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For U.S. energy producers, high priced $11 natural gas is "kind of like a Saturday night drunk," Devon Energy Executive Chairman Larry Nichols said at the opening session of the Unconventional Gas International Conference and Exhibition on Tuesday afternoon. "It may feel good at the time," he said, but it isn't a sustainable high.
Just as an $11 price is too high to persist, today's current market prices of about $3.75 are too low for the industry to thrive and maintain strong natural gas production in the long term, said Nichols, who stepped down this year from his longtime position as CEO of Oklahoma City based Devon, the leading producer in North Texas' gas rich Barnett Shale.
Even in the face of low gas prices, domestic energy producers have continued to do substantial drilling, particularly in major unconventional gas plays such as the Barnett, the Eagle Ford Shale in South and Central Texas, the Haynesville Shale in Louisiana and East Texas, and the Marcellus Shale in the Appalachian region. By continuing to drill despite weak prices.....Read the entire article.
Crude oil rises after a barrel busting report. US total petroleum supplies hit the highest level in 29 years. Crude stocks are the highest since 1980. Gasoline supplies, the highest levels since 1990. The forward demand covers for supply, the highest since 1995. Demand for petroleum products dropped a whopping 6.4% and prices rise! So I guess this quantitative easing thing is a way to help oil companies and their bottom line. The Fed wants inflation and the Fed gets what it wants and is even thinking about going beyond their informal target rate. The Fed fear deflation and believe that the best weapon against it is inflation real or not.
The Wall Street Journal says that, “the rationale is that getting inflation up even temporarily would push "real" interest rates nominal rates minus inflation down, encouraging consumers and businesses to save less and to spend or invest more” Let’s see how that works for you. At the same time the US and China are getting testy about the currency rate as the Chinese are saying that forcing them to revalue or devalue their currency would lead to a disaster for the world. The set up is so bullish and commodities continue to......Read the entire article.
Crude oil rose for a third day in New York as the dollar extended its decline against the yen and the euro, enhancing the investment appeal of commodities, and after a U.S. government report showed a drop in gasoline stockpiles. Futures climbed as the U.S. currency fell to a 15 year low against the yen and an eight month low against the euro amid speculation the U.S. Federal Reserve will expand credit easing to sustain the economic recovery. The U.S. Energy Department said yesterday supplies of motor fuel slipped more than forecast by a Bloomberg News survey.
“We’re seeing tremendous dollar weakening,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich AG in Vienna. “That’s what we saw throughout 2009, which made oil rise from below $40 to $70. This correlation disappeared all year until now, so all commodities are rising.” Oil for November delivery rose as much as 72 cents, or 0.9 percent, to $83.95 a barrel in electronic trading on the New York Mercantile Exchange. It was at $83.73 at 12:56 p.m. London time. Brent crude for November settlement rose 46 cents, or 0.5 percent, to $85.52 a barrel on the ICE Futures Europe exchange in London.
Futures reached their highest price since May 4 yesterday after the Energy Department reported gasoline supplies fell 2.65 million barrels to 219.9 million. They were forecast to decline 250,000 barrels, according to a Bloomberg News survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, dropped 1.12 million barrels.......Read the entire article.
Crude oil was higher overnight as it extends 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, the 62% retracement level of May's decline crossing at 84.65 is the next upside target. Closes below the 20 day moving average crossing at 78.09 would confirm that a short term top has been posted.
First resistance is Wednesday's high crossing at 84.09
Second resistance is the 62% retracement level of May's decline crossing at 84.65
Crude oil pivot point for Thursday morning is 83.20
First support is the 10 day moving average crossing at 79.97
Second support is the 20 day moving average crossing at 78.09
Wednesday’s session closed mixed on the day. The DOW posted a third of a percent gain while the tech sector closed down almost nine tenths of a percent. While technology stocks have been leading the market higher in the recent months, today they took the back seat while the DOW took control. Take a look at the intraday chart of the SPY price action compared to the tech sector. It’s clear the tech stocks where not in favor today. Some tech stocks that really took a beating today were FFIV, NTAP, APKT and AKAM. On another note, we are entering earning season and I am wondering if we are going to see a “Sell the New” type of thing again.
