Crude Oil Market Commentary For Friday Morning

Crude oil was steady to slightly higher overnight as it consolidates below the 20 day moving average. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends Monday's decline, the 38% retracement level of the February-April rally crossing at 81.18 is the next downside target. Closes above last Wednesday's high crossing at 87.26 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 84.73. Second resistance is last Wednesday's high crossing at 87.26. First support is Thursday's low crossing at 81.73. Second support is the 38% retracement level of the February-April rally crossing at 81.18.

Natural gas was lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. May appears to be forming a symmetrical triangle off the early April high. Closes above 4.269 or below 3.879 are needed to confirm a breakout of this consolidation pattern and point the direction of the next trending move. First resistance is last Wednesday's high crossing 4.269. Second resistance is the 25% retracement level of the October-April decline crossing at 4.405. First support is the reaction low crossing at 3.879. Second support is April's low crossing at 3.810.

Gold was lower overnight as it consolidates some of this week's rally but remains above the 20 day moving average crossing at 1139.00. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 1139.00 are needed to confirm that a short term top has been posted. If June renews the rally off March's low, the 75% retracement level of the December-February decline crossing at 1184.00 is the next upside target. First resistance is the 10 day moving average crossing at 1147.90. Second resistance is last Monday's high crossing at 1170.70. First support is Monday's low crossing at 1124.30. Second support is the reaction low crossing at 1102.40.

The U.S. Dollar was higher overnight as it extends the rally off last week's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends this week's rally, March's high crossing at 82.52 is the next upside target. Closes below the 10 day moving average crossing at 81.00 are needed to confirm that a short term top has been posted. First resistance is the overnight high crossing at 82.20. Second resistance is March's high crossing at 82.52. First support is the 20 day moving average crossing at 81.23. Second support is the 10 day moving average crossing at 81.00.

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Crude Oil Reverses Losses as Equities Closed Higher

Crude oil initially slumped as global stock market tumbled amid revision of Greece's debt deficits. Together with disappointing inventory report released Wednesday, the front month WTI contract plummeted to as low as 81.73. However, buying interests emerged at that level as price reversed and ended the day flat at 83.7. Strong rebound in equities and attack of Iraqi oil pipeline also supported oil.

After the EU released a report revising up 2009's Greek fiscal deficit to 13.6% of GDP from the 12.7% of GDP estimated previously, the Greek Financial Ministry reassured the market that will endeavor to shrink the deficit by 4%. With the upward revision and potential further revision, the country is unlikely to reduce the deficit to 8.7% of GDP as previously estimated.

Worse still, Moody's announced to cut its rating on Greek debt to A3 from A2. Moreover, Greek officials said that the country has prepared to ask the EU for a bridge loan. In US trading session, the market was further pressured by President Barrack Obama's call for new financial reform as well as the Senate's approval of derivative legislation requiring US lenders to spin off their swaps trading desks.

Despite the negative news, stocks managed to crawled back and DJIA and S&P 500 ended the day gaining +0.1% and +0.2%, respectively. Encouraging corporate earnings, mildly bigger than expected decline in initial jobless claims and stronger existing home sales data restored sentiment.

Specifically to the oil market, damage of an oil pipeline from Iraq to Turkey disrupted supply which will take around 3 days to resume.

Gold fell, halting a 2 day rally, as the euro tumbled to a new 11 month low against the dollar. However, the recovery after sliding to as low as 1132 signaled yellow metal's underlying strength. In fact, while the market has only focused on Greece's deficit issue, such problem has also rooted in other countries including the US, Japan and the UK. If worries intensify and spread to these countries, we believe gold should benefit.

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Where is Crude Oil Headed on Friday?

CNBC's Sharon Epperson 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 Thursday Evening

Crude oil closed down $0.01 at $83.67 a barrel today. Prices closed nearer the session high today. No serious chart damage has been inflicted in crude, but the bulls need to show more power soon to keep the uptrend on the daily bar chart in place. Crude oil bulls still have the overall near term technical advantage.

