Crude Oil Bulls Face Overbought Conditions, Here's Mondays Numbers

Crude oil was higher overnight as it extends the rally off February's low. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are possible near term.

If May extends the rally off February's low, the 87% retracement level of the January-February decline crossing at 83.53 is the next upside target. Closes below the 20 day moving average crossing at 78.72 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 82.82
Second resistance is the 87% retracement level of the January February decline crossing at 83.53

First support is the 10 day moving average crossing at 80.33
Second support is the 20 day moving average crossing at 78.72

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Natural gas was lower overnight and posted a new contract low as it extends this winter's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If May extends the decline off January's high, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 5.046 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 4.772
Second resistance is the 20 day moving average crossing at 5.046

First support is the overnight low crossing at 4.550
Second support is weekly support crossing at 4.157

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The U.S. Dollar was slightly lower overnight as it extends last Friday's decline. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.92 would open the door for a larger degree decline during March.

If June renews this winter's rally, the 50% retracement level of the 2009 decline on the weekly continuation chart crossing at 81.97 is the next upside target.

First resistance is February's high crossing at 81.70
Second resistance is the 50% retracement level of the 2009 decline on the weekly continuation chart crossing at 81.97

First support is last Wednesday's low crossing at 80.14
Second support is the reaction low crossing at 79.92

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Crude Oil Gains for Second Day on Speculation Demand Will Rise

Crude oil rose for a second day on speculation improving world demand and OPEC supply restrictions will help slow growth in stockpiles.

A report tomorrow in the U.S., the world’s largest oil consumer, will probably show consumer confidence is at its highest in a month, according to a Bloomberg News survey. Japan, Asia’s second largest oil importer, posted a current account surplus in January as exports climbed for a second month. Kuwait, the fourth largest Organization of Petroleum Exporting Countries producer, will maintain oil export limits through June, the Kuwait Times reported on March 6.

“Macro-economic sentiment seems to be fairly positive,” said Toby Hassall, research analyst with CWA Global Markets Pty in Sydney. “That’s helping to nudge oil up but the actual physical supply and demand data is still soft.”

Crude oil for April delivery rose as much as 54 cents, or 0.7 percent, to $82.04 a barrel in after hours electronic trading on the New York Mercantile Exchange. It was at $81.92 at 1:24 p.m. in Singapore.

The contract increased 1.6 percent to $81.50 on March 5, the highest closing price since Jan. 11, after a report showed U.S. employment declined less than forecast in February. It gained 2.3 percent last week as global equity markets rallied and U.S. refining climbed to a five month high.

Gains in the equity markets are supporting prices, Hassall said. The extent of oil’s rally after last week’s U.S. inventory report was surprising given that crude stockpiles are still rising and gasoline stocks remain high, he said.....Read the entire article.


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Strong Market Sentiment Boost Commodities

Crude oil rallied after fewer than expected payroll contraction in the US. Investors anticipate improved economic outlook would boost energy demand. WTI crude oil price surged to a 7 week high of 72.07 before closing at 81.5, up +1.6% Friday. The benchmark contract also added +2.3% on weekly basis. Brent crude also rose +2.96% last week, narrowing the spread between WTI BRENT crude prices. We believe this was due to the unexpected stock build in Cushing Oklahoma, where the WTI crude is stored.

The US Energy Department reported on Wednesday that crude oil inventory increased +4.03 mmb, compared with market expectation of +1.9 mmb gain, to 341.6 mmb in the week ended February 26. Cushing stock, halting the downtrend, rose for the first time in 10 weeks. Although utilization rate increased +0.7%, it was more than offset by +2% rise in imports.

Gasoline inventory rose +0.77 mmb to 231.9 mmb despite decline in imports and flat production. Demand slid -2% to around 8.88M bpd. Distillate stockpile continued to draw but the magnitude was less than expected. Although demand rose +4.6% during the week, it remained +21% above 5 year average.

We regard this as a weak set of inventory data. However, the market ignored the huge increase in crude oil inventory but focused on strong ISM services data and other positive macroeconomic data. Moreover, investors might view increase in utilization rate and rise in implied petroleum consumption as signs of recovery in US oil market.

The weekly data is volatile in nature. Let's take a look at the 4 week average. Total product demand averaged at 19.3M bpd over the past 4 week, down -1.2% from the same period last year. Although the contraction has moderated, it's far from being described as encouraging. Similar situations are seen in fuel demands. 4 week average for motor gasoline and distillate were down -2.5% and -7.7% respectively from the same period last year.

