Crude Oil Daily Technical Outlook For Tuesday

Crude oil's recovery from 72.60 extended further today and the development argues that rebound from 69.50 is not completed yet. Intraday bias is cautiously on the upside for the moment. Break of 75.69 resistance will bring stronger rise towards 78.04 resistance next. As noted before, break there will argue that whole fall from 83.95 has finished and will bring even stronger rally. On the downside, though, below 72.60 will flip intraday bias back to the downside for 69.50 support.

In the bigger picture, prior break of medium term trend line support added some credence to the case of reversal. Medium term rise from 33.2, which is treated as a correction to fall from 147.27, should have completed at 83.95 already, on bearish divergence condition in daily MACD. Current fall from 83.95 should extend through 68.59 support towards next key cluster level at 58.32 (50% retracement of 33.2 to 83.95 at 58.58). Decisive break there will strongly suggest that whole decline from 147.27 is resuming for a new low below 33.2. On the upside, break of 78.04 resistance is needed to confirm that fall from 83.95 has completed. Otherwise, outlook will remain bearish..... Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Weekend ETF and Market Report

From guest analyst Chris Vermeulen....

Last week ended on a positive note with stocks and commodities pushing higher into Friday’s close. The market overall is looking very unstable here and this week I figure there will be some big price movement.

Below are the charts on the DIA, GLD, SLV, UNG and USO funds so you can get a feel for the trend and additionally what I am looking for this week with respect to prices.

DIA – Daily & 60 Minute Chart
The Dow, along with the other indexes, has formed a bear flag and can be seen on the daily and 60 minute intraday charts below. This price pattern is a negative one and points to lower prices in the coming week.

If we get one more thrust down I figure it will spook the rest of the weak hands which in turn is a setup for a very nice multi week rally. If this flag turns into a rally then we will simply wait for a pullback and buy when there is a low risk setup.



GLD – Daily Chart
Gold has been doing much the same as the over stock indexes and I feel the same will happen here. We could see price rise for another day or two as it tests our blue resistance level before heading lower.



SLV – Daily Silver Chart
Silver has formed an interesting pattern the past few months and has now broken down. Silver’s chart continues to look weak as it drifts up to test resistance with a bear flag pattern that points to lower prices in the coming days, much the same as gold.



UNG – Daily Natural Gas Chart
Sorry for all the lines on this chart. It looks like a mess, I know, but it does show a possible trend change in UNG.

The trend has been down for over a year but now it looks as though it’s forming a reverse head & shoulders pattern and possible bull flag. These two patterns point to much higher prices in the coming months.

Natural Gas seasonally rallies in mid February into mid April. So this could be something we could catch for a multi month play. I may provide a stock to trade this rally in gas in addition to the ETF fund in the coming days or weeks, when ever this play unfolds.



USO – Daily Crude Oil Chart
Oil has been selling down very strong for the past 6 weeks but it is now trading at a key pivot point. Oil looks as though it’s trying to bottom here and in the next 1-2 weeks I think the energy sector will provide some great trades.



Weekend Trading Conclusion:
Overall, the market and metals bottomed last week or they have another leg down which I expect would happen this week if that’s the case. The charts are pointing to lower prices still. If the market does rally then we will simply watch the breaking and buy the pullback in 1-2 weeks once there is a low risk setup.

To get this weekly trading report sent via email to your inbox if you visit The Gold and Oil Guy .Com.


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Oil Trades at $74 on China Economic Tightening, Saudi Concern

Oil was little changed at $74 a barrel after China sought to temper its economic expansion and a Saudi adviser said the U.S. aims to cut oil imports. China, the world’s second largest oil consuming country, ordered banks to set aside more deposits as reserves for the second time in a month on Feb. 12, signaling slower economic growth and reduced energy demand. Saudi oil ministry adviser Mohammad al-Sabban said today the U.S. is promoting nuclear power as a means of cutting oil imports.

“The market is a bit uneasy about the Chinese tightening,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. China is not “yet the largest importer; it’s not yet the largest consumer region. Still, it is one of the most important ones.” Crude oil for March delivery traded at $74 a barrel, down 13 cents, at the halt of electronic trading for the contract on the New York Mercantile Exchange at 1:15 p.m. Trading resumes at 6 p.m. New York time. There is no floor trading today because of the U.S. Presidents’ Day holiday.

The dollar advanced to $1.3601 against the euro, from $1.3632, as of 3:15 p.m. in New York. The Dollar Index, a six- currency gauge of the greenback’s value, rose 0.14 percent to 80.366. A rise in the value of the dollar curbs demand for commodities as an alternative investment. “What we would be looking for in the next week is how the U.S. dollar is going to behave,” said Harry Tchilinguirian, head of commodity derivatives research at BNP Paribas SA in London. “You are going to be looking at how the dollar is going to behave against a number of currency pairs”....Read the entire article.