Natural gas closed up 16.2 cents at $4.203 today. Prices closed near the session high today and scored a bullish "outside day" up on the daily bar chart. A positive weekly gas storage report boosted the market today. Short covering was featured. Bears still have the near term technical advantage. Prices are trading sideways and choppy at lower price levels.

Gold futures closed down $6.10 at $1,142.70 today. Prices closed near mid-range today and saw some profit taking and pressure from a stronger U.S. dollar index and weaker crude oil futures prices. The gold market is still a 2 1/2 month old uptrend on the daily bar chart. Bulls' next upside technical objective is to produce a close above solid technical resistance at the April high of $1,170.70.

The U.S. dollar index closed up 45 points at 81.72 today. Prices closed nearer the session high today and hit a fresh two week high. The bulls still have the overall near term technical advantage and are regaining upside technical momentum.


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Crude Oil Declines as Greece’s Deficit Weakens Euro and Equities

Crude oil fell for the first time in three days after the European Union said Greece’s budget deficit last year was worse than previously forecast, sending equities and the euro lower. Oil slipped as much as 2.3 percent in New York after the U.S. currency’s gain dimmed the appeal of commodities as an alternative investment. An Energy Department report yesterday showed that U.S. crude and fuel supplies increased last week as demand slipped in the world’s largest energy consuming country.

“The stuff out of Europe doesn’t get any better,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “The problems out of Europe continue to impact the dollar and raise concerns about economic growth.” Crude oil for June delivery dropped 95 cents, or 1.1 percent, to $82.73 a barrel at 11:50 a.m. on the New York Mercantile Exchange. Futures are up 4.2 percent this year. The EU’s statistics office said Greece’s deficit was 13.6 percent of GDP last year, topping the government’s two week old forecast of 12.9 percent. Greece’s widening deficit and questions about the accuracy of its economic data have undermined the credibility of the EU’s budget rules and contributed to the 7.2 percent slide in the euro this year.

The dollar traded at $1.3293 against the European currency, up 0.7 percent from yesterday. It was the greenback’s sixth straight increase. The Standard & Poor’s 500 Index slid 1 percent to 1,193.98. The Energy Department’s report showed crude oil stockpiles in the U.S. increased by 1.89 million barrels in the week ended April 16. Gasoline supplies rose 3.59 million barrels to 224.9 million, and inventories of distillate fuel, a category that includes heating oil and diesel, gained 2.1 million barrels to 148.9 million.....Read the entire article.

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Mid Week Silver, Crude Oil, SP500 & Gold Charts

It’s been, an interesting week as stocks and commodities claw their way back up after the end of week sell off on Friday. Most of the chart technical are pointing to another wave lower for gold, silver, oil and the broad market.

This next wave of selling would form an ABC retrace pattern on the commodity charts and this pattern is bullish. Also commodity prices would drop to key support levels which would most likely provide a low risk entry point depending on the price and volume action at that time. So lower price is good for the big picture which is higher prices.

The charts below are a quick visual of what I am seeing and thinking....

GLD – Gold Exchange Traded Fund Trading Chart
The gold etf trading fund is getting closer to completing is 4 month correction and start another rally if all goes well in the coming week or two. What I am looking for is gold to hit resistance at $113 and then drop to the $110 level which is a key support level.


SLV – Silver Exchange Traded Fund Trading Chart
SLV etf fund looks ready for a pullback also. Both gold and silver tend to move together and support would be tested here also.


USO – Oil Trading Fund Chart
USO shows that one more thrust down would bring prices to a key support level also.


SPY – SP500 Exchange Traded Fund Trading Chart
Stocks have been on fire the past few months but this rally looks to be getting long in the teeth. After a rally this strong without any pullbacks one has to think that when a correction does start it will be a very sharp sell off. I will point out a few years ago we saw this exact type of price action for the broad market and it continued higher for several more months before actually putting in a large correction. If we don’t see a large correction, then we would see similar price movement which we saw last November and December with the sideways choppy price action and slow rally higher.


Mid-Week Market Conclusion:
In short, I think the market is ready to finally take a breather. What I am looking for another sell off which will break the low for gold, silver, oil and SP500 last week. If this happens then panic would be triggered washing the market of all the traders who have been buying at these high levels (chasing prices).