The broad market is experiencing a 36 day down cycle which has played a very dominant roll in the market this year. It topped out 9 days ago so we should expect sideways chop or some selling over the next 9 trading session. Because the market is trending up, pullbacks should be shallow.
The market continues to grind its way higher on relatively light volume. I have been waiting several weeks now for the volume to come back into the market but its just not happening. The majority of shares being traded are from banks, funds and day traders as the average investor’s not taking part because of the uncertainty looming. The lack of volume (commitment) to the market from the masses is making the market internals swing from one extreme to another on virtually weekly basis making it more difficult to take advantage of short term extreme sentiment levels.
The current market environment has traders shifting gears to more of a momentum trading strategy to take advantage of trends and this is what I am going to start implementing again as the market expands.
Market Conclusion:
In short, the equities market is in an up trend but looks to be overbought. Also with the downward cycle I don’t think the market will expand here and take off. Rather it will most likely chop around and burn off time until some earnings are released and the cycle bottoms. Unless we get a really sharp reversal down which we have yet to see on the SP500 or DOW, nibbling on small long positions or staying in cash is what I am doing right now.
As for gold, silver, the dollar and oil… Well the dollar continues to lose value on a daily basis which in turn is boosting metals along with crude oil. All four of those investments are over extended but they are trending and not really looking like they want to reverse just yet.
The gloves are coming off as around the globe the currency tensions are heating up and the printing presses are coming out because when it comes to currencies, everyone wants to be on the bottom. In fact things are getting so heated that the International Monetary Fund is warning that governments are risking a currency war if they try to use exchange rates to solve domestic problems which they say if translated into action would represent a very serious risk to the global economy.
I said yesterday, in a currency war the country with the most ink wins as countries try to print themselves to prosperity in a global race for the bottom. Japan raised the stakes yesterday by hitting critics of their intervention policy by showing the world that there is more than one way to try to intervene in your currency.
The Bank of Japan, by cutting their interest rate to 0%-0.1% and buying 60 billion dollars in assets, was sendng a message of hypocrisy to the critics of their intervention. Now if the Japanese are going to print more money what choice does the Untied State have? The markets believe that.....Read the entire article.
November crude oil futures benefited Wednesday from an unexpected decline in U.S. gasoline inventories last week, along with a weaker dollar. Oil settled at $83.23 a barrel, a 41 cent improvement from Tuesday, after the U.S. Department of Energy announced that total gasoline stocks declined to 219.9 million barrels as of October 1.
The latest figure represents a 1.2% decline from the previous week. The euro, meanwhile, gained 0.723% against the dollar to an exchange rate of US$1.3936 Wednesday. Since September 8, the euro has rallied nearly 9% against the greenback. A weaker dollar relative to the euro typically places upward pressure on oil prices.
The crude oil futures price peaked at $84.09 and bottomed out at $82.29. Given the Energy Department's report on the refined product, gasoline for November delivery also ended the day higher Wednesday. Gasoline rose three cents to settle at $2.16 a gallon after trading from $2.11 to $2.165. Colder temperatures are not expected to set in until later in the season, a prediction that natural gas traders have been quite aware of lately as prices have been low in recent weeks.
Nevertheless, gas futures settled at $3.865 per thousand cubic feet Wednesday, a 3.3% increase from the previous day. The bullish sentiment for gas stems from speculation that the Energy Information Administration would announce a decline in natural gas inventories in a weekly report Thursday. The front-month price for natural gas fluctuated from $3.75 to $3.88.
The U.S. stock indexes closed mixed today. A weak ADP U.S. jobs report did give the stock market bulls pause today. However, the index bulls still have the overall near term technical advantage. 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 $0.41 at $83.23 a barrel today. Prices closed near mid-range today and hit a fresh nearly five month high. Bulls have the solid near term technical advantage in crude. Prices are in an accelerating 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 $86.00 a barrel.
Natural gas closed up 11.8 cents at $3.861 today. Prices closed nearer the session high today and saw more 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 $4.20.
