Wednesday, April 28, 2010

Crude Oil Market Commentary For Wednesday Evening


Crude oil closed up $0.76 at $83.20 a barrel today. Prices closed near the session high today after hitting a fresh five week low early on. Crude oil bulls are fading and need to show more power soon. 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 up 4.2 cents at $4.357 today. Prices closed near mid-range today and did hit a fresh five week high in quieter trading. Bears still have the overall near term technical advantage. Prices are trading sideways and choppy at lower price levels. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.75.

Gold futures closed up $10.00 at $1,172.70 today. Prices closed nearer the session high today and hit a fresh nearly five month high. Gold's gains today again came despite a stronger U.S. dollar and lower crude oil futures prices. Traders this week are buying gold as a safe haven asset and as a hedge against further weakening of the European currencies as the Greek debt crisis appears to be worsening. Gold bulls have the solid near term technical advantage and have gained more upside momentum this week.

The U.S. dollar index closed up 16 points at 82.47 today. Prices closed near mid-range today and hit another fresh contract high on a flight to quality amid the European Union's sovereign debt crisis. The bulls have the solid overall near term technical advantage and have gained more upside momentum this week.


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Crude Oil Daily Technical Outlook Wednesday Morning


Intraday bias in Crude oil remains on the downside for the moment and further decline should be seen to 38.2% retracement of 69.50 to 87.09 at 80.37 or further to 100% projection of 87.09 to 80.53 from 85.63 at 79.07. On the upside, above 82.94 minor resistance will turn intraday bias neutral and bring recovery. But risk will now remain on the downside as long as 85.63 resistance holds.

In the bigger picture, 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.

So 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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Tuesday, April 27, 2010

Stronger Dollar Sends Crude Oil Bulls to the Sidelines


Crude oil closed down $2.14 at $82.06 a barrel today. Prices closed near the session low today and closed at a fresh five week low close. Prices were pressured by a stronger U.S. dollar index and weaker stock market today. Crude oil bulls are now fading and need to show fresh power soon. 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 2.4 cents at $4.327 today. Prices closed near mid-range today in quieter trading. Bears still have the overall near term technical advantage. Prices are trading sideways and choppy at lower price levels. 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 $8.00 at $1,162.00 today. Prices closed nearer the session high today, scored a bullish "outside day" up on the daily bar chart and hit a fresh three week high. Gold's gains came despite a stronger U.S. dollar and lower crude oil futures prices. Traders were buying gold today as a hedge against further weakening of the European currencies as the Greek debt crisis appears to be worsening. Gold bulls have the firm near term technical advantage and gained some more upside momentum today.

The U.S. dollar index closed up 86 points at 82.47 today. Prices closed nearer the session high today and hit a fresh contract high on a flight to quality amid the European Union's sovereign debt crisis. The bulls have the solid overall near term technical advantage and gained more upside momentum today.


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Phil Flynn: Oil Is Fed UP!


Oil prices still are having a hard time following through on its breakout over $85 a barrel. Obviously you have to respect that fact that the market has broken out yet at the same time, the bulls have to wonder what the market is waiting for.

It is very possible that the market is waiting for reassurance and permission to buy from our very accommodative Federal Reserve. The Fed has been taking baby steps back from the historic payload of economic stimulus and the oil market fears the impact that the removal of stimulus might have on the price of oil. The oil market has never before experienced the artificial amount of stimulation that it has experienced over the last year and so there is no wonder why there may be some angst building as we get closer to the judgment day. We can talk a lot about the demand growth in China but that too is the product of massive government spending. The Chinese spent 586 billion dollars to prop up their economy and it is unlikely that they will be pumping the economy with that kind of money again. Asian stocks fell hard on rising concerns that China, instead of adding stimulus, will actually be taking it away.

Oil just can’t get going because it is worried about the never ending Greece crisis and the concerns over other weak members in the PIIGS zone. Oil is worried about China and it is worried about what the Fed might say. The Fed has raised interest rates and removed most of its emergency lending programs. Now the market wants to know when the rates will start to rise. Every oil trader in the world is waiting for the answer. The removal of stimulus is a bearish oil event just waiting to happen.