Stocks have been very strong and new money continues to push prices higher so we could just see a relatively small pullback between 3-5% and then the rally could continue…. This would work very well with gold, silver and oil as they would be testing key support levels and should be ready for a another upward surge.

It doesn’t really matter what the market does as there will always be great opportunities. Waiting for quality setups requires discipline and focus because it is not very active. I see traders making all kinds of silly trades which chip away at their profits because they cannot sit and watch when they should be.

During slow times I actually focus on learning more about the markets going through charts, inter-market analysis comparing things….. That kills a ton of time and helps make you a better trader in the long run. So if you don’t see a good trade get out and do something fun or educational. Don’t just start trading the 5 minute charts because you want to trade…

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Crude Oil Daily Technical Outlook For Thursday

Crude oil's recovery was limited at 84.64 and subsequent break of 82.85 minor support argues that such recovery is completed. Intraday bias is flipped back to the downside for 38.2% retracement of 69.50 to 87.09 at 80.37. Note that sustained trading below 80.37 fibo support will confirm that rise from 69.50 has completed after hitting 61.8% projection of 69.50 to 83.16 from 78.56 at 87.00. In such case, deeper fall should be seen towards 61.8% retracement at 76.22 and below. On the upside, above 84.64 will turn focus back to 87.09 high.

In the bigger picture, note again that medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Where is Crude Oil Headed on Thursday?

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





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Sorry Crude Oil Bulls....My Family is From Missouri. Show Me!

Crude oil closed down $0.17 at $83.68 a barrel today. Prices closed near mid-range again today. No serious chart damage has been inflicted in crude, but the bulls need to show more power soon to keep the uptrend on the daily bar chart in place. Crude oil bulls still have the overall near term technical advantage. The next upside price objective for the bulls is producing a close above solid technical resistance at the April high of $87.59 a barrel.

Natural gas closed down 0.9 cents at $4.055 today. Prices closed nearer the session low today in quieter trading. Bears still have the solid near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the April high of $4.421.

Gold futures closed up $9.60 at $1,148.80 today. Prices closed nearer the session high today and saw bargain hunting buying interest after recent selling pressure. The bulls have shows resilience and have kept a 2 1/2 month old uptrend in place on the daily bar chart.

The U.S. dollar index closed up 15 points at 81.29 today. Prices closed near mid-range today in more quiet trading. The bulls still have the overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at the April high of 82.06.

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Crude Oil Gains as Earnings Exceed Estimates, IMF Raises Global Growth Target

Crude oil rose as U.S. companies posted better than estimated earnings and the International Monetary Fund raised its forecast for global growth this year, signaling fuel consumption will climb. Oil rebounded after Morgan Stanley profits rose as fixed income trading revenue more than doubled from a year earlier. The IMF said the economy will expand 4.2 percent in 2010, the fastest pace since 2007, compared with a January projection of 3.9 percent. Prices dropped as much as 1.1 percent earlier when a report showed that U.S. supplies gained last week.

“These markets tend to move on expectations of what will be, rather than what is,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy. “The earnings are pointing to a significant recovery and today’s IMF report also points to increased growth. Demand is poised to grow, outpacing output.” Crude oil for June delivery rose 31 cents, or 0.4 percent, to $84.16 a barrel at 12:31 p.m. on the New York Mercantile Exchange. Oil traded at $84.30 before the release of the inventory report at 10:30 a.m. in Washington.

U.S. supplies of crude oil rose 1.89 million barrels to 355.9 million, the Energy Department report showed. A 750,000 barrel drop was forecast, according to a Bloomberg survey. Inventories of crude at Cushing, Oklahoma, where New York traded West Texas Intermediate oil is stored, surged 5.8 percent to 34.1 million barrels, the highest since the week ended Jan. 8. “There was a massive build at Cushing, which should be very bearish,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “Between mid-February and mid-April supplies at Cushing have gone from a year on year deficit of 13 percent to a 15 percent surplus.”

Reporter Mark Shenk can be contacted at mshenk1@bloomberg.net


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