Crude Oil Market Commentary For Wednesday Evening

Crude oil closed lower on Wednesday as prices fell to a seven session low Wednesday due to a sharp rise in U.S. crude inventories and on a stronger dollar. The U.S. Energy Information Administration reported a 7.25 million barrel increase in crude inventories for last week, which was significantly more than the 1.4 million barrel gain that analysts had been expecting. The mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain bearish signaling that a short term top is in or is near. Closes below last Monday's low crossing at 79.41 are needed to confirm that a short term top has been posted. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. First resistance is the reaction high crossing at 83.47. Second resistance is January's high crossing at 85.43. First support is Monday's low crossing at 80.89. Second support is Monday's low crossing at 78.86.

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Natural gas closed lower on Wednesday as it extends the trading range of the past four days. The low range close sets the stage for a steady to lower 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, weekly support crossing at 4.035 is the next downside target. Closes above the 20 day moving average crossing at 4.511 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.308. Second resistance is the 20 day moving average crossing at 4.511. First support is Monday's low crossing at 4.093. Second support is weekly support crossing at 4.035.

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The U.S. Dollar closed sharply higher on Wednesday as worries over sovereign debt in Europe triggered today's rally. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends last week's rally, the May 2009 high on the weekly continuation chart crossing at 83.34 is the next upside target. Closes below the 10 day moving average crossing at 80.65 would confirm that a short term top has been posted. First resistance is today's high crossing at 82.19. Second resistance is the May 2009 high on the weekly continuation chart crossing at 83.34. First support is the 20 day moving average crossing at 80.73. Second support is the 10 day moving average crossing at 80.65.

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Phil Flynn: Oil Bull Knockdown

Oil bulls got a shot to the solar plexus from the American Petroleum Institute but it may be a downgrade from Fitch rating services that delivers the knockout blow. The American Petroleum Institute blindsided the global oil markets last night by reporting a spectacular 7.5 million barrel weekly build in US crude oil supplies. The oil seemed to come out of nowhere and made the oil bulls get nervous but the bulls vowed to wait for what the Department of Energy might say today.

Will it really matter if another PIG goes down? Overnight the euro got hammered and the dollar soared on news that Fitch Ratings, as reported by Marketwatch, downgraded Portugal's long term foreign and local currency issuer default ratings to AA- from AA on Wednesday. Fitch said that the outlooks on the long term IDRs are negative and the downgrade reflects significant budgetary underperformance in 2009. Marketwatch quotes Douglas Renwick, associate director in Fitch's Sovereign team as saying, “A sizeable fiscal shock against a backdrop of relative macroeconomic and structural weaknesses has reduced Portugal's creditworthiness.

Talking about sizable shocks how about that crude drop! It seems that some of those import drops into the North East due top that freaky winter storm self corrected along with the stormy seas. Oil imports rebounded from surprise drops in California and the Northeast. The API said that crude Imports were up by 1.3 million barrels a day to a hefty 9.19 million barrels.

The API reported that gasoline supplies fell by 81,000 barrels with increased demand and refinery turnarounds helped supply fall. Distillates fell as refiners are focused on turnarounds and maxing out on more profitable gas. Mark Shenk of Bloomberg News points out those higher profits for making gasoline are prompting refiners to increase motor fuel production to a record for this time of year. Mr. Shenk points rose 2.3 percent to 8.96 million barrels of oil a day. That is the highest level since they began to keep records all the way back in 1983. Mr. Shenk says this was inspired by the fact that the crack spread has almost doubled to $13 this year. Demand is also rising! Barbara Powell of Bloomberg says that MasterCard Spending Pulse reported that U.S. gasoline consumption rose last week to the highest level since June, the fourth increase in five weeks.

Motorists bought an average 9.66 million barrels of gasoline a day in the week ended March 19, the second biggest credit card company said in its SpendingPulse report. Consumption was up 1.4 percent from the previous week and 1.8 percent above a year earlier. Demand for the past four weeks averaged 9.55 million barrels a day, the highest level since the week ended July 3 and 2.5 percent above the same period in 2009. Total fuel demand year to date is up 1.5 percent from the same period of 2009.

OPEC put off their September OPEC meeting till October because of Ramadan. That means another 30 days of cheating on production! Yippe!. Once again the market will focus on the dollar and the euro. The market's worst fear is that the crisis in Greece will spread to other PIIG nations (Portugal, Italy Ireland and of course Greece). That has put the market out of its comfort zone of being short the dollar and long the euro and of course being long crude oil. If more PIIGS start to fall then so too will oil. Forget about China demand for the moment and focus on what is really moving the market.

Phil Flynn can be reached at pflynn@pfgbest.com And don't forget to watch Phil every day on the Fox Business Network.

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Crude Oil Drops as Report Shows U.S. Supplies Gained More Than Predicted

Crude oil fell after a government report showed a bigger than forecast increase in U.S. supplies and as the dollar surged to a 10 month high against the euro. Stockpiles rose 7.25 million barrels to 351.3 million last week, the Energy Department said. Inventories were forecast to climb 1.65 million barrels, according to a Bloomberg News survey. The greenback increased after Fitch Ratings cut Portugal’s credit grade. A stronger dollar reduces the appeal of commodities as an alternative investment.

