Crude Prices Decline, Following Equity Markets After U.S. Economic Reports

Crude oil fell the most in three weeks as U.S. jobless claims and manufacturing orders trailed forecasts, stirring concern that the global economic recovery may falter and crimp energy demand growth. Oil decreased as much as 3.7 percent to the lowest level in a week as the number of Americans filing first time claims for unemployment insurance unexpectedly increased last week, and durable goods excluding transportation declined in January.

“It’s going to take better jobs, better consumer confidence, better business confidence and getting everything going into a better direction before you can support crude oil in a $75 to $80 level,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington.

Crude oil for April delivery fell $2.71, or 3.4 percent, to $77.29 a barrel at 11:36 a.m. on the New York Mercantile Exchange, the biggest decline since Feb. 4. Earlier, it touched $80.32. Oil has dropped 2.6 percent this year.

Initial jobless applications rose by 22,000 to 496,000 in the week ended Feb. 20, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance gained and those receiving extended benefits decreased.

Orders for durable goods fell 0.6 percent, the biggest drop since August, figures from the Commerce Department showed today in Washington. Bookings for all goods meant to last several years rose 3 percent, more than anticipated and reflecting a jump in commercial aircraft.....Read the entire article.


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New Video: Making Sense of Today's Gold Market

It's been about eight days since we did a video on gold, and given the market action today we thought we would look at what is causing the downward pressure in this market.

If you did not watch our last video on gold, we strongly recommend that you watch the video titled "Five Reasons Why Gold Will Not Make a New High This Time" as it will give you a bigger picture of how we see this market playing out in the next 12 months.

In today's short video we look at an indicator that we have not talked about before in any of our videos. The indicator, which is an overlay on top of the chart, is called the Donchian Channel Indicator.

Richard Donchian, who has since passed away, came up with this indicator in the late '40s. The reason why we like this indicator is the fact that it has successfully stood the test of time. We think you'll really enjoy seeing how it can help you make money in the gold market.

Also in this video, we point out one very important cycle that is in play now and where I think the next tradable low is coming into this market.


As always our videos are free to watch and there are no registration requirements. We would really like to hear back from you, with regards to your thoughts on the gold market, so please feel free to leave a comment.




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Crude Oil Daily Technical Outlook For Thursday

Crude oil continues to stay in tight range below 80.51 today and intraday bias remains neutral for the moment. Deeper retreat to 4 hours 55 EMA (now at 78.12) cannot be ruled out. But after all, rise from 69.50 is in favor to continue as long as 75.69 support holds. Above 80.51 will target a retest on 83.95 high. However, note that Break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.

In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish..... Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Gold, Silver & Stock Indices on the Verge of Rolling Over?

From guest analyst Chris Vermeulen....

This week has been playing out as we expected. Last week we saw the market rally on light volume into a resistance zone on the daily chart. Light volume rallies are always a warning sign, much like the “Calm before a Storm”.

The way I look at bearish price action....

The First Heavy Selling Volume Day – I see this as large institution selling massive amounts of investments (stocks & commodities) because prices have risen enough for them to book profits OR they know something we don’t and they are getting out before the majority of traders find out.

Light Volume Rally/Drift Higher – After a heavy volume sell off we tend to see prices drift higher on light volume. This is when the institutions stop dumping investments and allow the retail investors (Un-educated Traders) to buy the market back up.

Bear Market Trend – In a down trend we see these two phases enter and exit the market. These patterns happen on every time frame from tick charts to yearly charts. Trends vary in length from 1-2 cycles and sometimes 10-20 cycles and more…

Current Market Conditions

So far this week we have seen the market sell down on increasing volume which is bearish and is pointing to lower prices. On Wednesday we saw prices move up on light volume with volatility rising into the close with a short wave of selling. This was indicating to me that sellers were starting to enter the market again.

The daily chart below clearly shows the heavy selling and drift higher on declining volume. The market is now trading deep into a resistance zone and looking ready to drop.



SP500 Intraday 2 Hour Candle Charts

You can see the same selling patterns repeat themselves. Since the Feb 5th bottom we have been forming a much larger bear flag which makes me think a BIG drop is only days away.



SP500 Trend Trading Conclusion:

Both stocks and precious metals are trading with the same chart patterns and volume levels. So if you are wondering about gold, silver and oil, I am seeing a similar scenario playing out for them also.

The reason I keep bringing these bearish patterns up in my reports is because once you master trading in a down market then you can make money during some of the fasted moving times in the market. I have always preferred shorting the market because prices drop much quicker then they rise. So profits are made quickly.

Also, if the broad market does eventually roll over later this year, and I am not saying it is, but “IF” it does, then you will feel somewhat comfortable with the positions we will be taking.

If you would like to receive these Free Bi-Weekly Trading Reports please visit Chris Vermeulen's The Gold And Oil Guy.