Gold futures closed up $5.90 at $1,346.20 today. Prices today closed near mid-range and hit another fresh contract and all time record high. A weaker U.S. dollar index and strong investor demand continue to boost the gold market bulls. While gold bulls still have the solid overall near term technical advantage and there are still no significant early technical clues that a market top is close at hand, the market is now a bit over extended on a near term basis and due for a corrective pullback soon.
The U.S. dollar index closed down 33 points at 77.63 today. Prices closed nearer the session low again today and hit another fresh 8 1/2 month low. Bears have the solid overall near term technical advantage. There are still no early clues to suggest a market bottom is close at hand.
Last August I penned an article predicting a massive five year bull run in gold and gold stocks. I outlined my reasoning and compared this 13 year period from 2001 to 2014 to the tech stock bull from 1986-1999. .
In February of this year, I again wrote an article for Kitco.com explaining the 13 year Gold Bull still had a lot more room to run. At the time Gold had pulled back to 1040-1070 windows and I mentioned that “smart money would be accumulating” and we should look for $1300-$1325 as the objective. That brings up forward to October of 2010, with Gold running to $1350 as recently as this morning.
We have a huge rally because we are in the 2nd year of this final 5 year run I predicted, and this is when the general investing public becomes “aware” of the bull market. They miss the first five years from 2001-2006, and then while we consolidate for three years from 2006-2009 they fall asleep. It is not until Gold breaks all time highs that people wake up and start buying. This is typical in a super bull cycle, the behavioral patterns are always the same with the herd. I based my forecast on herd mentality, whether bullish or bearish.
I am now looking for Gold to continue to run during this trampling into the asset from the herds of investors to about $1480-$1520 on this leg before we have a strong correction. That figure is not taken out of the thin air, it’s an Elliott Wave based pattern that I recognize and forecast in advance. Subscribers to my website are exposed to my outside the box forecasts on the SP 500 and Gold all the time. Usually it starts with them not believing, and later they wonder how I arrived at the predictions. To wit, on August 30th I predicted a huge breakout in Silver to $26-$29 per ounce when it was at $18.75 per ounce. This was purely based on the Elliott Wave pattern and the lack of awareness by the investing public at the time of the Silver bull. It is also “poor man’s Gold”, and as simple as that sounds, it is what drives the herd of investors to invest. Look for Silver to continue higher to those target zones before correcting.
Many investors who are briefly exposed to Elliott Wave Theory assume that a certain well known forecaster must be the only person in the world who uses it. Since he is wrong more often than he is right, people toss out Elliott Waves as mad science. That is a mistake and why I continually write articles for Kitco using my Elliott Wave methods to forecast SP 500 and Gold moves in advance. Look for Gold and Gold stocks to continue powering higher than people can imagine over the next four years, and pick up some darts and throw them at some juniors while you’re at it.
You can check out our forecast service at www Market Trend Forecast.com, consider subscribing ahead of our rate increase as well. Best to you and your trading!
The domestic oil and gas sector has been under intense pressure to discover new resources and increase supply. A renewed emphasis on domestic, on-shore drilling has revitalized the industry from coast to coast in North America. To add to the pressure, demand from developing nations will soon exceed even the wildest predictions of only a few years ago. China, India and Brazil will be three of the largest emerging economies set to impact the global supply of oil.
China has overtaken the United States as the largest automaker in the world. There are millions of Chinese buying their first car every year and this trend will only increase. China has emerged as the world's third largest net importer of oil. Just 15 years ago it was a net exporter. It is currently the second largest consumer of oil behind the United States.
In August, China consumed an estimated 35.54 million metric tons of oil, or an average of 8.40 million barrels per day. This pales in comparison to the United States which consumes over 20 million barrels per day, but a dangerous trend is emerging. See the chart below which documents a net increase of 3,328% of oil consumption in China over the past 40 years. With China's middle class emerging at a faster rate than ever before, the next decade could be unforgettable for the oil markets. Are you positioned?
Although renewable energy sources have been making up some ground recently, there are thousands of applications oil is used for and many of them have no substitute. We are many years away from renewable energies taking hold of even a small percentage of the market share (from primary sources of fossil fuel demand).......Read the entire article.