If the bulls cannot get reassurance from the Fed maybe they can get it from Schlumberger. Chief Executive Andrew Gould said he feels that oil near $80 a barrel should hold and that customers will boost spending at oil prices near $80 a barrel. "Our customers will loosen their purse strings on high end technology," Gould said during a conference call to discuss the oil field services company's first-quarter earnings.

There is a lot of oil in storage. Bloomberg News reports that, “Traders increased the number of vessels used to store crude oil by 75 percent last week as the potential profit from storage rose, Morgan Stanley said. There were 21 oil tankers storing dirty products last week, 20 of them are very large crude carriers, up from 12 vessels in the previous week, a Morgan Stanley analyst, said in a report yesterday. Among the nine vessels there are four in Iran. About 41 million barrels of oil were stored in the tankers, Morgan Stanley said, enough to meet more than two days of U.S. consumption. That’s up from 24.5 million barrels a week ago.”

We also need to get prepared for the possible market impact from potential sanctions on Iran. I know that the Iran situation is well known that even with their abundant production of oil, they still do not have the refining capacity to produce what they need in refined products. So it is widely expected that any sanctions on the country will be a ban on gasoline. The AFP is reporting that Iran has increased its gasoline by inventories by about 220 million gallons and plans to boost domestic production to offset possible fuel sanctions according to Nooreddin Shahnazi-Zadeh, the head of National Iranian Oil Refining and Distribution. He claims that, "At the moment the volume of Iran's strategic petrol supplies has increased by over a billion liters" and dismissed the threat of sanctions saying, "it is impossible to impose such limitations in the current situation."

Phil can be reached at pflynn@pfgbest.com And as always watch him each day on the Fox Business Network.


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Crude Oil Falls the Most in a Week as Equities Decline, Dollar Strengthens


Crude Oil fell the most in more than a week as global equities declined and the dollar advanced on skepticism European governments will approve the Greek bailout plan quickly enough to help the country avoid default. Oil lost 1.4 percent after Greece’s largest union said it will stage a strike for a day next month and Germany’s Chancellor Angela Merkel said yesterday that Greece “must do its homework” to reduce its deficit. A stronger dollar reduces the appeal of commodities as an alternative investment.

“Oil is lower because global equities are weaker and the dollar’s stronger,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut-based procurement adviser. Crude oil for June delivery dropped 78 cents, or 0.9 percent, to $83.42 a barrel at 10:13 a.m. on the New York Mercantile Exchange. Earlier, it touched $83.06 a barrel. Prices have risen 66 percent in the past year.
The U.S. dollar rose to $1.3306 per euro from $1.3383 in New York yesterday. The Standard & Poor’s 500 Index dropped 0.4 percent to 1,207.60.

Oil and equities pared their losses after the Conference Board reported confidence among U.S. consumers increased in April to the highest level since September 2008 as Americans became more upbeat about the labor market. The Conference Board’s confidence index rose more than forecast to 57.9 from 52.3 in March, according to the New York- based private research group. The median forecast of economists surveyed by Bloomberg News projected an increase to 53.5.....Read the entire article.

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Crude Oil Intraday Bias is Flipped Back to the Downside


Crude oil's sharp fall from 85.63 dragged 4 hours MACD below signal line and suggests that recovery from 80.53 has completed. Intraday bias is flipped back to the downside and deeper fall should be seen towards 38.2% retracement of 69.50 to 87.09 at 80.37 or further to 100% projection of 87.09 to 80.53 from 85.63 at 79.07. On the upside, above 85.63 will bring another rise to retest 87.09 high. But after all, sustained break there is needed to confirm rally resumption. Otherwise, another fall would still be seen before consolidation from 87.09 concludes.

In the bigger picture, 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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Monday, April 26, 2010

Where is Crude Oil Headed on Tuesday?