In the coming week, the International Energy Agency, the US Energy Department and the OPEC will release their monthly oil reports. We expect to see modest upgrade in global oil demand given stronger macroeconomic outlook. Major growth driver remains in countries outside OECD. In previous reports, all 3 agencies viewed that OECD demand should remain subdue in 2010 and 2011. We will see if there're any upward revisions in these countries as OECD demand is crucial for sustaining oil price above 80.

From Oil N'Gold Saturday March 6th


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Phil Flynn: Oil Held hostage Day

It is almost been a year since the day the oil market was changed forever. After collapsing in a heap of deflationary despair, oil was saved by what could only be described as a historic government intervention. It was the day that the US Federal Reserve changed the world by printing more money and therefore, essentially putting a floor under the price of oil. It was the day that the Federal Reserve, after having nowhere to go on interest rates, made a move to save the banks and the economy by taking the unprecedented step to use quantitative easing in the United States to save our economy.

This move of course changed the way oil moved and was valued. And to this day this government intervention and newly created Fed policy inspired the largest move in crude oil prices there has ever been even when considering geo-political events or even data on supply and demand. As we come upon the one year anniversary let’s look back and see how the global oil market was changed and what that means for our future.

A year ago the economic world was stunned. We were 6 months away from the collapse of Lehman Brothers investment bank, a failure thought almost impossible. The world started to realize that this sub-prime crisis was a much larger problem than at first glance and wasn’t going to go away very easily. The Federal Reserve was aggressive and moved the target range for the federal funds rate at 0 to 1/4 percent and even took the step to buy some bad assets like mortgage backed securities from the banks. Yet despite these moves and some short term stabilization in the market place many markets still seemed frozen.

Oil, despite a three month spike in price, appeared to be getting ready for a collapse of its own. Tight credit and still plunging demand made price prospects dim. It was obvious that because of lack of confidence and real problems with toxic assets still festering in our nation’s banks, that even a zero percent fed funds rate would not be enough to ward of deflationary fears. Demand destruction was rampant. Oh yes, oil had recovered from its January lows but that was after we had experienced the biggest peak to valley price drop in the history of the oil market reflecting what was the biggest peak to valley drop in the history of oil demand. This drop in demand reflected the fact that the economy was still contracting and we were getting ready to see more de-leveraging and more deflation.....Read the entire article.


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Crude Oil Rises, Topping $81, After U.S. Loses Fewer Jobs Than Predicted

Crude oil surged and gasoline rose to a 17-month high after U.S. employment declined less than forecast in February, bolstering optimism that fuel demand will climb in the world’s biggest energy consuming country.

Oil rose as much as 2.3 percent after the Labor Department reported that payrolls dropped 36,000 last month. The total was forecast to fall by 68,000, according to economists surveyed by Bloomberg News. U.S. fuel use, averaged over the past four weeks, was 19.3 million barrels, up 3 percent from a year earlier, an Energy Department report on March 3 showed.

“The employment numbers were quite good relative to expectations, so I’m surprised the market isn’t responding more,” said Michael Fitzpatrick, vice president of energy at MF Global in New York.

Crude oil for April delivery rose $1.26, or 1.6 percent, to $81.47 a barrel at 12:09 p.m. on the New York Mercantile Exchange. Futures reached $82.07, the highest level since Jan. 12. The contract is up 2.3 percent this week.

Gasoline for April delivery increased 3.13 cents, or 1.4 percent, to $2.265 a gallon in New York. The fuel touched $2.2831, the highest price since Oct. 3, 2008.

The Standard & Poor’s 500 Index gained 10.83, or 1 percent, to 1,133.80. The Dow Jones Industrial Average rose 81.25 points to 10,525.39.

“We had a nice spike up on the jobless report,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “Whenever we get above $80 the bids seem to dry up. I will have to see us close above $80 for a few more days before I’m convinced we’re going to test $84.96.”

The April oil contract surged to $84.96 a barrel on Jan. 11, the highest level since October 2008.....Read the entire article.


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Crude Oil Bulls Maintain a Near Term Advantage, Here's Friday's Numbers

Crude oil was higher overnight as it consolidates some of Thursday's decline. Stochastics and the RSI are overbought, diverging but are bullish signaling that sideways to higher prices are possible near term.

If May resumes the rally off February's low, 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 78.17 would confirm that a short term top has been posted.

Friday's pivot point, our line in the sand is 80.33

First resistance is Wednesday's high crossing at 81.60
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 80.10
Second support is the 20 day moving average crossing at 78.17

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Natural gas was steady to lower overnight and posted a new contract low. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If May extends the decline off January's high, weekly support crossing at 4.157 is the next downside target. Closes above the 20 day moving average crossing at 5.090 would confirm that a short term low has been posted.