“The crude number was a lot bigger than what was expected,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “There hasn’t been much attention paid to the fundamentals lately. The market has been more focused on what happens to the dollar and equities.” Crude oil for May delivery dropped $1.04, or 1.3 percent, to $80.87 a barrel at 11:01 a.m. on the New York Mercantile Exchange. Futures have increased 1.9 percent in 2010 and 50 percent from a year earlier.

Imports of crude oil gained 12 percent to 9.4 million barrels a day last week, the highest level since September and the biggest change since August, the report showed. Gasoline stockpiles fell 2.72 million barrels to 224.6 million in the week ended March 19. A 1.5-million-barrel drop was forecast, according to the median of 16 analyst responses in the Bloomberg News survey. Inventories of distillate fuel, a category that includes heating oil and diesel, declined 2.42 million barrels to 145.7 million, according to the department. A decrease of 985,000 barrels was forecast.....Read the entire article.

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Crude Oil Daily Technical Outlook Wednesday Morning

Crude oil's rebound failed below 83.16 and the sharp retreat dragged 4 hours MACD back below signal line. Consolidations from 83.16 might extend further and intraday bias is turned neutral. Nevertheless, in case of deeper fall, we'd still expect strong support from 38.2% retracement of 69.50 to 83.16 at 77.94 and bring rally resumption. Break of 83.16 will target a retest of 83.95 high. However, note that sustained trading below 77.94 fibo level will argue that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support.

In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. 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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Where is Crude Oil Headed on Wednesday?

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




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Crude Oil Market Commentary For Tuesday Evening

Crude oil closed higher due to a late day short covering rally on Tuesday. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bearish signaling that a short term top is in or is near. Closes below last Monday's low crossing at 79.41 are needed to confirm that a short term top has been posted. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. First resistance is the reaction high crossing at 83.47. Second resistance is January's high crossing at 85.43. First support is Monday's low crossing at 80.89. Second support is Monday's low crossing at 78.86.

Natural gas closed higher due to short covering on Tuesday as it consolidates some of this winter's decline. The high range close sets the stage for a steady to higher opening on Wednesday. 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, weekly support crossing at 4.035 is the next downside target. Closes above the 20 day moving average crossing at 4.550 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.357. Second resistance is the 20 day moving average crossing at 4.550. First support is Monday's low crossing at 4.093. Second support is weekly support crossing at 4.035.

The U.S. Dollar closed higher on Tuesday as it extends last week's breakout above the 20 day moving average crossing at 80.69. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends last week's rally, February's high crossing at 81.70 is the next upside target. If June renews this month's decline, the 38% retracement level of the November-February rally crossing at 79.17 is the next downside target. First resistance is Monday's high crossing at 81.35. Second resistance is February's high crossing at 81.70. First support is the 20 day moving average crossing at 80.69. Second support is the 10 day moving average crossing at 80.51.

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Phil Flynn: Jean Claude Trichet to Save the Day!

Wild ranges and a lot of action!

After it was all said and done, we basically ended up where we started. Oil prices were once again just a pawn of the foreign exchange market as the EURO started the day absolutely getting crushed over the Greek debt crisis. The Financial Times points out that the Euro hit the lowest level against the Swiss franc since the Euro came into existence in 1999. The Wall Street Journal said that the euro started the trading day on a weak footing after German Chancellor Angela Merkel ruled out discussion of an aid package for Greece when European leaders gather at a meeting scheduled for Thursday and Friday. The currency dropped as low as $1.3463 after Greece Deputy Prime Minister Theodore Pangalos warned that the integrity of the euro zone could suffer should EU leaders fail to support Greece. The dollar became safe haven fodder and the commodities got hammered.

It looked like the risk trade was getting ready to collapse before European Central Bank Chairman Jean Claude Trichet stepped in to save the day. Well at the very least he stepped in to save the Euro.
Jean Claude said that Greece was courageous. Did he say courageous? Yep, that's what he said. Dow Jones reported that austerity measures adopted by the Greek government to slash its budget deficit are "convincing and courageous. Participants in financial markets will eventually recognize this as well, said Trichet, who repeated that the notion of a country leaving the euro zone was absurd. The single currency is not a la carte, "We share a destiny in common." Well market participants seemed pleased and the euro reversed course. That brought the oil back as well reversing its earlier sharp gains adding more excitement to the expiration to the April crude futures. For bulls and bears, the moves can be maddening unless you realize that oil is just in a range. I have been saying for months that oil is in a big trading range and will eventually break out on the downside. Yet as the outlook for US interest rate being still in that low for an extended period language the range goes on.