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 Closes Below 20 Day, Signals Still Give Bulls The Advantage


Crude oil closed lower due to profit taking on Monday and below the 20 day moving average crossing at 84.97. 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 Friday's rally, the reaction high crossing at 87.26 is the next upside target. Closes below last Thursday's high crossing at 81.73 would open the door for a larger degree decline into early May. First resistance is last Friday's high crossing at 85.19. Second resistance is the reaction high crossing at 87.26. First support is last 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 posted an inside day with a lower close on Monday and the mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Multiple closes above the reaction high crossing at 4.421 are needed to confirm an upside breakout of this month's trading range. If June renews this winter's decline, weekly support crossing at 3.502 is the next downside target. First resistance is the reaction high crossing at 4.421. Second resistance is the 25% retracement level of the October-April decline crossing at 4.4438. First support is the reaction low crossing at 3.967. Second support is the early April low crossing at 3.914.

Gold closed slightly lower due to profit taking on Monday but remains above the 10 day moving average crossing at 1148.40. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If June renews this year's rally, the 75% retracement level of the December-February decline crossing at 1184.00 is the next upside target. Closes below last Monday's low crossing at 1124.30 would confirm that a short term top has been posted. First resistance is today's high crossing at 1160.70. Second resistance is the reaction high crossing at 1170.70. First support is the 10 day moving average crossing at 1148.40. Second support is the 20 day moving average crossing at 1142.00.

The U.S. Dollar closed higher on Monday and the mid-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends this month's rally, March's high crossing at 82.52 is the next upside target. Closes below the 10 day moving average crossing at 81.07 are needed to confirm that a short term top has been posted. First resistance is last Friday's 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 81.22. Second support is the 10 day moving average crossing at 81.07.



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Phil Flynn: Solid Economic Data


Solid economic data keeps the oil bulls dreams alive in an impressive drive to end the week. The market is still getting support from the calendar and found comfort in the fact that housing seemed to blow away market expectations. Sales of new homes increased by a stunning 26.9% over February, inspired by federal tax incentives for buyers that are set to expire in days. Still, as exciting as the numbers were by historical standards, they were not anything to write home about nor do they suggest that without government help they can be repeated. Yet it was enough to get the market to forget about Greece and their problems that had been weighing on the market in the morning.

The housing numbers made us forget all about Greece. Though Greece may be getting bailed out, the question remains if you will be next. Bloomberg News reports that Greece is unlikely to be the last euro nation to need an International Monetary Fund bailout, with Ireland, Spain and Portugal “conspicuously vulnerable, “the budget cuts needed in Europe in many countries are profound.” Bloomberg says that Portuguese, Spanish and Irish bond yields jumped last week as investors questioned their ability to reduce budget deficits and avoid Greece’s fate. Greece on April 23 triggered a 45 billion-euro ($60 billion) rescue package from the IMF and the euro region after its soaring deficit sent borrowing costs surging and sparked concern about a default. At 14.3 percent of gross domestic product, Ireland had the euro region’s largest deficit last year. Greece’s was 13.6 percent; Spain’s was 11.2 percent and Portugal’s 9.4 percent.

Yet despite the problems in Europe the oil market is getting caught up in a seeping wave of increasing economic optimism. Crude oil is getting its drive in part from fears that rates will continue to remain low as demand for the products rise increasing the chances for more commodity price inflation.

The Deepwater Horizon site is said to be leaking about 1000 barrels of oil per day. NOAA says that an attempt to control the leaking well using a Remotely Operated Vehicle (ROV) was not successful, and the well continues to leak. All available assets are being brought on-scene to address well control and cleanup of the floating oil. Over 1000 people are supporting the operational response. Efforts are now focused on gathering more information about the spill (amount, fate and effects), plans for possible undersea containment, drilling relief wells, maximizing oil recovery and readying for shoreline assessments. NOAA says the plan for attacking the spill has elements that try to activate the blow out preventer (BOP), a cut-off valve at the well head using ROVs, then if successful use an undersea dome to contain leaking oil. This process could take several months.

Phil Flynn can be reached at pflynn@pfgbest.com And make sure to watch him everyday on the Fox Business Network!


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Exxon Chevron Showdown

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