Crude Oil Falls Ahead Of Fed Minutes

Crude futures fell Tuesday as investors grew nervous ahead of the release of minutes from the Federal Reserve that could offer clues on the central bank's plans to stimulate the economy. Light, sweet crude for November delivery recently traded 74 cents, or 0.9%, lower at $81.47 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 56 cents lower at $83.16 a barrel. The minutes of the Federal Open Market Committee's Sept. 21 meeting, due for release at 2 p.m. EDT, will be closely watched for any signals on how the central bank may restart a Treasury buying program, known as quantitative easing, in an effort to revive the slowing economic recovery.

But after a rally above $84 a barrel last week, oil traders are wary about how the central bank will decide to act, and how it will influence oil and the financial markets that crude has closely followed in recent months. "We've put this quantitative easing premium in the marketplace, and now people are a little worried about the size of it," said Phil Flynn, an analyst with PFG Best, which tracks the market. He said traders are selling to lock in profits.

The euro is also falling against the dollar, and was recently down 0.3% to $1.3828. A weaker dollar makes oil cheaper for buyers in other currencies, and its recent decline to 8 month lows against the euro has been a primary factor in crude's most recent surge. Equities markets are also trading lower, with the Dow Jones Industrial Average recently down 55 points to 10954. "Another day, another dollar," said Gene McGillian, a broker and analyst with Tradition Energy, summing up the motivation for crude's price move.

The Organization of Petroleum Exporting Countries on Tuesday revised up its forecast for global oil demand growth this year, encouraged by stimulus-led economic growth in the first half of 2010. OPEC upgraded its forecast for world oil demand growth by 100,000 barrels a day to 1.13 million barrels a day, and its non OPEC supply forecast for 2010 was also increased by 100,000 barrels a day to 1.01 million barrels a day. OPEC is expected to keep quotas unchanged when the group meets Thursday, though some member countries have said prices should move higher due to the weakening dollar.

Despite U.S. inventories of oil and fuel products that hit 27 year highs last month, economic data and moves in the dollar have trumped worries about oil supply and demand. U.S. crude oil stocks are expected to rise in a report due Thursday from the Department of Energy, according to a Dow Jones Newswires survey of analysts. Crude stocks are seen increasing by 1.2 million barrels, according to data covering the week ended Oct. 8.

Meanwhile, France was hit by a nationwide strike against pension reform, and the industrial dispute that has closed the Fos-Lavera oil terminal, the world's third largest oil port, entered its 16th day. The Marseille port authority said 85 ships have been affected, of which 56 are oil tankers. Front month November reformulated gasoline blendstock, or RBOB, recently traded 3.41 cents, or 1.6%, lower at $2.1314 a gallon. November heating oil recently traded 1.97 cents lower at $2.2593 a gallon.

Courtesy of Wall Street Journal/Dow Jones Newswire


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White House Signals Deepwater Drilling Ban to End Soon

Top Obama administration officials signaled Tuesday that a moratorium on deepwater oil drilling could end "very soon," but it's unclear how quickly idled oil rigs could go back to work in the Gulf of Mexico. The Interior Department scheduled a 1 p.m. EDT news conference to discuss what it said would be an announcement on "the current suspensions on deepwater drilling." White House Press Secretary Robert Gibbs told reporters Tuesday that the Interior Department will lift its moratorium on deep water oil drilling in the Gulf of Mexico "very soon," likely this week. Asked if he was saying the ban will be lifted this week, Gibbs said: "I do."

But the government's top offshore drilling regulator, Michael Bromwich, separately told reporters during an event across town that it is unlikely companies could resume drilling immediately, even when the moratorium is lifted. Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said his agency will need to time to carefully vet companies' applications to ensure they comply with new safety and environmental regulations established since the April 20 explosion of the Deepwater Horizon oil rig and the subsequent oil spill in the Gulf of Mexico. He emphasized that the pace of approvals will depend on......Read the entire article.


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Phil Flynn: QE2...Is It A Bounce Or Bust?

Surging retail gasoline prices and surging food costs! Cotton price going through the roof! Not to worry it is just the Fed here to help you. I do not know about the consumers but the farmers sure love the Fed. The Wall street Journal’s lead article is, "How the Farm Belt” is bouncing back in part based on strong Asian demand as the USDA projects net farm income to climb 24% this year to 77.1 billion dollar,s the fourth highest year on record.

Farmers are getting about 62% more for hogs than a year ago and 32% more for milk! That means for most Americans to feed their families costs are going up. The cost of filling their gas tank is going up as well. Gas prices have surged at the retail level almost 20 cents a gallon since the Federal Reserve said it wants inflation. Oh sure, the French refinery strike and the improved export picture for gasoline is part of the story, but in reality the spike in gas and the timing of the spike can be traced back directly to your friends at the Fed.

With friends like that you need policy makers. Since the Fed meeting we have seen the price of oil add over 11 dollars a barrel from peak to valley. RBOB gasoline futures went up from a low of 192 a gallon to as high as $2.20 a gallon and Heating oil hit as low as $2.11.14 a gallon to a high of $233.41 a gallon. Are you feeling the Fed's love now?......Read the entire article.


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Crude Oil Technical Outlook For Tuesday Morning Oct. 12th

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 and are turning bearish signaling that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 78.64 would confirm that a short term top has been posted. If November renews the rally off last week's low, the 62% retracement level of May's decline crossing at 84.65 is the next upside target.

First resistance is last 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 Tuesday morning is 82.51

First support is the 10 day moving average crossing at 81.47
Second support is the 20 day moving average crossing at 78.64


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Crude Oil Decline as Dollar Strengthens Against the Euro and Yen

Crude oil fell for a second day after the dollar strengthened, reducing the appeal of commodities as an investment, and as Saudi Arabia signaled that OPEC may leave oil production quotas unchanged. The dollar yesterday climbed from an eight month low against the euro and a 15 year low to the yen. The currency had retreated earlier on speculation the Federal Reserve will signal it’s willing to buy more government debt to spur economic growth.

