Crude Oil, Natural Gas, Gold and Dollar Commentary For Tuesday Evening

Crude oil closed lower on Tuesday and below last September's low crossing at 69.40. The low range close sets the stage for a steady to lower 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 June extends this month's decline, last July's low crossing at 65.66 is the next downside target. Closes above the 20 day moving average crossing at 79.44 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 74.62. Second resistance is the 20 day moving average crossing at 79.44. First support is today's low crossing at 68.91. Second support is last July's low crossing at 65.66.

Natural gas closed lower due to profit taking on Tuesday as it consolidated some of last week's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this month's rally, the 38% retracement level of the October-April decline crossing at 4.715 is the next upside target. Closes below the 20 day moving average crossing at 4.171 would temper the near term friendly outlook. First resistance is today's high crossing at 4.494. Second resistance is the 38% retracement level of the October-April decline crossing at 4.715. First support is the 10 day moving average crossing at 4.191. Second support is the 20 day moving average crossing at 4.171.

The U.S. Dollar closed higher on Tuesday as it extends this year's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, the 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79 is the next upside target. Closes below the 20 day moving average crossing at 83.70 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 87.30. Second resistance is weekly resistance crossing at 87.79. First support is the 10 day moving average crossing at 85.30. Second support is the 20 day moving average crossing at 83.70.

Gold closed lower due to profit taking on Tuesday as it consolidated some of the rally off February's low. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1189.40 would confirm that a short term top has been posted. If June extends this year's rally into uncharted territory, upside targets are hard to project. First resistance is last Friday's high crossing at 1249.70. First support is today's low crossing at 1206.60. Second support is the 20 day moving average crossing at 1189.40.


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Phil Flynn: Silver Linings

Europe is in turmoil and global stock markets looked like they were getting ready to collapse. But look at the bright side, at least gasoline prices are coming down. Leave it to The Energy Report to find that silver lining in that dark cloud (of course even silver fell yesterday in this deflationary downside route). According to The Energy Information Agency, gas prices fell 4.1 cents last week to 286.4 cents a gallon. AAA said that the price of gas fell to $2.867 a gallon, the lowest since April 26. See, who says that this Greece crisis is all bad.Deflation fears are now the main concern along with whether or not the EURO can be saved. Overnight Dow Jones said that, “slightly more positive tone returned to foreign exchange markets in European trading hours with the euro stabilizing, while safe haven currencies like the yen edged lower.” This of course brought the oil bulls out of hiding, the same ones that were pretty boisterous when oil was at $87 but have been hiding under a rock ever since.

The reason for the stabilization may be the fact that Greece got its first installment of funds to avoid a default. According to the AP, Greece is to receive euro14.5 billion in bailout loans from other European Union countries, thus helping to stave off default on approximately euro 9 billion of debt due in a day or 2. The problem with the crude oil bulls is that they have been trying to shine a light on positive economic data as the reason to be blindly bullish on oil. What they have failed to realize is that the data is in part dependent on continued deficit spending and the printing of more paper money. Oil supplies may fall in Cushing, Oklahoma but they are still at a record and we have not seen the evidence that demand can over take the amount of massive oversupply. The price of oil is a product of dollar strength or dollar weakness.

Its relationship to just supply and demand was changed and we will live and die with the dollar.Is the Iran nuclear Issue solved? Bloomberg News reported that, "Iran agreed to hand to Turkey about half of its enriched uranium in exchange for fuel to run a medical reactor, possibly thwarting U.S. efforts to step up international sanctions over the Iranian atomic program.” Bloomberg says that, “Iran is ready to ship the low-enriched uranium for safekeeping in Turkey within a month of the U.S. and other powers agreeing to the swap, Foreign Minister Manouchehr Mottaki said on state television today. Within a year, Iran expects to get a shipment of reactor-grade fuel for use in the research reactor in Tehran, he said. “There is no opportunity or excuse for sanctions now.”Oh yeah.

The Voice of America reports that, "The United States is skeptical of the nuclear fuel swap agreement announced on Monday in which Iran says it will ship enriched uranium to Turkey. President Barack Obama's spokesman says the agreement will not slow the drive for a new U.N. Security Council sanctions resolution. The White House and State Department issued similar responses to the deal in which Tehran agrees to send about 1,200 kilograms of enriched uranium to Turkey. In return, Iran would receive medium enriched uranium for use in a medical research reactor. White House spokesman Robert Gibbs acknowledged efforts by Turkey and Brazil, saying it would be a positive step for Iran to transfer low enriched uranium as it agreed to do in October of last year.

But noting Iran's announcement that it will continue its 20 percent enrichment program, Gibbs said there is no change in the administration's position on Iran's nuclear program or Obama's determination to achieve new U.N. Security Council sanctions resolution. "It does not change the steps that we are taking to hold Iran responsible for its obligations, including sanctions," he said. Supply disruption concerns are secondary to global economic concerns.Short term we still feel the best way to play it is to play the ranges. Long term we are still bearish.

