. If March renews the decline off January's high, the 75% retracement level of the December-January rally crossing at 4.919 is the next downside target.
Thursday evenings pivot point for natural gas is 5.398
First resistance is the 20 day moving average crossing at 5.501
Second resistance is the reaction high crossing at 5.804
First support is last Thursday's low crossing at 5.060
Second support is the 75% retracement level of the December-January rally crossing at 4.919
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The U.S. Dollar closed higher on Thursday and above the 38% retracement level of the 2009-2010 decline crossing at 79.71. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways prices are possible near term.
If March extends this winter's rally, the 50% retracement level of the 2009-2010 decline crossing at 81.32 is the next upside target. Closes below the 20 day moving average crossing at 78.32 would confirm that a short term top has been posted.
First resistance is today's high crossing at 80.13
Second resistance is the 50% retracement level of the 2009-2010 decline crossing at 81.32
First support is the 10 day moving average crossing at 79.12
Second support is the 20 day moving average crossing at 78.32
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Phil Flynn: Worms in Space
Yesterday the petroleum markets were all about trying to digest the weekly inventory reports. Refineries are running at the lowest level since the 1980’s if you exclude time when refineries were shut down for hurricanes and this shows that demand is lousy. Yet at the same time there are fears that we are finally getting down to a point where refiners have cut back enough to meet slowing demand. Despite this fascinating study of supply versus demand, we will get more into what really made the market pop and drop and that was a story from the AP that was released again by the AFP on the Dow Jones commodity wire.
A breaking oil market seemed to rally quickly after a headline crossed that said, “WHITE HOUSE: Reported rocket launch by Iran would be a provocative act.” Oh my gosh! Rocket launch! What was that, Get Me Out! Well that seemed to be the reaction or a higher buy got triggered but the story had come out earlier. The report did say that the White House reported a rocket launch by Iran would Be a "provocative act.", but the White House was still checking out reports of the launch. The Kavoshgar 3 (Explorer) rocket was launched Wednesday, Iranian state-owned Al-Alam television reported.....Read the entire article.
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Crude Oil Drops the Most in 6 Months as Stocks Tumble, Dollar Strengthens
Crude oil tumbled the most in six months as the dollar gained and a drop in stocks bolstered skepticism that the economic recovery will be sustained. Oil fell as much as 5.4 percent as the greenback climbed versus the euro, curbing the appeal of commodities as an alternate investment. The Standard & Poor’s 500 Index dropped after more Americans filed first time claims for unemployment insurance last week, raising concern that an improvement in the job market is stalling.
“Oil is down because of the dollar’s strength and the poor fortunes of the S&P, especially after the jobs report,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The whole commodity sector is looking weak today.” Crude oil for March delivery fell $3.83, or 5 percent, to $73.15 a barrel at 11:49 a.m. New York time. Oil declined as much as $4.12 to $72.86, and is heading for the biggest daily drop since July 29. Prices are up 81 percent from a year ago.
“Everything on the screen is red because of negative economic news,” said Chip Hodge, who oversees a $9 billion natural resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Unless the economy rebounds, prices should move in one direction, south.” The dollar climbed to the highest level against the euro since May after European Central Bank President Jean-Claude Trichet said the economic outlook is subject to “uncertainty.”
The dollar traded at $1.3745 per euro, up from $1.3893 yesterday. It traded earlier at $1.3728, the highest level since May 21.
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Trends for Stocks & Commodities: Gold, Oil and Indexes
Stocks and metals have been on a steady rise this week. The US Dollar drifting lower has helped to add fuel to the oversold bounce in equities and metals we are seeing.
Stocks – NYSE 65 Minute Chart
Stocks have started to show signs of a possible reversal to the upside. So far this week we have seen the major indices form a higher high and as of today are stuck under the key resistance level shown on the chart below. The rally seen this week has been on light volume indicating there is not much strength behind it at this time.
If buying volume picks up and we see the NYSE break this resistance level then money should start to pour back into the market as the first set up of higher highs and lows will have formed and that is the definition of an up trend.
Gold – 24 Hour Trading Chart Using 8 Hour Bars
This chart allows us to look far enough back to see key support and resistance levels. Today we saw gold sell down with rising volume which is bearish.
Oil – 10 Hour Candle Chart
The Oil fund is currently in the same situation as gold. It had a nice rally/bounce which was expected from the rather large sell off over the past couple weeks.
US Dollar Index – 2 Hour Chart
This chart shows the dollar rally that triggered the recent sell off in gold & silver from Jan 25th to Jan 31st. So far in February, the dollar has drifted lower into a support level and bounced sharply on Wednesday. This is very bullish price action and points to higher dollar prices in the near future.
Stock & Commodity Trading Conclusion:
In short, stocks and metals rallied on light volume which is a sign of weakness. They are both stuck under a key resistance level and selling volume has started to pickup. To add more logs to the fire, the US Dollar appears to be picking up speed for another surge higher in the next couple days.
All of this leads me to believe this weeks rally is just a dead cat bounce and lower prices are just around the corner. But, because the 60 minute intraday charts have made a higher high, the down trend is now in question. When in doubt, just stay out. During possible tops or bottoms I find it best to stay clear of the market, even for day traders unless there are very strong price and volume surges occurring.
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Stocks – NYSE 65 Minute Chart
Stocks have started to show signs of a possible reversal to the upside. So far this week we have seen the major indices form a higher high and as of today are stuck under the key resistance level shown on the chart below. The rally seen this week has been on light volume indicating there is not much strength behind it at this time.
If buying volume picks up and we see the NYSE break this resistance level then money should start to pour back into the market as the first set up of higher highs and lows will have formed and that is the definition of an up trend.
Gold – 24 Hour Trading Chart Using 8 Hour Bars
This chart allows us to look far enough back to see key support and resistance levels. Today we saw gold sell down with rising volume which is bearish.
Oil – 10 Hour Candle Chart
The Oil fund is currently in the same situation as gold. It had a nice rally/bounce which was expected from the rather large sell off over the past couple weeks.
US Dollar Index – 2 Hour Chart
This chart shows the dollar rally that triggered the recent sell off in gold & silver from Jan 25th to Jan 31st. So far in February, the dollar has drifted lower into a support level and bounced sharply on Wednesday. This is very bullish price action and points to higher dollar prices in the near future.
Stock & Commodity Trading Conclusion:
In short, stocks and metals rallied on light volume which is a sign of weakness. They are both stuck under a key resistance level and selling volume has started to pickup. To add more logs to the fire, the US Dollar appears to be picking up speed for another surge higher in the next couple days.
All of this leads me to believe this weeks rally is just a dead cat bounce and lower prices are just around the corner. But, because the 60 minute intraday charts have made a higher high, the down trend is now in question. When in doubt, just stay out. During possible tops or bottoms I find it best to stay clear of the market, even for day traders unless there are very strong price and volume surges occurring.
Just click here if you would like to receive these free trading reports from The Gold and Oil Guy Chris Vermeulen at The Gold and Oil Guy .Com
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