Crude Oil Closes Lower, Bulls Maintain Slight Advantage

Crude oil closed lower due to profit taking on Tuesday as it consolidated some of the rally off May's low. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If July extends the rally off May's low, the 62% retracement level of last month's decline crossing at 81.13 is the next upside target. Closes below the 20 day moving average crossing at 74.30 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 78.92. Second resistance is the 62% retracement level of last month's decline crossing at 81.13. First support is the 10-day moving average crossing at 76.23. Second support is the 20 day moving average crossing at 74.30.

Natural gas closed lower on Tuesday as it extended Monday's decline below the 10 day moving average crossing at 4.908 signaling that a short term top is in or is near. The mid range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are turning bearish hinting that a short top might be in or is near. Closes below the 20 day moving average crossing at 4.694 would confirm that a short term top has been posted. If July renews the rally off May's low, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. First resistance is last Wednesday's high crossing at 5.196. Second resistance is the 62% retracement level of the November-May decline crossing at 5.429. First support is the 20 day moving average crossing at 4.691. Second support is today's low crossing at 4.691.

The U.S. Dollar closed higher due to short covering on Tuesday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are oversold and are turning bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 87.24 would confirm that a short term low has been posted. If September renews this month's decline, the 38% retracement level of the November-June rally crossing at 83.83 is the next downside target. First resistance is the 10 day moving average crossing at 86.81. Second resistance is the 20 day moving average crossing at 87.24. First support is Monday's low crossing at 85.36. Second support is the 38% retracement level of the November-June rally crossing at 83.83.

Gold closed lower on Tuesday confirming Monday's key reversal down. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are diverging and are turning neutral hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1228.30 are needed to confirm that a short term top has been posted. If August extends this year's rally into uncharted territory, upside targets will now be hard to project. First resistance is Monday's high crossing at 1266.50. First support is Monday's low crossing at 1231.60. Second support is the 20 day moving average crossing at 1228.30.

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Phil Flynn: The Oil Market Re-Evaluates China’s Re-Valuation

The oil market re-evaluates China’s re-valuation. Perhaps the yuan re-valuation was not as bullish as you thought. We warned yesterday not to get complacently bullish on the yuan re-valuation and sure enough after the commodities markets popped, they then dropped. In fact it is very possible that this yuan re-velation non event may change the short term trend direction risk in commodities.

Mainly I am talking about gold and oil but other commodities that have speculated for months on the Chinese government allowing their currency to “float” may have already bought the rumor and sold the fact. Besides, despite what you might think, this unclear valuation in this environment may not be as bullish for demand as some might think. Despite the increase in Chinese purchasing power the main driver of their economy is still exports. Higher yuan means fewer exports.

And they have wage pressure at home and that has the Chinese government desperately trying to adjust their market by making workers more satisfied with the yuan they've got. Yet this move could drive inflation at home as Chinese consumers start to look for more goods and property perhaps leading to imbalances in the overall Chinese economy.

For oil the idea that this move would put pressure on the dollar and raise all petroleum prices was thwarted by how demand might respond to higher energy prices. Already demand for oil is struggling. We know consumers are price sensitive and we know that oil is sensitive to the dollar.

Phil can be reached at pflynn@pfgbest.com Also make sure to catch him on the the Fox Business Network every day!


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Deepwater Drilling Ban Lifted by New Orleans Federal Judge

A New Orleans federal judge lifted the six-month moratorium on deepwater drilling imposed by President Barack Obama following the largest oil spill in U.S. history. Drilling services shares jumped on the news.

Obama temporarily halted all drilling in waters deeper than 500 feet on May 27 to give a presidential commission time to study improvements in the safety of offshore operations. More than a dozen Louisiana offshore service and supply companies sued U.S. regulators to lift the ban. The U.S. said it will appeal the decision.

U.S. District Judge Martin Feldman today granted a preliminary injunction, halting the moratorium. He also “immediately prohibited” the U.S. from enforcing the ban. Government lawyers told Feldman that ban was based on findings in a U.S. report following the sinking of the Deepwater Horizon rig off the Louisiana coast in April.

“The court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium,” Feldman said in his 22-page decision. “The blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger”.....Read the entire article.


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Crude Oil Slides on Overnight Profit Taking

Crude oil was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If July extends the rally off May's low, the 62% retracement level of May's decline crossing at 81.13 is the next upside target. Closes below the 20 day moving average crossing at 74.27 are needed to confirm that a short term top has been posted.

First resistance is Monday's high crossing at 78.92
Second resistance is the 62% retracement level of May's decline crossing at 81.13

Tuesday's pivot point for crude oil is 78.76
First support is the 10 day moving average crossing at 76.18
Second support is the 20 day moving average crossing at 74.27

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Natural gas was lower overnight as it extends Monday's decline below the 10 day moving average crossing at 4.914. Stochastics and the RSI are turning bearish signaling that a short term top is in or is near.

Closes below the 20 day moving average crossing at 4.698 would confirm that a short term top has been posted. If July extends this month's rally, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target.

First resistance is last Wednesday's high crossing at 5.196
Second resistance is the 62% retracement level of the November-May decline crossing at 5.429

Tuesday's pivot point for natural gas is 4.960

First support is Monday's low crossing at 4.826
Second support is the 20 day moving average crossing at 4.698


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Where is Crude Oil and Gold Headed on Tuesday?

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




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New Video: How To Use Fibonacci Retracements

We have had a number of requests to do a video on Fibonacci retracements and how they can be used in trading.

We put together this five minute lesson on Fibonacci trading and how we use this important tool to determine turning points in the market. Like all tools, it has its flaws and should be used with other complementary tools like our "Trade Triangle" technology.