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


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OPEC Scrambling To Jaw Bone Prices

From guest blogger Vincent Fernando.....

Light sweet crude broke $72 just recently, then bounced off of $70 a few times. It has rebounded back a bit, but could easily head lower.European economic growth is looking fragile, and more importantly China's economic growth is starting to look like it peaked based on leading indicators. Thus while we can potentially bailout the European periphery nations, and it could stabilize the world economy, it's not so clear if it will save commodities. Especially as the China growth engine slows.

OPEC's scrambling to jawbone oil prices as a result of price softness:

Forex Yard:
Investment in new energy capacity worldwide must be maintained to avoid a supply crunch in the future, Attiyah told an industry event, but deep water drilling and other high-cost operations would be unprofitable at a price of less than $70.

OPEC member Qatar supported Saudi Arabia's price aspirations for oil, Attiyah said. Saudi King Abdullah, ruler of the world's top oil exporter, said in December that a price of around $75 to $80 was fair. The kingdom has pegged that level as fair for both consumers and producers.

"I support fully what King Abdullah says," Attiyah said.

We can envision a potential 'new normal' boring growth scenario where China slows, Europe stagnates into a bailout coma, and the U.S. grows but underwhelms. Industrial commodities will be anemic to such a situation and we'll be unsurprised to see oil go below $70 in the near future given the China/Europe situation.


Vincent Fernando writes for The Business Insider


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Crude Oil Daily Technical Outlook For Tuesday Morning

With 4 hours MACD crossed above signal line, a temporary low should be in place at 69.27 after crude oil hit 69.50 key support. Intraday bias is turned neutral and stronger recovery might be seen towards 4 hours 55 EMA (now at 75.17). But upside should be limited below 61.8% retracement of 87.15 to 69.27 at 80.32 and bring fall resumption. Below 69.27 will target 38.2% retracement of 33.2 to 87.15 at 66.54 next.

In the bigger picture, as noted before, 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Such rise might have completed at 87.15 already, ahead of 50% retracement of 147.27 to 33.2 at 90.24. Break of 68.59/69.50 key support zone 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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New Video: Where to Place Your Stops in Gold?

Gold is gaining in popularity with the online trading community, and whenever we write about it, or produce a video featuring this precious metal, unsurprisingly, it also tends to generate the most passion of any market that we cover. With gold making new highs recently, we thought it would be timely to put together a video showing you where we are placing our short term stops. The video is about 90 seconds long and shows you in a very visual way, what we're looking at in this market.

As always the video is available for viewing now and there is no charge or registration requirement. Please feel free to comment on this video and let us know what you think about the direction of this gold market.

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Crude Oil Snaps Five Days of Declines After Tumbling Below $70 a Barrel

Crude oil rose, snapping five days of declines, as some investors took the view a drop below $70 a barrel made the commodity attractive to buy. Oil pared yesterday’s 2.1 percent drop as the euro’s rebound from a four year low bolstered optimism the shared European currency will weather the region’s debt crisis. A U.S. Energy Department report tomorrow will probably show that refinery operating rates increased and gasoline inventories dropped, according to a Bloomberg News survey.

“We’ve come from having oil at $87 a barrel to around $70 per barrel,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Those who have already factored in a weak outlook for the euro zone, or don’t think that there’s the risk of another financial crisis happening, seem to think this is not such a bad time to buy.” Crude oil for June delivery gained as much as 64 cents, or 0.9 percent, to $70.72 a barrel in electronic trading on the New York Mercantile Exchange, and was at $70.38 at 9:02 a.m. Singapore time. Yesterday, the contract fell $1.53 to $70.08 a barrel, the lowest settlement since Dec. 14. Prices had tumbled to $69.27 yesterday.

The dollar was at $1.2357 per euro from $1.2395 in New York. The euro weakened before a report forecast German investor confidence fell in May, after rising yesterday. Refineries probably operated at 88.6 percent of capacity last week, up 0.2 percentage point from the previous week, according to the median of analyst responses before the Energy Department report. “Refinery operations have been reasonably good,” National Australia Bank’s Westmore said.

Gasoline supplies declined 1 million barrels from 222.1 million the prior week, according to the Bloomberg survey. U.S. crude oil stockpiles probably increased by 625,000 barrels, the 15th time in 16 weeks as imports climbed. Brent crude oil for July delivery increased as much as 80 cents, or 1.1 percent, to $75.90 a barrel, on the London-based ICE Futures Europe exchange, and was at $75.71 at 8:31 a.m. Singapore time. Yesterday, the contract slipped $2.83, or 3.6 percent, to $75.10.

