Crude Oil Market Summary For Wednesday Morning Oct. 6th

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

If November extends the rally off last week's low, August's high crossing at 83.91 is the next upside target. Closes below the 20 day moving average crossing at 77.66 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 83.33
Second resistance is August's high crossing at 83.91

Crude oil pivot point for Wednesday morning is 81.65

First support is the 10 day moving average crossing at 79.07
Second support is the 20 day moving average crossing at 77.66


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Crude Oil Declines From Five Month High Before U.S. Government Supply Report

Crude oil fell from a five month high before a government report that may show U.S. crude supplies rose last week while traders bet that crude’s rally made the commodity too expensive. Crude earlier reached its highest price since May 4 after a report yesterday showed U.S. gasoline inventories dropped last week by the most since May 2009. The Energy Department may say today crude supplies rose by 413,000 barrels, a Bloomberg News survey shows. Oil’s 14 day relative strength index rose above 70, a sign that prices may drop after rising too far, too fast.

“There is some optimism in the market that inventories are decreasing and the oversupply is shrinking,” said Sintje Diek, an HSH Nordbank analyst in Hamburg. “This is an overreaction by the oil market. The higher prices are not sustainable.” Crude for November delivery traded at $82.71 a barrel, down 11 cents, or 0.1 percent, on the New York Mercantile Exchange at 1:08 p.m. London time. It earlier climbed as much as 51 cents to $83.33 a barrel. Brent crude for November settlement traded at $84.71 a barrel, down 13 cents, on the ICE Futures Europe exchange in London.

New York futures rose 1.7 percent yesterday after the Institute for Supply Management’s index of non manufacturing businesses, which covers about 90 percent of the U.S. economy, climbed to 53.2 from 51.5 in August. Economists surveyed by Bloomberg News projected the index would advance to 52. Crude’s 14 day relative strength index, a measure of how fast prices have risen or fallen in that period, was at 70.1 today. A reading of 70 or more can be taken as a sign that a market is “overbought” and prices may drop......Read the entire inventory report.


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New Video: The Ultimate Price Target For Gold

Recently we posted a video that projected some amazing levels for gold. Given the strong upward trend in gold and the price action on Tuesday the 5th of October, it is worthwhile looking at this video again. Today's new short video will certainly give you some more interesting price targets for gold that are based on sound trading principles. We hope you enjoy the video, and as always we would love to have your feedback so please leave a comment. The video is free to watch and there are no registration requirements.

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New Video: This Reliable S&P Formation Could Make You Money

In this new video we explain in detail a particular chart formation that has proven to be very reliable in the past. If we are right, we could see a further move and run in the S&P500 to the upside. The video is free to watch and there are no registration requirements.

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Commodity Corner: Weaker Dollar, Surging Equities Propel Dollar

Light, sweet crude for November delivery ended the day on a five month high Tuesday after the dollar weakened and equities markets surged. Crude futures settled at $82.82 a barrel Tuesday on the New York Mercantile Exchange, a $1.35 increase from the previous day. Oil prices tend to correlate with the dollar's relationship to the euro nowadays. On Tuesday the dollar lost ground against euro, supporting oil prices.

The dollar also plummeted against the yen Tuesday. Japan's Central Bank reported that it would cut benchmark interest rates to almost zero in an effort to boost that country's economy. By expanding its liquidity measures, growth oriented assets such as stocks and commodities become cheaper for investors to buy.

The Dow Jones Industrial Average increased more than 200 points in afternoon trading while both NASDAQ and S&P 500 rose more than two percent. Additionally, the disruption in crude shipments in the Houston Ship Channel and the strike at French terminals have also contributed to the increase in oil prices.

November crude oil fluctuated within a range from $81.15 to $82.99.

Henry Hub natural gas futures continued to weaken Tuesday as stockpiles remain abundant and mild weather lingers. Traders anxiously await the upcoming heating season, when cooler temperatures will increase demand for gas heating and hence natural gas fired electricity. Natural gas ended Tuesday's trading session at $3.74 per thousand cubic feet, up a penny from Monday. Natural gas traded from $3.69 to $3.78.

The reformulated gasoline blendstock futures price for November rose to $2.13 a gallon, a 4 cent improvement from Monday and its highest level since Aug. 5. Gasoline prices peaked at $2.13 and bottomed out at $2.08.

Courtesy of The Commodity Corner, Rigzone.Com

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Brian Shactman: Where is Crude Oil and Gold Headed on Wednesday?

CNBC's Brian Shactman discusses the day's activity in the commodities markets, and where oil and gold are likely headed tomorrow.



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Stock Market and Commodities Commentary For Tuesday Evening Oct. 5th

The U.S. stock indexes closed solidly higher today. The index bulls have the near term technical advantage and gained some fresh upside technical momentum today. The indexes last week hit fresh multi month highs. Traders are gearing up for Friday's U.S. employment report. Look for more subdued trading in the stock indexes until then, but then look for an active trading day on Friday, in the wake of the jobs data.