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Crude Oil Bulls Cling to a Near Term Advantage

Crude oil closed higher on Wednesday and remains poised to extend the rally off this month's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If May extends this month's rally, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target. Closes below the 20 day moving average crossing at 76.60 would confirm that a short term top has been posted.

Crude oil pivot point, our line in the sand is 79.68

First resistance is Monday's high crossing at 81.15
Second resistance is the 75% retracement level of the January-February decline crossing at 81.63

First support is the 10 day moving average crossing at 78.32
Second support is the 20 day moving average crossing at 76.60

Just click here for your FREE trend analysis of crude oil ETF USO

Natural gas closed higher due to short covering on Wednesday as it consolidated some of this week's decline. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If May extends this week's decline, the 87% retracement level of the December-January rally crossing at 4.819 is the next downside target. Closes above the 20 day moving average crossing at 5.293 are needed to confirm that a low has been posted.

Natural gas pivot point for Wednesday evening is 4.861

First resistance is the 10 day moving average crossing at 5.218
Second resistance is the 20 day moving average crossing at 5.293

First support is today's low crossing at 4.859
Second support is the 87% retracement level of the December-January rally crossing at 4.819

Just click here for your FREE trend analysis of natural gas ETF UNG


The U.S. Dollar closed lower due to light profit taking on Wednesday as it consolidates below the 50% retracement level of the 2009 decline crossing at 81.32. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are diverging but are neutral signaling that sideways to higher prices are possible near term.

If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target. Closes below the 20 day moving average crossing at 80.15 are needed to confirm that a short term top has been posted.

First resistance is last Friday's high crossing at 81.43
Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92

First support is Tuesday's low crossing at 80.15
Second support is the 20 day moving average crossing at 80.15


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Phil Flynn: I Have Confidence

I have confidence in sunshine, I have confidence in rain, I have confidence that spring will come again. But confidence in the economy may knock the confidence out of me. Strength may not lie in numbers but the numbers are not showing strength.
What can only be described as a stunning drop in consumer confidence went a long way in shaking the confidence of even the most steadfast bull. The Conference Board, after reporting an increase in consumer confidence last month, posted an ignominious drop from a lofty height of 56.5 reading in January to a pathetic 46.0 reading in the month of February.

What made this number feel even worse was it followed weak business confidence numbers in Germany leading to worries that Europe’s credit woes are having an impact on the business climate throughout the region. The IFO business climate index in Germany fell for the first time in eleven months, to 95.2 from 95.8 in January, below economists' forecast of 96.4 as concerns over Greece debt issues are taking its toll. These dual concerns gave a rise to the dollar and put pressure on commodities across the board as oil seemed to lead many commodities to the downside.

Oh sure it helped that it appeared that the strike in France is over and that the refinery shutdown was going to be settled. The Wall Street Journal Claire Rangel reported that Total said, "it had concluded talks with trade unions at its French refineries that could lead to the end of the strike that began over a week ago. The French oil major pledged to preserve refining operations in France for five years.

Refinery workers were angry over plans by Total to end refining operations at the sprawling Flanders facility near Dunkirk, which the company committed to keeping open in some form or another. However, Total didn't disclose its intentions for the refining operations at the site, which houses other activities.” This is bearish in two ways. One is obvious that France will be refining product. But the other bearish activity is not as obvious.

Increased French refining activity will add to the global glut of refining capacity. The problems with North Sea production and the Buzzard Oil field is an issue that the market can look beyond. Reuters News, quoting a source at the company, said that the North Sea Buzzard oilfield has started to increase output after a period of much diminished production. With production coming back, that will be one less thing that the bulls can hang onto.

Yet ultimately it was the drop in confidence that was the major factor in the big drop in oil. Let’s face it, even the oil bulls have to admit that the price of oil is being supported by confidence as in confidence that the economy will recover at steady inflation free pace and that demand in China will continue to reduce global oil inventories. Or perhaps confidence that OPEC will get back to being compliant in production cuts. Or confidence that the dollar will stay weak forever. This would allow an inflated oil price due to a weak dollar as opposed to traditional measurements of supply and demand. But if that confidence is shaken then oil will tumble.

I have confidence in spring time! And so does the natural gas market that has declared that for all intents and purposes spring has sprung. Natural gas continues to get pummeled ahead of today’s March expiration. Another sign of spring is melting snow. The snow melted and that had people feeling confident to go back to their cars and drive! The MasterCard SpendingPulse reported that gasoline demand rose 5.8 percent last week after last week’s snow induced 16 month low. The report showed demand at an average 9.36 million barrels of gasoline a day.

We are still maintaining our long term bearish outlook for petroleum. We see oil going down to the $40 region. Iran is still a concern as it appears sanctions are on the horizon. Still we feel the path of least resistance is to the down side.

You can contact Phil Flynn at pflynn@pfgbest.com or catch him each day on the Fox Business Network!