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Crude Oil Daily Technical Outlook For Monday

Intraday bias in crude oil remains neutral for the moment. As noted before, recovery from 69.50 might have completed at 75.69 already. Break of 72.60 will affirm this case and flip intraday bias back to the downside for 69.50 support first. Break will confirm resumption of the whole fall from 83.95 towards next key support at 68.59. On the upside, above 75.69 will turn focus to 78.04 minor resistance. Break there will argue that whole fall from 83.95 has finished and will bring stronger rebound instead.

In the bigger picture, prior break of medium term trend line support added much credence to the case of reversal. Medium term rise from 33.2, which is treated as a correction to fall from 147.27, should have completed at 83.95 already, on bearish divergence condition in daily MACD. Current fall from 83.95 should extend through 68.59 support towards next key cluster level at 58.32 (50% retracement of 33.2 to 83.95 at 58.58). Decisive break there will strongly suggest that whole decline from 147.27 is resuming for a new low below 33.2. On the upside, break of 78.04 resistance is needed to confirm that fall from 83.95 has completed. Otherwise, outlook will remain bearish......Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Saudi Arabia Preparing for oil Demand to Peak

A top Saudi energy official expressed serious concern Monday that world oil demand could peak in the next decade and said his country was preparing for that eventuality by diversifying its economic base. Mohammed al-Sabban, lead climate talks negotiator, said the country with the world's largest proven reserves of conventional crude is working to become the top exporter of energy, including alternative forms such as solar power.

Saudi Arabia was among the most vocal opponents of proposals during the climate change talks in Copenhagen. And al-Sabban criticized what he described as efforts by developed nations to adopt policies biased against oil producers through the imposition of taxes on refined petroleum products while offering huge subsidies for coal _ a key industry for the United States. Al-Sabban said the potential that world oil demand had peaked, or would peak soon, was an "alarm that we need to take more seriously" as Saudi charts a course for greater economic diversification.

"We cannot stay put and say 'well, this is something that will happen anyway," al-Sabban said at the Jeddah Economic Forum. The "world cannot wait for us before we are forced to adapt to the reality of lower and lower oil revenues," he added later.

Some experts have argued that demand for oil, the chief export for Saudi Arabia and the vast majority of other Gulf Arab nations, has already peaked. Others say consumption will plateau soon, particularly in developed nations that are pushing for greater reliance on renewable energy sources. With oil demand only now starting to pick up after it was pummeled by the global recession, some analysts say consumers may have learned to live permanently with a lower level of consumption.....Read the entire article.

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Secrets of the 52 Week High Rule

From guest blogger Adam Hewison.....

Over 30 years ago I learned from a very successful trader, a trade secret I’ve never shared on the web before. In fact, I only shared this trading secret with a few friends during that time.

I learned this trading secret from a trader named Bill… I am keeping his last name private as Bill is a very low key guy and shuns any publicity.

Using his special trading technique, Bill made millions and millions of dollars from his office. Now for the first time, I am going to share with you the exact same technique that Bill used so successfully for so many years. The best part is that this technique is still working more than 30 years after I learned about it. Now it’s time for the next generation of traders to learn Bill’s secret.

Bill didn’t even have a name for this killer trading technique. I named
it “The 52 week new highs on Friday rule”.

Just click here to learn this trading secret and please take a minute to leave a comment and let us know what you think.

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Crude Oil Bulls Take a Small Advantage Into The Weekend

Crude oil closed lower due to profit taking on Friday as it consolidated some of the rally off last week's low. The mid range close sets the stage for a steady opening on Tuesday.

Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If March extends the rally off last week's low, the reaction high crossing at 78.04 is the next upside target.

First resistance is Thursday's high crossing at 75.69.
Second resistance is the reaction high crossing at 78.04.

First support is last Friday'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 as it extended this month's trading range. The high range close sets the stage for a steady to higher opening on Tuesday.

Stochastics and the RSI are turning neutral to bullish hinting that sideways to higher prices are possible near term. Closes above the reaction high crossing at 5.680 or below 5.060 are needed to confirm a breakout of the aforementioned trading range.

First resistance is today's high crossing at 5.556
Second resistance is Monday's high crossing at 5.680

First support is today's low crossing at 5.204
Second support is January's low crossing at 5.060

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The U.S. Dollar closed higher on Friday as it consolidates above the 38% retracement level of the 2009-2010 decline crossing at 79.71. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are diverging but are turning neutral signaling that sideways to higher 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 79.24 are needed to confirm that a short term top has been posted.

