CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.
Wednesday, April 14, 2010
Crude Oil Bulls Hold Solid Near Term Advantage
crude oil closed up $1.91 at $85.96 a barrel today. Prices closed nearer the session high today and were supported by a weaker U.S. dollar index and a bullish weekly DOE stocks report. Crude oil bulls have the solid overall near term technical advantage and gained more upside momentum today.
Natural gas closed up 3.2 cents at $4.192 today. Prices closed near mid-range today on more short covering in a bear market. Bears still have the near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at last week's high of $4.334.
The U.S. dollar index closed down 32 points at 80.30 today. Prices closed near mid-range today and hit a fresh five week low. While no serious chart damage has occurred recently the bulls have faded and need to show fresh power soon. The bulls still have the overall near term technical advantage.
The U.S. stock indexes closed higher again today and hit fresh 1 1/2 year highs. The stock index bulls have the solid overall near term technical advantage. Gentle, nine week old uptrends are in place on the daily bar charts. There are no early technical clues to suggest a market top is close at hand in the stock indexes.
Gold futures closed up $5.10 at $1,158.50 today. Prices closed near mid-range today and were supported by speculative bargain hunting buying after Tuesday's mild sell off. A weaker U.S. dollar index and sharply higher crude oil prices also supported buying interest in gold. Bulls still have the solid near term technical advantage. A nine week old uptrend line is in place on the daily bar chart.
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Crude Oil Bulls Charge Ahead on Surprise Draw
Lifted by a bullish drop in U.S. crude inventories, as well as upbeat economic data on the domestic front, crude futures snapped a recent losing streak on the New York Mercantile Exchange Wednesday to soar past an $85 resistance area. On target to test $90 in the near term, the price of light, sweet crude oil for May delivery added $1.79 to yesterday's final price tag to close higher at $85.84 a barrel. Also rising on today's commodity exchange, NYMEX gasoline futures scaled above $2.32 a gallon, while natural gas spot prices at the Henry Hub burned brighter at $4.20 Mcf.
Rally Reignites
"I think we're seeing the rally that drove oil prices to 18 month highs starting up again," commented Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. The analyst underscored several supportive factors helping to prop up the price per barrel of crude today, including weakness in the dollar, encouraging retail sales for March and positive earnings reports out of U.S. companies. "The stronger earnings reports can point to improving economic conditions, which have played a primary role in rallying oil prices," McGillian explained.
Furthermore, the Energy Information Administration posted surprisingly supportive technical data for the previous week, which renewed risk appetite for the energy commodity and pushed prices back into positive territory. Specifically, crude oil supplies, expected to have grown by 1.4-1.5 million barrels, fell by 2.2 million barrels in the week to Apr. 9. Also paring down bearish levels, gasoline stocks shed 1.1 million barrels last week, trumping forecasts for a mere 600,000 barrel loss.
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Gas Prices Reflect Little Worry over Hurricane Forecast
Last week's price action of natural gas futures suggested there is little concern among buyers about the potential for a more active hurricane season disrupting available gas supply from the Gulf of Mexico. Gas prices bounced around the $4 per Mcf level most of the week, responding to news about the upcoming revision to the EIA's 914 survey of domestic gas production and gas storage inventory data rather than recognition that the latest Colorado State University (CSU) hurricane forecasting team had boosted their estimate of the number of tropical storms, hurricanes and major hurricanes.
There is little concern among gas buyers about the potential for a more active hurricane season disrupting available gas supply from the Gulf of Mexico. In its traditional early spring forecast revision, the hurricane forecasting team, led by Professors Philip Klotzbach and William Gray of the Department of Atmospheric Science at CSU, lifted its forecast for the number of tropical storms, hurricanes, major hurricanes and storm days in each category that can be expected this hurricane season into the upper end of its earlier December 9th forecasted ranges.
The forecasting team now expects 15 named storms, eight hurricanes and four major hurricanes. If the forecast materializes, this year's storm season will resemble the hurricane seasons of 2003, 2004, 2005 and 2008. As we know, those years included some of the worst hurricanes to hit the Gulf Coast and Southeast United States in recent years, Katrina, Rita, Ike, Ivan and Isabelle to name a few.
To reinforce the potential for a significantly more active and potentially destructive storm season, the CSU team provided its estimates for hurricane landfalls. The CSU team predicts that a major hurricane has a 45% chance of hitting somewhere along the U.S. East Coast including the Florida peninsula, which compares to a 31% average for the last century. The probability of a major hurricane landing somewhere along the Gulf Coast extending from the Florida Panhandle westward to Brownsville.....Read the entire article.
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Crude Oil Climbs as Rising Stocks, Retail Report Signal Economic Recovery
Crude oil advanced, snapping the longest drop since January, as global equities strengthened and sales at U.S. retailers climbed, signals that energy demand may improve with the economy. Oil rose more than 1.2 percent as the Standard & Poor’s 500 Index climbed to the highest level since September 2008 on greater than estimated profits by Intel Corp. and JPMorgan Chase & Co. U.S. purchases gained 1.6 percent in March, the most in four months, the Commerce Department reported in Washington.
The equity markets and earnings reports are “barometers of economic activity and economic recovery,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities. “As they go, so goes energy demand.” Crude oil for May delivery rose 27 cents, or 0.3 percent, to $84.32 a barrel at 9:58 a.m. on the New York Mercantile Exchange, ending a five day decline. Oil has gained 71 percent in the past year.
The S&P 500 rose 0.4 percent to 1,201.84, and the Dow Jones Industrial Average gained 41.72, or 0.4 percent, to 11,061.14 on the earnings, which bolstered confidence that a six week equities rally was justified. The Stoxx Europe 600 Index added 0.6 percent. The Commerce Department also revised up retail sales numbers for February and January, and the Labor Department reported that consumer prices rose 0.1 percent last month.....Read the entire article.