Reporter Ben Sharples can be contacted at bsharples@bloomberg.net

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New Video: Crude Oil Breaks $70 a Barrel, is it Time to be Short?

The crude oil market broke through an important support zone and appears to be very much on the defensive. In this new short video on crude oil, we point out some of the levels that we still think are important in this market and illustrate just how important it is to use both stops and our "Trade Triangle" technology.

As always there is no charge or registration requirement in order to view this new video, and we encourage you to leave a comment and let us know what you think about the video and the direction of this crude oil market.


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Where is Gold and Crude Oil Headed on Tuesday?

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



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Crude Oil Signals Remain Oversold, Lower Prices Still Likely

Crude oil closed lower on Monday and spiked below last September's low crossing at 69.40. A short covering bounce tempered early losses and 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 June extends this month's decline, last July's low crossing at 65.66 is the next downside target. Closes above the 20 day moving average crossing at 80.19 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 76.01. Second resistance is the 20 day moving average crossing at 80.19. First support is today's low crossing at 69.27. Second support is last July's low crossing at 65.66.

Natural gas closed higher on Monday as it extended last week's rally. The high 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 today's rally, the 25% retracement level of the October-April decline crossing at 4.438 is the next upside target. Closes below the 20 day moving average crossing at 4.157 would temper the near term friendly outlook. First resistance is last Thursday's high crossing at 4.414. Second resistance is the 25% retracement level of the October-April decline crossing at 4.438. First support is the 10 day moving average crossing at 4.158. Second support is the 20 day moving average crossing at 4.157.

The U.S. Dollar closed higher on Monday as it extends this year's rally. However, profit taking tempered much of today's gains and the low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, the 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79 is the next upside target. Closes below the 20 day moving average crossing at 83.39 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 87.21. Second resistance is weekly resistance crossing at 87.79. First support is the 10 day moving average crossing at 84.92. Second support is the 20 day moving average crossing at 83.39.

Gold closed lower due to profit taking on Monday as it consolidated some of the rally off February's low. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1185.10 would confirm that a short term top has been posted. If June extends this year's rally into uncharted territory, upside targets are hard to project. First resistance is last Friday's high crossing at 1249.70. First support is the 10 day moving average crossing at 1209.60. Second support is the 20 day moving average crossing at 1185.10.

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Phil Flynn: Euro Melt

Asia plays catch up with last Fridays Euro Meltdown driving oil to a new 3 month low. Strength comes in numbers but at the same time, the numbers can bring you down as the small members of the EU are raising concerns that the Euro will be split. Those fears gained momentum when German Chancellor Angela Merkel said that Europe is in a “very, very serious situation” .Those concerns started a global aversion to risk going into the weekend as we saw the Euro move to a four year low. Today we want to find out if the market gains a sense of confidence as the market hopes that we will see bargain hunters step in. Yet whether they do or they do not, the one thing we do know is that the Euro problems have not gone away.

For oil and the products the market is living and dying with the fallout from the crisis. Oil has been propped up on the backs of a weak dollar and then a strong dollar and without that going for it, the focus falls back on the supply side facts for crude oil. Last week the Energy Information Agency reported that supplies of oil is at a record high at Cushing, Oklahoma which is the Nymex delivery point. The refiners have a lot of incentive to make gasoline with the crack spread this wide. The EIA says that the high crack spread is due in part to the switch to summer time grades of gas. The EIA says that May 1 marks the date for most of the country when more costly summer-grade gasoline is required (April 1 in southern California). The maximum allowable vapor pressure, which is measured as Reid vapor pressure (Rvp), is the primary distinction between winter- and summer-grade gasolines.

When the weather turns warm, a high vapor pressure increases the evaporation of the gasoline into the atmosphere. The volatile organic compounds that are released from gasoline into the air not only contribute directly to health problems, but also indirectly through the formation of ground-level ozone and smog. Gasoline vapor pressure is also important for an automobile engine to operate efficiently. Vapor pressure must be high enough to allow an engine to start easily, but it must not be so high as to lead to vapor lock, which stalls the engine when gasoline in the engine’s fuel delivery system prematurely turns from liquid to vapor.

Reducing gasoline vapor pressure to lessen harmful emissions and maintain car drive ability during the summer adds to refiners’ operating costs in the second and third quarters. Because of these higher costs, the rise in the crack spread during the summer months overstates the actual increase in the profitability of gasoline sales.The low for the year in oil of 6950 is the first big, long term target for oil yet with the stock market rebounding, we may not make it on this run. We think that longer term oil is headed much lower yet we still think the best way to play it is by the range. Make sure you call for our entry and exit points on every major market.

Phil can be reached at at pflynn@pfgbest.com and don't forget to watch him everyday on the Fox Business Channel

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