Natural gas pivot point for Friday is 4.639

First resistance is the 10 day moving average crossing at 4.811
Second resistance is the 20 day moving average crossing at 5.090

First support is the overnight low crossing at 4.612
Second support is weekly support crossing at 4.157

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The U.S. Dollar was slightly lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

Closes below the reaction low crossing at 79.61 would open the door for a larger degree decline during March. If March renews this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target.

First resistance is the reaction high crossing at 81.43
Second resistance is the 62% retracement level of the 2009 decline crossing at 82.92

First support is Wednesday's low crossing at 79.84
Second support is the reaction low crossing at 79.61


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Technical Analysis Video: The Line Is Drawn In the Sand In the Equity Markets?

To many technicians, it is very clear where the equity markets will reverse, and for those folks who don't follow the technicals, this is a key reversal area in the S&P 500, the NASDAQ, and the Dow.

In our new short video we show you the exact levels that we think will reverse this market, if in fact it's ever going to reverse to the downside.

Currently the major trend remains positive for all the indices and we would only become negative on the these markets should the key levels we show you today, are broken.

As always our videos are free to watch and there are no registration requirements. We would really like to hear your thoughts on this video and the markets, so please feel free to leave a comment.


Technical Analysis Video: The Line Is Drawn In the Sand In the Equity Markets?




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Crude Oil Falls From 7 Week High as Dollar's Gain Reduces Appeal of Commodities

Crude oil fell as the dollar climbed the most against the euro in two weeks, reducing the appeal of commodities as an alternative investment. Oil slipped as much as 1.4 percent on the greenback’s advance after European Central Bank President Jean-Claude Trichet kept its benchmark interest rate unchanged and extended some stimulus measures to cement the economic recovery. Prices also dropped as a report showed that the number of contracts to buy previously owned homes in the U.S. declined in January.

“The dollar has been gaining strength, which is having an impact on the energy markets,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “We had some bad home sales data, which seems to also be sending prices lower.” Crude oil for April delivery fell 74 cents, or 0.9 percent, to $80.13 a barrel at 10:30 a.m. on the New York Mercantile Exchange. The contract rose 1.5 percent to $80.87 yesterday, the highest settlement level since Jan. 11.

Brent crude oil for April delivery declined 83 cents, or 1.1 percent, to $78.42 a barrel on the London-based ICE Futures Europe exchange. The dollar traded at $1.3595 per euro, up 0.8 percent from $1.3697 yesterday. The greenback is heading for the biggest gain since Feb. 17. An index of home purchase agreements, or pending home sales, fell 7.6 percent after a revised 0.8 percent increase in December, the National Association of Realtors announced today in Washington.....Read the entire article.


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Crude Oil Daily Technical Outlook For Thursday

Crude oil edges higher to 81.23 but upside momentum remains a bit unconvincing. Nevertheless, in any case, further rise is still in favor as long as 77.05 support holds. Current rise from 69.50 might continue for a retest on 83.95 high next. On the downside, though, break of 77.05 will argue that rebound from 69.50 is completed. In such case, focus will be shifted back to 69.50 support instead.

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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Crude Oil Market Commentary For Wednesday Evening

Crude oil closed higher on Wednesday renewing the rally off February's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought, diverging and are turning neutral to bullish signaling that sideways to higher prices are possible near term.

If May extends the rally off February's low, 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 77.53 would confirm that a short term top has been posted.

First resistance is today's high crossing at 81.60
Second resistance is the 87% retracement level of the January-February decline crossing at 83.53

First support is the 20 day moving average crossing at 77.53
Second support is last Thursday's low crossing at 77.44

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Natural gas closed higher due to short covering on Wednesday as it consolidates some of Monday's decline but remains below the 87% retracement level of the December-January rally crossing at 4.819. The high range close sets the stage for a steady to higher opening on Thursday.

Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If May extends this winter's decline, December's low crossing at 4.656 is the next downside target. Closes above the 20 day moving average crossing at 5.171 are needed to confirm that a low has been posted.

First resistance is the 10 day moving average crossing at 4.917
Second resistance is the 20 day moving average crossing at 5.171

First support is Tuesday's low crossing at 4.725
Second support is December's low crossing at 4.656

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The U.S. Dollar closed lower on Wednesday and below the 20 day moving average crossing at 80.43. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

Closes below the reaction low crossing at 79.61 are needed to confirm that a short term top has been posted. If March renews this winter's rally, the 62% retracement level of the 2009 decline crossing at 82.92 is the next upside target.

First resistance is the reaction 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 79.84
Second support is the reaction low crossing at 79.61


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