Sharon Epperson: Where is Crude Oil and Gold Headed on Thursday

CNBC's Sharon Epperson 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: Rallies All Around

November crude oil finished higher for the first time this week Wednesday, gaining 1.6% on news that China's appetite for crude oil increased in September. The price of a barrel of crude oil rose $1.34 to settle at $83.01 after China's General Administration of Customs announced the country's crude oil imports increased by 11% last month compared to its purchases in August.

Also providing momentum for oil was the International Energy Agency (IEA), which increased its global oil demand forecast by 300,000 barrels per day through 2011. Now, the IEA forecasts global oil demand to reach 86.9 million b/d for 2010 and 88.2 million b/d for 2011. Oil traded within a range from $81.68 to $83.45 Wednesday.

Natural gas, which has endured a slump recently on mild weather forecasts, rose 1.9% Wednesday as a result of profit taking by traders as well as the sentiment that prices have bottomed out. November natural gas settled seven cents higher at $3.70 per thousand cubic feet after trading from $3.63 to $3.78. The price of a gallon of gasoline increased by 2.4% Wednesday. The front month price settled a nickel higher to end the day at $2.17. It fluctuated between $2.12 and $2.17.

Courtesy of Rigzone.Com


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Stock Market and Commodities Commentary For Wednesday Evening Oct. 13th

The U.S. stock indexes closed higher today and hit fresh five month highs. The stock index bulls have the overall near term technical advantage as price uptrends are in place on the daily bar charts. Stock index bulls have been very pleased with price action so far this autumn a time which is normally not favorable to market bulls. My bias is that prices will trade mostly sideways, but with a slight upside bias, into the end of the year.

Crude oil closed up $1.36 at $83.03 a barrel today. Prices closed nearer the session high today in the wake of a bullish IEA report that showed increasing worldwide demand for oil. A weaker U.S. dollar index also supported crude today. 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 last week's high of $84.43 a barrel.

Natural gas closed up 5.5 cents at $3.684 today. Prices closed nearer the session low today. More tepid short covering in a bear market was featured today. 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 $25.30 at $1,372.00 today. Prices today closed near the session high and scored another fresh all time record high. A weaker U.S. dollar index and a two year high in the Continuous Commodity Index invited fresh speculative interest into the gold market on the long side today. The gold bulls have the solid overall near term technical advantage. Prices are in a 2 1/2 month old uptrend on the daily bar chart.

The U.S. dollar index closed down 28 points at 77.30 today. Prices closed near the session low again today and are hovering near a nine month low. 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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Phil Flynn: Can Rising Commodity Prices Derail QE 2?

The odds of quantitative easing continues to go up almost as fast as corn prices as the Fed Minutes confirmed that the Fed is getting ready to run the printing presses. The FOMC is worried that, “the recent and anticipated progress toward meeting the Committee’s mandate of maximum employment and price stability to be unsatisfactory”.

The Fed says that economic data had been mixed, with readings early in the period generally weaker than anticipated but the more recent data coming in on the strong side of expectations. So, “in light of the considerable uncertainty about the current trajectory for the economy, some members saw merit in accumulating further information before reaching a decision about providing additional monetary stimulus” But that they would consider it appropriate to take action soon.”

How soon? While the Fed is talking about more purchases of securities, European Central Bank Governing Council member Axel Weber is talking about an exit stagy. He said that the European Central Bank should stop its bond purchase program while our Fed is talking about stepping it up thus creating the potential for a larger wedge between the Euro and the dollar and a continuing spike in commodity prices......Read the entire article.


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Crude Surges amid Demand Upgrades, China Imports Reach Record High

Crude oil strengthened further in European session as both the International Energy Agency (IEA) and the OPEC raised their forecasts on global oil demand as global economic recovery provides support for oil consumption. Also supporting oil prices was China's trade data in September. Strong imports for crude oil indicate resilience in domestic demand. WTI crude oil price soared to 82.9, up from yesterday's close of 81.67. Gold crawled above 1360 in European session as renewed selling pressure in USD raised demand for safe haven. GFMS forecasts the metal to reach 1400 by the end of the, citing low interest rates, the European sovereign debt crisis and fears about an economic slowdown factors supporting prices.