OPEC may leave oil production quotas unchanged when it meets this week after Saudi Arabian Oil Minister Ali al-Naimi described the market as “very well balanced,” and said an oil price between $70 and $80 a barrel is “ideal.” “The dollar is so heavily sold at the moment, creating the opportunity for a bit of strength in the dollar and softness in oil,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said by phone. “You would be leaning toward a softer oil price this week.”

Crude for November delivery fell as much as 66 cents, or 0.8 percent, to $81.55 a barrel on the New York Mercantile Exchange, and was at $81.62 at 12:14 p.m. Singapore time. Yesterday, prices lost 0.5 percent to $82.21. Futures last week recorded a third consecutive weekly gain, the longest stretch since June. Brent crude for November settlement declined as much as 0.8 percent to $83.07 a barrel. The contract slipped 31 cents, or 0.4 percent, yesterday to $83.72 on the ICE Futures Europe exchange in London......Read the entire article.


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Matt Nesto: China Moves into Texas with Billions on Natural Gas

CNBC's Matt Nesto 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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Commodity Corner: Crude Oil, Gasoline Settle Higher

A stronger dollar contributed to lower November crude oil futures Monday. Oil settled at $82.21 a barrel, a 45 cent drop from Friday, as the euro declined 0.8% during Monday's trading. Because oil is priced in dollars, a stronger dollar makes the commodity more expensive and thus less attractive to investors. Oil peaked at $83.50 and bottomed out at $82.01.

Crude oil might have lost more ground had gasoline not rallied for the second consecutive trading day. Gasoline, which settled two cents higher to end the day at $2.17 a gallon, has benefited from a recent prediction by the U.S. Department of Agriculture that this year's corn harvest will bring smaller yield. Consequently, prices for the corn based gasoline additive ethanol are expected to rise. Gasoline for November delivery traded within a range from $2.14 to $2.17.

November natural gas continued to follow a downward course Monday, settling a nickel lower at $3.60 per thousand cubic feet. The front month natural gas price fluctuated between $2.14 and $2.17.

Courtesy of  Rigzone.Com


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Stock Market and Commodities Commentary For Monday Evening Oct. 11th

The U.S. stock indexes closed mixed again today in quieter holiday trading. The stock index bulls still have the overall near term technical advantage as uptrends are in place on the daily bar charts. However, the uptrends have turned into more sideways price action recently, which is likely to continue in the near term. Stock index bulls have been very pleased with price action so far this autumn a time which is normally not favorable to market bulls.

Crude oil closed down $0.61 at $82.05 a barrel today. Prices closed near the session low today on profit taking from recent gains. Prices are still 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 $86.00 a barrel.

Natural gas closed down 4.9 cents at $3.602 today. Prices closed near the session low today and closed at a fresh contract low close. 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 $9.30 at $1,354.60 today. Prices today closed near the session high and closed at a fresh contract and all time record high close. Bargain hunters stepped in to buy some early session weakness and prices pushed higher. The gold bulls have the solid overall near term technical advantage and have regained upside momentum the past two trading sessions. Prices are in a 2 1/2 month old uptrend on the daily bar chart.

The U.S. dollar index closed up 19 points at 77.75 today. Prices closed near the session high today and hit a fresh nine month low. Tepid short covering in a bear market was featured. Bears still 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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Correlating Financial Factors to Crude Oil Q4 Pricing

Although the future of oil prices and related exchange traded funds are usually based on the basic fundamentals of demand and supply and the Crude oil prices did indeed fall after the American Petroleum Institute (API) report citing oversupply but its interesting to note that crude oil prices have been reacting more to the financial factors (such as moves in the S&P 500 index and the USD) much more as compared to the gross fundamentals of supply and demand.

Oil rose for a second straight session on Monday to top $83 as the dollar extended 15 year lows versus the yen and weakened against the euro, bolstering the appeal of commodities as an alternative investment. Earlier, oil prices had hit a five month peak near $83 a barrel, boosted by a slumping dollar after a BoJ rate cut and by tanker disruptions after a French strike and a closed Texan shipping route. November crude rose 1.42 percent to $82.63 per barrel, the highest settlement since closing at $86.19 on May 3rd.

Crude Oil vs. Financial Factors
An 8% stronger S&P 500 and a 4% weaker USD could very well push oil up to USD85/bbl level as a regression on oil as a function of the S&P 500 and the USD since September 1 suggests that current equity and currency levels are compatible with USD80/bbl oil. Crude oil prices are not only highly sensitive to global political and economic developments but also the US dollar as most of the worldwide oil sales are denominated in dollars. Usually when the dollar’s value declines as.......Read the entire article.



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Phil Flynn: Be Careful Of What You Wish For

The Federal Reserve wanted inflation and inflation is what they got! The Feds plan to restore activity to the economy by printing money and inspiring people to spend may have hit what you might call a reality check. While after a very weak jobs report showing that the economy lost 9500 jobs increasing the odds of quantitative easing, a report released simultaneously from the Department of Agriculture shows the perils of this policy. The USDA dramatically lowered its corn stocks to the lowest level in 14 years.

Corn shot up to the daily price limit sending shockwaves across the grain complex and the stock market as well. The Wall street Journal reported that, “A steep cut to U.S. corn harvest estimates triggered a rash of trades by investors who bet that tighter corn supplies could keep rippling through the stock market.“ “Analysts called the U.S. Department of Agriculture report a shocker. It shaved a record 6.7 bushels per acre from last month's corn yield estimate, pushing the figures well below.......Read the entire article.


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