The Crude Oil Trader

Friday, August 27, 2010

Sorry BP, No One Wants You Drilling In The Arctic

BP has been dissuaded not to join in on oil drilling operations in the Arctic region around Greenland, according to The Guardian. BP was persuaded not to join in the bidding process by the country of Greenland, which felt that the company's involvement in the project might make a bad PR situation worse.

A Greenpeace ship is already stationed off the coast of Greenland, protesting Cairn Energy's exploration activities there. Cairn announced on Tuesday that it had found natural gas in the area, but not any oil.

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New Video: Why Weekly Charts Work

Many traders get so involved with the market on a daily or even an intraday basis, that they somehow lose out on the bigger picture. Weekly charts are enormously helpful in giving clues to the future direction of the market.

In today's video we examine one of the biggest markets in the world, the S&P 500, using a weekly chart. The video runs about two minutes in length and we think you will find it both educational and informative.

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Crude oil was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are turning bullish hinting that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 77.23 are needed to confirm that a short term low has been posted. If October extends this month's decline, May's low crossing at 70.35 is the next downside target.

First resistance is the 10 day moving average crossing at 74.03
Second resistance is the 20 day moving average crossing at 77.23

Crude oil pivot point for Friday morning is 73.29

First support is Wednesday's low crossing at 70.76
Second support is May's low crossing at 70.35

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Thursday, August 26, 2010

Crude Oil Falls on Concerns About Economic Recovery, Spain's Deficit

Crude oil declined for the first day in three after equities fell as a slowdown in U.S. manufacturing added to concern that economic growth is faltering, curbing fuel demand. Oil is dropping for the third week, the longest losing streak since May, as Asian stocks slipped on expectations of revisions to U.S. economic growth figures later today. A Federal Reserve Bank of Kansas City report yesterday showed manufacturing slowed in August. U.S. crude inventories climbed more than expected last week, an Aug. 25 report from the Energy Department showed.

“The oil market is very bearish,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “The fundamental picture is just not positive at all. If oil breaks $70, it will come under pressure and then you’ll see it substantially lower.” Crude oil for October delivery dropped as much as 49 cents, or 0.7 percent, to $72.87 a barrel in electronic trading on the New York Mercantile Exchange and was at $73.03 at 11:27 a.m. Singapore time. Yesterday, the contract rose 84 cents, or 1.2 percent, to $73.36. Prices have dropped 0.6 percent this week and 8 percent since the start of the year.

Economists who projected the U.S. recovery would gain speed in the second half of the year are now scaling back those forecasts as the outlook for jobs and business investment dims. Second quarter gross domestic product growth may be revised down to 1.4 percent from 2.4 percent earlier , according to a Bloomberg News survey of economists.....Read the entire article.

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Where is Crude Oil and Gold Headed on Friday?

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

The S&P 500 index closed lower on Thursday as it consolidates some of Thursday's rally. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that additional weakness is possible near term. If September extends this month's decline, July's low crossing at 1003.10 is the next downside target. Closes above the 20 day moving average crossing at 1090.13 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1068.71. Second resistance is the 20 day moving average crossing at 1090.13. First support is Wednesday's low crossing at 1037.50. Second support is July's low crossing at 1003.10.

Crude oil closed higher due to short covering on Thursday despite record high US oil stockpiles. The mid-range close sets the stage for a steady to higher opening on Friday. 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 77.53 are needed to confirm that a short term low has been posted. If October extends this month's decline, May's low crossing at 70.35 is the next downside target. First resistance is the 10 day moving average crossing at 74.27. Second resistance is the 20 day moving average crossing at 77.53. First support is Wednesday's low crossing at 70.76. Second support is May's low crossing at 70.35.

Natural gas closed lower on Thursday as it extends this month's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If October extends this month's decline, weekly support crossing at 3.810 is the next downside target. Closes above the 20 day moving average crossing at 4.343 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.138. Second resistance is the 20 day moving average crossing at 4.343. First support is Today's low crossing at 3.825. Second support is weekly support crossing at 3.810.

The U.S. Dollar closed lower due to profit taking on Thursday as it consolidates some of this month's rally. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends this month's rally, the reaction high crossing at 84.73 is the next upside target. Closes below the 20 day moving average crossing at 82.07 would temper the near term friendly outlook. First resistance is Tuesday's high crossing at 83.64. Second resistance is the reaction high crossing at 84.73. First support is the 20 day moving average crossing at 82.07. Second support is the reaction low crossing at 81.99.