The IEA raised its global oil demand outlook to 86.9M bpd in 2010 and 88.2M bpd in 2011. That's +0.3M bpd more than last month's forecast for both those years. According the agency, the upgrades were driven by signs that 'the underlying demand trend in the OECD is more resilient than previously thought'. On the supply side, non-OPEC supply will increase to 52.6M bpd in 2010 (unchanged from August's estimates) from 51.5M bpd in 2009, followed by a rise to 53.1M bpd in 2010 (August: 52.9M bpd). Call on OPEC will be around 28.3M bpd (August: 28.8M bpd) in 2010 and 29.3M in 2011 (August: 29.3M bpd).

At an OPEC report released yesterday, the cartel also raised its demand forecast for 2010 to 85.6M bpd (August: 85.5Mbpd) while keeping that for 2011 unchanged at 86.6M bps. The 'stronger-than-expected, stimulus-led economic growth in the first half of the year' was the key reason for the upgrade. Non-OPEC supplies are revised higher for both 2010 and 10 as driven by growth in Brazil, Canada, Azerbaijan, and Kazakhsta. In contrast with the IEA, the OPEC revised lower the demand for the cartel's production for 2011 to 28.8M bpd from 28.9. The cartel forecasts demand for its production would be around 28.6M bpd for 2010 and 28.8M bpd for 2011. The estimate for 2010 represents a mild drop from August's reading.

The China trade report showed that export growth slowed to +25.1% in September from +34.4% in August, import growth slowed to +24.1% from +35.2% while trade surplus narrowed to $16.9B from $20B. The market was not disappointed by the slowdown but viewed it as a result of strong base effect last year. Imports for crude oil surged to 23.29M metric tons (2.69M bpd), up +35.4% and +11.4% on annual and monthly basis respectively. The record-high imports for crude oil signals the country's robust demand for the commodity.

Base metals rallied despite decline in imports from China. Rather investors were thrilled by the prospect that the market will be 'tighter' next year. LME copper surged to a 27-month high while lead also rose to the highest level in 6 months. Chile's Codelco, the world's biggest copper producer, expects a 'tighter' market next year as 'China is continuing to have a strong demand and from the supply side we have only a couple of new projects coming on- stream'. In September, China imported 368410 tons of unwrought copper and copper products (-7.68% y/y and -2.93% m/m) and 65772 metric tons of unwrought aluminum and aluminum products (-66.42% y/y and -9.44% m/m).

Courtesy Oil N'Gold .Com



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Bob Lang: Markets, the Fed, and Metals

From Bob Lang at Big Trends ETF Tradr.......

Market Noise is Deafening
When we don't know what to do or where to go, we ask someone. The obvious path is not so any longer and we need direction. Well, in the markets we're now at that critical juncture. Much like the 'advice' that was given in fall 2008, bargains of a lifetime, 'you have to be in this market', long term it makes sense, etc, only to have markets fall another 50% into the spring of 2009. Was that advice we needed to follow? Today, the word on the 'street is 'how far this rally can go, and should I stay or get on the sidelines'. Naturally, market sages will tell you to stay the course if you're invested, they want you all in at all times. Yet with all the noise and distractions around can we afford to make the one decision that could lead to a setback? The LESS we listen to media accounts, hurray the Dow hit 11,000 again, let's have a party, the better off we'll be. It'll be all over the place now and louder than ever! This type of 'workplace noise' can be hazardous, a news story the other evening stated that those prone to noise at work are more likely to have a stroke, heart attack or high blood pressure. Let the market tell you WHEN to should exit, remain or re-enter.

What's All this Fed Talk About?
We've heard quite a bit lately about this Fed game called QE2. To be sure, they are playing upon our positive expectations at the end of the game. The hope is that this program will help spur some economic activity, inflation and move people back to work. But, what is QE2, and did what did QE1 accomplish? Simply put, QE is quantitative easing, implemented when the Fed has no more additional room to cut short-term rates to stimulate the economy. Basically, cutting borrowing rates has failed to control the money supply. By definition, QE is upping the supply of money by increasing excess reserves of the banking system, expanding their balance sheet. By purchasing government assets and other bonds in the open market they give banks excess reserves required to create new money. Hopefully the banks will use this extra money to lend out to borrowers, thereby stimulating activity. Many argue this is the wrong approach, creating dollars. To be certain, QE measures have had mixed results and there is not a direct correlation to creating new jobs, which seems to be the big issue of today. Back in early 2009 the Fed implemented the first round of QE and while it improved growth a bit, the desired effect and length lagged badly. In fact, the economy recently fell into a 'soft patch', enough warning for the Fed to jump to the fore with their new easing plan. Is that a pattern we'll see develop over time?