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Crude Oil Daily Technical Outlook Wednesday Morning

Intraday bias in crude oil remained neutral for the moment and retreat from 80.51 could extend further to 4 hours 55 EMA (now at 77.69) But still, rise fro 69.50 is in favor to continue as long as 75.69 support holds. Above 80.51 will target a retest on 83.95 high. However, note that Break of 75.69 will argue that rebound from 69.50 has completed and will turn focus back to this low.

In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Oil Rises After Dollar Declines, Report Shows Drop in U.S. Crude Supplies

Crude oil rose in New York after an industry report showed U.S. stockpiles declined and the dollar dropped, increasing the incentive to buy commodities.

Crude inventories fell 3.14 million barrels last week, the American Petroleum Institute said late yesterday. The drop is counter to analysts’ expectations of an increase in a U.S. Energy Information Administration report due today. The dollar snapped two days of gains against the euro as the Federal Reserve will maintain interest rates to support economic growth.

“Everyone is expecting a 2 million barrel build but you’ve got API showing a 3 million barrel draw,” said Clarence Chu, a trader with options dealers Hudson Capital Energy in Singapore. “This is making people nervous but they’re waiting to see the EIA numbers to confirm. The dollar will continue to be significant in terms of moving the market.”

Crude oil for April delivery rose as much as 47 cents, or 0.6 percent, to $79.33 a barrel in electronic trading on the New York Mercantile Exchange. It was at $79.21 at 13:03 p.m. Singapore time. Yesterday, futures declined 1.6 percent to settle at $78.86.

Prices also gained today as the dollar fell against the euro. Fed Chairman Ben S. Bernanke is expected to tell Congress in testimony starting today that the U.S. Federal Reserve’s increase in discount interest rate last week won’t be a prelude to changes in the benchmark borrowing costs. The dollar traded at $1.3534 per euro at 12:47 p.m. Singapore time, from $1.3507 yesterday.....Read the entire article.


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Crude Oil Bulls Lose Round Two, Hold Slight Advantage For Wednesday

Crude oil closed lower due to profit taking on Tuesday as it consolidated some of the rally off this month's low. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If May extends this month's rally, the 75% retracement level of the January-February decline crossing at 81.63 is the next upside target. Closes below the 20 day moving average crossing at 76.33 would confirm that a short term top has been posted.

Tuesday evening's pivot point, our line in the sand is 79.26

First resistance is Monday's high crossing at 81.15
Second resistance is the 75% retracement level of the January-February decline crossing at 81.63

First support is the 10 day moving average crossing at 77.78
Second support is the 20 day moving average crossing at 76.33

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Natural gas closed lower on Tuesday as it extends last Friday's breakout below the lower boundary of this month's trading range, which crosses at 5.060. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If March extends this week's decline, the 87% retracement level of the December-January rally crossing at 4.734 is the next downside target. Closes above the 20 day moving average crossing at 5.281 are needed to confirm that a low has been posted.

Natural gas pivot point for Tuesday evening is 4.856

First resistance is the 10 day moving average crossing at 5.221.
Second resistance is the 20 day moving average crossing at 5.281.

First support is today's low crossing at 4.773
Second support is the 87% retracement level of the December-January rally crossing at 4.734

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The U.S. Dollar closed higher on Tuesday ending a two day correction off last Friday's high but remains below the 50% retracement level of the 2009 decline crossing at 81.32. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are diverging but are neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target. Closes below the 20 day moving average crossing at 80.04 are needed to confirm that a short term top has been posted.

First resistance is last Friday's high crossing at 81.43
Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92

First support is today's low crossing at 80.15
Second support is the 20 day moving average crossing at 80.04



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Tension Builds As British Start Drilling For Oil In Contested Falkland Islands

The most hotly contested piece of land in the world has just discovered oil.

British oil and gas exploration company Desire Petroleum started drilling today sixty miles off coast of the Falkland Islands. The South Atlantic territory may contain 3.5 billion barrels of oil and significant quantities of natural gas, according to CNN.

But the enterprise risks reigniting a sovereignty dispute between Argentina and the UK, which led to a two month war in 1982.

Although the islands are occupied by British troops and pay tribute to the Queen, they are self governed and self supporting.

President Cristina Fernandez has ruled out any military action to stop the drilling, according to the AP. However, she is leading a diplomatic campaign that may face the emergent powers of Latin America against the lame duck empire.

Argentina has unilateral regional support in its claim to the islands, including the vociferous backing of Venezuela's Hugo Chavez.

Reuters:
"The British are desperate for oil since their own fields in the North Sea are now being depleted," Chavez said in a televised speech. When will England stop breaking international law? Return the Malvinas to Argentina!"

"The English are desperate, the Yankees are desperate and here we have the biggest petroleum reserves in the world," Chavez said.



Author Gus Lubin is a writer at The Business Insider





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