As always, our videos are free to watch and there are no registration requirements. We hope you have the time to comment and share if this video helped you understand this important trading tool, or how you're already using it.

We hope you enjoy this brief lesson and it helps you understand how to use this important tool.


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Crude Oil Extends Rally Off May's Low, Remains Overbought

Crude oil closed higher on Monday as it extends the rally off May's low. Profit taking tempered early session gains and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If July extends the rally off May's low, the 62% retracement level of last month's decline crossing at 81.13 is the next upside target. Closes below the 20 day moving average crossing at 73.95 would confirm that a short term top has been posted. First resistance is today's high crossing at 78.92. Second resistance is the 62% retracement level of last month's decline crossing at 81.13. First support is the 10 day moving average crossing at 75.70. Second support is the 20 day moving average crossing at 73.95.

Natural gas closed lower due to profit taking on Monday and below the 10 day moving average crossing at 4.913 signaling that a short term top is in or is near. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short top might be in or is near. Closes below the 20 day moving average crossing at 4.660 would confirm that a short term top has been posted. If July extends the rally off May's low, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. First resistance is last Wednesday's high crossing at 5.196. Second resistance is the 62% retracement level of the November-May decline crossing at 5.429. First support is today's low crossing at 4.826. Second support is the 20 day moving average crossing at 4.660.

The U.S. Dollar closed higher due to short covering on Monday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Tuesday as September might extend today's bounce off the 25% retracement level of the November-June rally crossing at 85.71. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 87.28 would confirm that a short term low has been posted. If September extends this month's decline, the 38% retracement level of the November-June rally crossing at 83.83 is the next downside target. First resistance is the 10 day moving average crossing at 87.06. Second resistance is the 10 day moving average crossing at 87.06. First support is today's low crossing at 85.36. Second support is the 38% retracement level of the November-June rally crossing at 83.83.

Gold posted a key reversal down due to strength in equities and the US Dollar on Monday but not before posting a new all time high. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are diverging but remain bullish signaling that sideways to higher prices are possible near term. If August extends this year's rally into uncharted territory, upside targets will now be hard to project. Closes below the 20 day moving average crossing at 1225.80 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1266.50. First support is today's low crossing at 1231.60. Second support is the 20 day moving average crossing at 1225.80.



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Phil Flynn: The Dollar Drops While China Rocks

The dollar drops while China rocks. China has either given in to pressure or has realized that its peg to the dollar may soon become counterproductive.China shook the global markets by announcing that they were going to allow their currency to be more flexible. As expected, oil soared on the news because the move will make oil cheaper in China and may inspire more Chinese buying of more commodities! Yet will this be for the long haul as a stronger yuan may slow exports by making Chinese goods more expensive overseas. For now though it is a commodity buying spree as the markets react to what most people feel will be the most obvious result.

The Wall Street Journal says that China’s central bank's statement Saturday came as a surprise and effectively marked the end of currency's de-facto peg to the U.S. dollar. It has been seen as a clear signal that China will let the yuan resume a gradual rise against the U.S. dollar after nearly two years of being effectively pegged around CNY6.83 to the U.S. dollar. Property developers were among the biggest gainers, as a stronger yuan would attract fund inflows and strengthen demand for real estate in China.....Read the entire article.

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Crude Oil and Natural Gas Numbers For Monday Morning

Crude oil was higher overnight as it extends this month's rally. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If July extends the rally off May's low, the 62% retracement level of May's decline crossing at 81.13 is the next upside target. Closes below the 20 day moving average crossing at 73.98 are needed to confirm that a short term top has been posted.

First resistance is the overnight high crossing at 78.87
Second resistance is the 62% retracement level of May's decline crossing at 81.13

Crude oil pivot point for Monday is 76.73

First support is the 10 day moving average crossing at 75.76
Second support is the 20 day moving average crossing at 73.98

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Natural gas was higher overnight as it consolidates below the 50% retracement level of the November-May decline crossing at 5.151. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If July extends this month's rally, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. Closes below the 20 day moving average crossing at 4.670 would confirm that a short term top has been posted.

First resistance is last Wednesday's high crossing at 5.196
Second resistance is the 62% retracement level of the November-May decline crossing at 5.429

Natural gas pivot point for Monday morning is 5.058

First support is the 10 day moving average crossing at 4.933
Second support is the 20 day moving average crossing at 4.670

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Crude Oil Rises for a Second Day on Signs of Improving Fuel Demand in U.S.

Crude oil rose for a second day in New York amid signs of increased fuel demand in the U.S., the biggest energy consuming nation. Oil for July delivery gained 74 cents, or 1 percent, to $77.92 a barrel on the New York Mercantile Exchange at 9:03 a.m. Sydney time. Prices increased 4.6 percent last week, advancing for a second week, along with equities.

Oil may rise this week after U.S. gasoline demand climbed 1.6 percent to 9.34 million barrels a day, the highest level since August, according to a Bloomberg News survey. Eleven of 21 analysts, or 52 percent, predicted crude will increase. On June 18, oil gained 39 cents, or 0.5 percent, to settle at $77.18 a barrel in New York. The Standard & Poor’s 500 Index rose to the highest level in a month.

Brent crude for August settlement gained 84 cents, or 1.1 percent, to $79.06 a barrel on the ICE Futures Europe exchange in London. It dropped 46 cents, or 0.6 percent, to $78.22 a barrel on June 18.

Tighter regulation after the BP Plc oil spill in the Gulf of Mexico may delay exploration projects and cut global output by as much as 900,000 barrels a day if a moratorium on deep water drilling spreads beyond the U.S., Nobuo Tanaka, executive director of the International Energy Agency, said June 18.


Via Bloomberg News

Reporter James Paton can be reached at jpaton4@bloomberg.net.


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