Gold closed lower due to a decline in jobless data on Thursday as it consolidates around the 75% retracement level of the June-July decline crossing at 1239.60. Stochastics and the RSI are overbought, diverging but are turning bullish signaling that sideways to higher prices are possible near term. If August extends the rally off July's low, the 87% retracement level of the June-July decline crossing at 1253.30 is the next upside target. Closes below the 20 day moving average crossing at 1212.80 would temper the friendly outlook. First resistance is today's high crossing at 1244.50. Second resistance is the 87% retracement level of the June-July decline crossing at 1253.30. First support is the 10 day moving average crossing at 1229.70. Second support is the 20 day moving average crossing at 1212.80.

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Phil Flynn: When Bad News Becomes Good News

Oh sure the economic data did not get any better. New homes sales were a disaster and the Energy Information Agency report was very bearish yet the good news is that a lot of the bad news was already priced in. Now doesn’t that make you feel better? Yes things are lousy but as bad as they are at this point in time we actually priced in that things were even worse! Yippee!! Time to celebrate! Forget that doom and gloom of Tuesday. Now its doom and zoom as the market tries to tell itself hey nothing can be that bad! Can it?

Well I hate to be a bummer but it can. The oil inventory report shows that the economy has slipped back into recession. It is a portrait of everything that is wrong about the economy. Oil and product supplies are surging reflecting the same things we have seen in other markets. It shows that the economy, somewhere in the middle of summer, hit a brick wall and went back into recession. Oh sure some may say that the builds are seasonal and that this is to be expected yet the magnitude of oil supply and the direction demand is going is sending out clear signals that.....Read the entire article.

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Crude Oil Rises for Second Day on U.S. Jobless Claims Report

Crude oil rose the most in more than three weeks as applications for U.S. unemployment benefits dropped more than forecast, easing concern about the labor market amid other signals the economy is slowing. Oil jumped as much as 2 percent after the Labor Department in Washington reported initial jobless claims fell for the first time in a month in the week ended Aug. 21. The Standard & Poor’s 500 Index fluctuated after yesterday’s gain and the dollar fell against the euro, boosting commodities as an alternative investment.

“The four horsemen that matter to oil are all galloping in the same direction today, with a stronger stock market, weaker dollar, better than expected jobs and lower Cushing inventories,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. Crude oil for October delivery rose $1.01, or 1.4 percent, to $73.53 a barrel at 11:34 a.m. on the New York Mercantile Exchange. Futures have dropped 11 percent since Aug. 3. They have risen 2.9 percent in the past year.

Jobless claims declined by 31,000 last week to 473,000. The median estimate of 48 economists surveyed by Bloomberg News forecast the figure would drop to 490,000. The S&P 500 gained 0.72 points to 1,056.05. The Dow Jones Industrial Average fell 2.2 points to 10,057.86. The dollar traded at $1.2706 per euro, down 0.4 percent from $1.2659 yesterday. The Reuters/Jefferies CRB Index of 19 commodities advanced 0.8 percent to 263.99, the first increase in seven days. Seventeen of the commodities gained, led by copper, heating oil and gasoline.
....Read the entire article.

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Smart Scan Chart Analysis For Crude Oil ETF....USO

Smart Scan Chart Analysis continues negative longer term. Look for this market to remain weak. As always trade this strong downtrend with tight stops. A triangle indicates the presence of a very strong trend that is being driven by strong forces and insiders.
Based on a pre-defined weighted trend formula for chart analysis, USO scored -90 on a scale from -100 (strong downtrend) to +100 (strong uptrend):

+10.....Last Hour Close Above 5 Hour Moving Average
-15.....New 3 Day Low on Wednesday
-20.....Last Price Below 20 Day Moving Average
-25.....New 3 Week Low, Week Ending August 28th
-30.....New 3 Month Low in May
-90.....Total Score

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Just click here for your FREE trend analysis of crude oil ETF USO

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Crude Oil Stochastics-RSI Oversold, is This The Near Term Bottom For Oil?

Crude oil was higher due to short covering overnight as it consolidates some of this month's decline. 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 77.53 are needed to confirm that a short term low has been posted. If October extends this month's decline, May's low crossing at 70.35 is the next downside target.

First resistance is the 10 day moving average crossing at 74.26
Second resistance is the 20 day moving average crossing at 77.53

Crude oil pivot point for Thursday morning is 72.08

First support is Wednesday's low crossing at 70.76
Second support is May's low crossing at 70.35

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