Metals are sure Precious!
New highs again for gold, new multiyear highs for silver. Haven't seen such a blistering move on a commodity since crude oil went parabolic in 2008. Do we know the reasons for this parabolic rise, or do we 'think' we know the reasons. By all accounts it seems everyone is talking about the metals these days. Heck, there are four new gold shops that popped up in my town over the last several months, and on every other street corner is a guy holding a sign that says 'will buy your gold'. The fever pitch is reaching that of the miner 49ers over 160 yrs ago! Can it last? Sure, any bubble move can keep going until every last one gets in and then POP! I'm not calling for this, but certainly the reasons for buying gold are consistent with past bubbles, oil, housing, tech, and biotech. Oh, I've participated, silver has been my choice, but if you fail to acknowledge what is happening around you then you'll get taken in by the hype. We choose to listen to what and whom we want that makes us feel good (read up top again about the noise factor). Being in a bubble and profiting is ok, in fact it's great as an options player, but knowing your exit is most important. Enjoy the ride while it lasts!

Check out Bob Lang's calls and articles at Big Trends.Com


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Crude Oil Technical Outlook For Wednesday Morning Oct. 13th

Crude oil was higher overnight and appears poised to renew the rally off August's low. At the same time, 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 78.93 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 Wednesday morning is 81.63

First support is the 10 day moving average crossing at 81.99
Second support is the 20 day moving average crossing at 78.93


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Commodity Corner: Crude Falls on Fed's Release of Minutes

Light, sweet crude settled lower Tuesday after the record of a recent Federal Reserve meeting failed to meet traders' expectations. Oil futures for November delivery settled 54 cents lower Tuesday at $81.67 a barrel after Fed policymakers released details of their September meeting. The minutes of the meeting indicated that several board members believed additional steps might be needed for the struggling economy.

The dollar gave up earlier gains on release of the meeting minutes. The drop came too late in the trading session to help crude prices. Analysts anticipate the dollar will fall lower if the Fed purchases government securities next month. Meanwhile, the euro and stocks rebounded following the Fed's minutes. NASDAQ and S&P 500 were up slightly, while the Dow Jones Industrial Average increased by nearly 30 points in afternoon trading.

Earlier Tuesday, crude fell on speculation that the Organization of Petroleum Exporting Countries (OPEC) will leave production quotas unchanged. Investors moved to lock in profits ahead of the OPEC meeting, which is set to take later this week. The intraday range for crude futures was $80.88 to $82.33 Tuesday.

Natural gas futures rose 2.8 cents Tuesday as traders were reluctant to bet prices would fall with the upcoming winter's gas heating demand. Henry Hub natural gas settled at $2.63 per thousand cubic feet after fluctuating between $3.55 and $3.67. Reformulated gasoline blendstock, or RBOB, ended Tuesday's trading session 1.9% lower, at $2.12 a gallon. Gasoline prices peaked at $2.16 and bottomed out at $2.12 Tuesday.

Courtesy Rigzone.Com

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Sharon Epperson: Where is Crude Oil and Gold Headed on Wednesday

CNBC's Sharon Epperson 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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Stock Market and Commodities Commentary For Tuesday Evening Oct. 12th

The U.S. stock indexes closed firmer again today in quieter 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 $0.56 at $81.65 a barrel today. Prices closed near mid-range today and saw more profit taking from recent gains. A firmer U.S. dollar index also put light pressure on crude today. Prices are still in a six week old uptrend on the daily bar chart.

Natural gas closed up 4.6 cents at $3.647 today. Prices closed near the session high today after hitting a fresh contract low early on. Tepid short covering in a bear market was featured. The bears still have the solid overall near term technical advantage.

Gold futures closed down $6.00 at $1,348.40 today. Prices today closed near mid-range and saw profit taking. A firmer U.S. dollar index also slightly weighed on the precious yellow metal today. The gold bulls still have the solid overall near term technical advantage. Prices are in a 2 1/2 month old uptrend on the daily bar chart.

The U.S. dollar index closed down 11 points at 77.54 today. Prices closed near the session low today. 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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