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Crude Oil Daily Technical Outlook Wednesday Morning
With 4 hours MACD crossed above signal line, the choppy pull back from 87.09 might have completed at 82.51 already. Intraday bias is cautiously on the upside for the moment and crude oil should target a retest of 87.09 first. Break will confirm rally resumption for 90 psychological level next. On the downside, while another fall cannot be ruled out, we'd continue to expect strong support from 61.8% retracement of 78.56 to 87.09 at 81.82 to conclude the correction and bring rally resumption.
In the bigger picture, medium term rise from 33.2 is still in progress and could extend further higher. Nevertheless, there is no change in the view that it's the second wave of the whole correction that started in 2008 at 147.27. Hence, 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, below 78.56 support will be the first signal of topping and will turn focus back to 69.50 support for confirmation.....Nymex Crude Oil Continuous Contract 4 Hours Chart.
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Tuesday, April 13, 2010
Where is Crude Oil Headed on Wednesday?
CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.
Crude Oil Bulls Struggle as Stochastics and RSI Turn Bearish
Crude oil closed lower on Tuesday as it extends Monday's breakout below the 10 day moving average crossing at 84.90 signaling that a short term top has likely been posted. A short covering rally tempered early losses and the high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI have turned bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 83.22 are needed to confirm that a short term top has been posted. If May renews the rally off February's low, the 50% retracement level of the 2008-2009 decline crossing at 97.31 is the next upside target. First resistance is last Tuesday's high crossing at 87.09. Second resistance is the 50% retracement level of the 2008-2009 decline crossing at 97.31. First support is the 20 day moving average crossing at 83.22. Second support is today's low crossing at 82.51.
Natural gas closed higher due to short covering on Tuesday and the high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Multiple closes above last Tuesday's high crossing at 4.334 are needed to confirm that a low has been posted. If May renews this winter's decline, weekly support crossing at 3.502 is the next downside target. First resistance is last Tuesday's high crossing at 4.334. Second resistance is the 25% retracement level of the October-April decline crossing at 4.405. First support is last Thursday's low crossing at 3.857. Second support is the early April low crossing at 3.810.
The U.S. Dollar closed lower on Tuesday as it extends the decline off March's high. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If June extends this week's decline, March's low crossing at 79.73 is the next downside target. Closes above last Thursday's high crossing at 82.06 are needed to confirm that a short term low has been posted. First resistance is Monday's gap crossing at 81.01. Second resistance is the 20 day moving average crossing at 81.28. First support is Monday's low crossing at 80.22. Second support is March's low crossing at 79.73.
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President Obama - New Wildcatter or Bait 'n Switcher?
On the last day of March, President Obama went to Andrews Air Force Base in Maryland to stand in front of an F-18 jet fighter called the Green Hornet, which is scheduled to fly powered by biofuel later this year, and announce he was recommending lifting offshore drilling curbs. The symbolism of pushing for more offshore drilling while highlighting biofuel for military jets was not lost on all observers. The announcement, when fully dissected, showed the administration made concessions in areas where they were destined to lose court cases, but they may actually be slowing down future offshore drilling. Yes, President Obama says he wants to open the East Coast waters from Delaware south to central Florida for offshore exploration, but ultimately it all depends on Congress signing on to the plan.
The administration made concessions in areas where they were destined to lose court cases, but they may actually be slowing down future offshore drilling. The staging symbolism was highlighted by the president's comments. In talking about his decision to open new coastal regions to offshore exploration, he said, "The bottom line is this: given our energy needs, in order to sustain economic growth we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy." In reality, the offshore drilling announcement was designed to win a few Republican senate votes for the potential energy bill being drafted by Senators John Kerry (D-MA), Lindsay Graham (R-SC) and Joseph Lieberman (I-CT). The legislation they are writing is designed to attack carbon emissions through cap-and-trade on a sector by sector basis rather than economy wide. That means the utility industry will have one set of regulations implemented on a certain date while refiners would have a slightly different set of regulations and a different date and manufacturers would have yet another set of regulations and implementation date.....Read the entire article.
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Crude Oil Declines for a Fifth Day as U.S. Crude Stockpiles Forecast to Increase
Crude oil declined the most in six weeks as the International Energy Agency boosted its forecast for non OPEC supplies and U.S. inventories were estimated to climb, raising concern that the markets are oversupplied. Oil fell as much as 1.6 percent on the IEA forecast that production would expand in countries such as Canada, the U.K. and Russia as it kept the global demand outlook little changed. U.S. crude stockpiles may advance for an 11th week, the longest stretch of consecutive increases since December 2004, according to a Bloomberg News survey of analysts.
“We’re seeing a lot of growth out of the U.S., Russia and Canada, responding to high prices,” said Brad Samples, a commodity analyst for Summit Energy Inc. in Louisville, Kentucky. “Investments that were made leading up to 2008 are coming to fruition.”
Crude oil for May delivery lost $1.67, or 2 percent, to $82.67 a barrel at 10:27 a.m. on the New York Mercantile Exchange. It was the biggest one day decline since Feb. 25. Prices have risen 65 percent in the past year. Crude oil peaked at a record $147.27 a barrel in July 2008.
Countries outside the Organization of Petroleum Exporting Countries will raise output by 600,000 barrels a day this year to average 52 million barrels a day, the IEA said in its monthly market report today. That’s 220,000 barrels a day more than estimated last month. The agency’s global oil demand forecast was 30,000 barrels a day higher than in last month’s report. Non OPEC producers pump about 60 percent of the world’s oil.....Read the entire article.
Is gold ready to challenge its all time high?
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