It appears that I am not the only one who feels this way. Dow Jones Newswires reports that The International Energy Agency said, “Oil price risks are skewed toward the downside, but prices will most likely drift in their recent range for the rest of the year", quoting International Energy Agency Deputy Executive Director Richard Jones. He said that the price outlook hinges on oil demand growth and, "our prognosis is that there won't be many." But eventually, in the next three to four years, new oil production, particularly from Brazil and West Africa, will weigh on prices. As far as that production goes Dow Jones says that, “The first of three floating production, storage and offloading vessels is due to start producing from Ghana's 700 million barrels of oil equivalent Jubilee field before the end this year at a maximum capacity of 120,000 barrels a day", Tullow Oil PLC's (TLW.LN) Chief Operating Officer Paul McDade said earlier this month.

Brazil's Tupi field holds an estimated 5 billion to 8 billion barrels of recoverable reserves. The initial development phase is expected to commence in late 2010, with initial production of up to 100 000 barrels a day, BG Group, which has a 25% share of Tupi, said on its Web site. Jones told Dow that a recovery in U.S. oil demand so far hasn't been strong. While there have been some encouraging signs of growth, energy intensity per GDP unit in the U.S. have dropped. Growth may not come back as strong as it was prior to the economic downturn, Jones said.

Instead of cursing the trading range, just play it! Buying oil or selling oil at the extreme ranges of the daily charts has been very profitable. Try to take into account volatility as well as the fundamental outlook and adjust accordingly. Yesterday could have been a banner day yet if you are stubborn with a bullish or bearish ideology you may be missing the boat.

You can contact analyst Phil Flynn at pflynn@pfgbest.com You can also see Phil on Fox Business Network every day.

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Crude Oil Declines on Forecast for Higher U.S. Supplies, Stronger Dollar

Crude oil fluctuated as the Standard & Poor’s 500 Index erased gains and the dollar increased against the euro. Oil climbed as much as 0.7 percent earlier today when the S&P 500 advanced above its March 17 close, the highest in 18 months. Futures dropped earlier when the greenback appreciated on skepticism European Union leaders will agree on an aid package for Greece this week. A stronger dollar reduces the investment appeal of commodities.

“All we are doing is chasing the S&P,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Traders have been trained to look at the correlation between the S&P and oil.” Crude oil for May delivery rose 6 cents to $81.66 a barrel at 11:15 a.m. on the New York Mercantile Exchange. Prices are up 2.9 percent this year. The S&P 500 declined 0.13 point to 1,165.68, after climbing as much as 3.61 points, or 0.3 percent, to 1,169.42.

The dollar traded at $1.3537 per euro, up 0.2 percent from $1.3558 yesterday. The greenback was up 0.6 percent earlier today. The euro weakened versus 12 of 16 major counterparts after European Central Bank President Jean-Claude Trichet spoke out against offering low interest loans to Greece.

Oil prices have remained within a $68 to $84 a barrel range since October, and have traded between $77.05 and $83.16 over the past month. “We’re finding out the market can’t move too far above $80 before running into resistance,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “There will have to be evidence of increasing demand or a geopolitical crisis to push prices above $83”.....Read the entire article.


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Crude Oil Daily Technical Outlook For Tuesday

Crude oil rebounds strongly after dipping to 78.57 and the break of 80.94 minor resistance argues that consolidation from 83.16 is possibly completed at 78.57 already. Intraday bias is flipped back to the upside for retesting 83.16 first, break will confirm rally resumption to retest 83.95 high. In case of another fall, downside is still expected to be contained by 38.2% retracement of 69.50 to 83.16 at 77.94. However, note that sustained trading below 77.94 fibo level will argue that rise from 69.50 is completed and deeper fall would possibly be seen to retest this support.

In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. 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 Monday Evening

Crude oil closed higher due to a late day short covering rally on Monday. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are diverging and are turning neutral to bearish signaling that a short term top is in or is near. Closes below last Monday's low crossing at 79.41 are needed to confirm that a short term top has been posted. If May renews the rally off February's low, January's high crossing at 85.43 is the next upside target. First resistance is the reaction high crossing at 83.47. Second resistance is January's high crossing at 85.43. First support is Monday's low crossing at 80.89. Second support is today's low crossing at 78.86.

Natural gas closed lower on Monday as it extends this winter's decline below weekly support crossing at 4.157. The mid range close sets the stage for a steady opening on Tuesday. 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, weekly support crossing at 4.035 is the next downside target. Closes above the 20 day moving average crossing at 4.585 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 4.396. Second resistance is the 20 day moving average crossing at 4.585. First support is today's low crossing at 4.093. Second support is weekly support crossing at 4.035.

The U.S. Dollar closed lower due to profit taking on Monday but remains above the 20 day moving average crossing at 80.70. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If June extends last week's rally, February's high crossing at 81.70 is the next upside target. If June renews this month's decline, the 38% retracement level of the November-February rally crossing at 79.17 is the next downside target. First resistance is today's high crossing at 81.35. Second resistance is February's high crossing at 81.70. First support is the 20 day moving average crossing at 80.70. Second support is the 10 day moving average crossing at 80.49.


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