First resistance is today's high crossing at 80.83
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 79.99
Second support is the 20 day moving average crossing at 79.24


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Oil Falls for First Day in Five as China Seeks to Cool Economic Expansion

Crude oil fell for the first day in five after China, the world’s fastest growing energy consuming country, sought to cool its economic expansion. Oil dropped below $74 a barrel as the People’s Bank of China ordered banks to set aside more deposits as reserves for the second time in a month, boosting the dollar. An Energy Department report today showed a bigger than forecast increase in inventories.

“All of the markets still need every bit of stimulus the central banks can provide,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities. “This move augurs for diminished demand and lower prices.” Crude oil for March delivery fell $1.29, or 1.7 percent, to $73.99 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures have dropped 6.8 percent this year. Oil increased for the first week in five.

China’s central bank said today it will raise banks’ reserve requirement ratio by 50 basis points. China’s policy makers aim to avert asset bubbles and restrain inflation after flooding the economy with money last year to drive a recovery from the first global recession since World War II. “This means it’s more difficult for the Chinese banks to lend, and China has been the bright spot in an otherwise unspectacular global economic recovery,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut.....Read the entire article.

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IEA - Oil Market Report

Highlights of the latest OMR dated February 11th 2010.....

Benchmark crude oil prices fell to six week lows by early February, after warmer weather in the Northern Hemisphere, negative macroeconomic news and sudden strength in the dollar set in motion a $12/bbl slide. Prices regained some of their losses in recent days, with WTI last trading at $73.80/bbl and Brent at $72/bbl.

Forecast global oil demand is revised up 170 kb/d for 2010 as more robust IMF GDP projections are partly offset by a higher price assumption and persistently weak OECD oil demand. Global oil demand is estimated at 84.9 mb/d in 2009 (-1.5% or -1.3 mb/d year-on-year) and 86.5 mb/d in 2010 (+1.8% or +1.6 mb/d versus 2009), with growth entirely in non-OECD countries.

Global oil supply fell 45 kb/d to 85.8 mb/d in January, with higher total OPEC output (mostly NGLs) offset by lower non-OPEC production. Average 2009 non-OPEC production is revised 70 kb/d higher at 51.4 mb/d while 2010 supply is revised up by 120 kb/d to 51.6 mb/d on slightly improved US and North Sea crude prospects.

OPEC crude output was up 105 kb/d at 29.1 mb/d in January. OPEC NGL production is forecast to rise 0.8 mb/d to 5.5 mb/d in 2010, with just over half of the increase related to ramp up from 2009 project start-ups. The call on OPEC crude and stock change for 2010 is revised up 300 kb/d to 29.4 mb/d.

OECD industry stocks fell 67.8 mb in December to 2 678 mb, around 0.8% below 2008’s level, on lower crude and middle distillate inventories. End-December forward demand cover fell to 58.1 days, now only 0.1 day higher than a year ago. Preliminary data point to a January OECD stockbuild of 11.4 mb, but with lower floating storage.

Global 4Q09 and 1Q10 refinery crude throughput forecasts remain unchanged at 72.3 mb/d and 72.6 mb/d respectively, though in the latter’s case, higher Canadian, Mexican and OECD Pacific runs offset lower non-OECD throughputs. Despite some signs of improvement for the refining industry, the sector’s short-term outlook remains fundamentally bearish.

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Crude Oil Pivot, Support and Resistance Numbers For Friday Morning

Crude oil was lower overnight as it consolidates some of the rebound off last Friday's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

Multiple closes above the 20 day moving average crossing at 74.92 are needed to confirm that a short term low has been posted. If March renews last week's decline, last September's low crossing at 67.46 is the next downside target.

Crude oil pivot point, our line in the sand is 74.78

First resistance is the 20 day moving average crossing at 74.92
Second resistance is Thursday's high crossing at 75.69

First support is the overnight low crossing at 73.50
Second support is last Friday's low crossing at 69.50

Is Gold Poised to Go Higher or Lower?

Natural gas was lower overnight as it extends this month's choppy sideways trading pattern. Stochastics and the RSI are neutral signaling that sideways to lower prices are possible near term.

If March extends Tuesday's decline, the reaction low crossing at 5.227 is the next downside target. Closes above the 20 day moving average crossing at 5.427 would temper the near term bearish outlook.

Friday's pivot point for natural gas is 5.366

First resistance is the 20 day moving average crossing at 5.427
Second resistance is Monday's high crossing at 5.680

First support is Tuesday's low crossing at 5.330
Second support is the reaction low crossing at 5.227

Secrets of the 52 Week High Rule

The U.S. Dollar was higher overnight as it extends the recent breakout above the 38% retracement level of the 2009 decline crossing at 79.71. Stochastics and the RSI are diverging but are turning bullish signaling that additional gains 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 79.26 are needed to confirm that a short term top has been posted.

First resistance is the overnight high crossing at 80.83
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 80.03
Second support is the 20 day moving average crossing at 79.26

Is It Déjà Vu All Over Again for the Dow?

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