Crude oil closed up $1.26 at $82.73 a barrel today. Prices closed nearer the session high today and hit another fresh two month high. Bulls have the solid near term technical advantage in crude. Prices are in a six week old uptrend on the daily bar chart. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the August high of $83.91 a barrel.

Natural gas closed up 4.4 cents at $3.771 today. Prices closed near the session high today and saw tepid short covering in a bear market. The bears still have the solid overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $4.00.

Gold futures closed up $24.50 at $1,341.30 today. Prices today closed near the session high and soared to a fresh contract and all time record high. A slumping U.S. dollar index continues to fuel the gold market bulls. Generally higher commodity markets today also supported fresh buying interest in the gold market. Gold bulls still have the solid overall near term technical advantage and gained more power today. There are still no significant early technical clues that a market top is close at hand.

The U.S. dollar index closed down 65 points at 78.00 today. Prices closed nearer the session low today and hit a fresh 8 1/2 month low. Prices also scored a bearish "outside day" down on the daily bar chart. Bears have the solid overall near term technical advantage. There are still no early clues to suggest a market bottom is close at hand.

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Crude Oil Inventories Climb as Refinery Processing Drops

U.S. oil supplies probably rose last week as refineries undergoing seasonal maintenance cut their processing rates to the lowest level since April, reducing demand for crude, a Bloomberg News survey showed. Stockpiles gained 400,000 barrels, or 0.1 percent, from 357.9 million, according to the median of 13 analyst estimates before an Energy Department report tomorrow. Gasoline stocks were unchanged in the survey and distillates fell.

Oil prices climbed above $80 a barrel to the highest level in eight weeks after the Energy Department last week reported declines in supplies of gasoline and distillate, including heating oil and diesel. Oil stocks were 13 percent higher than the five-year average in the week ended Sept. 24. “We’re in the heart of maintenance season, so we’d expect a little bit of an increase in crude and a little bit of a drop in products,” said Phil Flynn, a Chicago based analyst and trader with investment adviser PFGBest. “Refinery runs are going to continue to be low.”

Refineries probably operated at 85.3 percent of capacity, down 0.5 percentage point from the previous week, according to the Bloomberg survey. That would be the lowest level since the seven days ended April 2. Rates dropped 2 percentage points in the week ended Sept. 24, compared with a forecast decline of 0.6 percentage point. Eight analysts forecast oil supplies increased last week, four projected a decline and one said there would be no change.....Read the entire article.


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Phil Flynn: Rate Ruckus

Is the winner the country that has the most ink? Gold prices soar to a new record high as once again a global central bank decides to print their way to prosperity. The Bank of Japan gave gold another reason to make a new high by announcing what Dow Jones Newswires says is, “an ambitious” Y35 trillion monetary easing program to spur economic growth while cutting interest rates to virtually zero and launching a Y5 trillion program to buy private and public sector assets. Ambitious?! Boy, I’d say.

I guess there is more than one way to intervene in your currency. The Japan government is adding more stimuli while reducing the confidence in paper money. Looks like a golden opportunity to buy more gold. Perhaps it's time to buy black gold as well. Oil traders love to exploit devalued currencies and devalued confidence in the same way. Yesterday the oil market ignored the rebounding dollar and supplies that are 13% above the five year average and instead returned to focus on the shutdown of the Houston Shipping Channel that was shut down when a barge hit an electrical tower.

That disruption helped send oil to an eight week high. Dow Jones reported that U.S. Coast Guard says that the 3 1/2 mile stretch of the Houston shipping channel will likely be closed until late Tuesday so that low hanging power lines and a listing tower can be cleared away. The closure will affect crude deliveries to four refineries in the Houston ship channel. Dow says that the tower, which carries one of three transmission lines into Exxon Mobil Corp.'s (XOM) Baytown refinery, was struck.....Read the entire article.




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Crude Oil Higher From Here?

If you listen to "The Street" it would appear oil has no where to go but up. But a quick look ay our Smart Scan Chart Analysis gives us good reason to be cautious about going long at these levels. Let's look at the most popular crude oil ETF, USO.

Our Smart Scan Chart Analysis shows the current uptrend in USO is very weak and at a crossroads and has possibly ended. Look for choppy trading action in the near term and as always make sure to trade this trend with very tight stops.

Based on a pre-defined weighted trend formula for chart analysis, USO scored +60 on a scale from -100 (strong downtrend) to +100 (strong uptrend)....

-10......Last Hour Close Below 5 hour Moving Avg
+15......New 3 Day High on Monday
+20......Last Price Above 20 Day Moving Average
+25......New 3 Week High, Week Ending October 9th
-30......New 3 Month Low in May
+60......Total Score

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