The Crude Oil Trader

Thursday, October 28, 2010

Live SP500 Trading Video & Analysis

From Chris Vermeulen at The Gold And Oil Guy.com.....

Many have been wondering what the newly upgraded service The Gold And Oil Guy.com provides so I have put together this report so you can see the pre-market morning video, updates, charts and trades.

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The S&P 500 index closed slightly higher on Thursday and the mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1167.57 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. First resistance is Monday's high crossing at 1193.00. Second resistance is April's high crossing at 1203.00. First support is Wednesday's low crossing at 1167.80. Second support is the 20 day moving average crossing at 1167.58.

Crude oil closed higher on Thursday and the mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI are neutral to bullish signaling that a short term low might be in or is near. Closes above the reaction high crossing at 83.28 are needed to confirm that a low has been posted. Closes below the reaction low crossing at 79.90 are needed to confirm that a short term top has been posted. First resistance is Monday's high crossing at 83.28. Second resistance is last week's high crossing at 84.80. First support last week's low crossing at 79.90. Second support is the August-September uptrend line crossing near 78.55.

Natural gas closed sharply higher on Thursday as it extends this week's short covering rally. Stochastics and the RSI are bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.930 are needed to confirm that a short term low has been posted. If December renews this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 20 day moving average crossing at 3.930. Second resistance is the reaction high crossing at 4.207. First support is Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed higher due to short covering on Thursday but remains poised to extend this month's decline. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices is possible near term. If December extends this month's decline, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. Closes above Monday's high crossing at 1349.50 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 1343.40. Second resistance is Monday's high crossing at 1349.50. First support is last Friday's low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed lower on Thursday ending a two day short covering bounce. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain bullish hinting that a short term low might be in or is near. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. If December renews the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. First resistance is Wednesday's high crossing at 78.51. Second resistance is the reaction high crossing at 78.61. First support is last Friday's low crossing at 75.85. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.

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Phil Flynn: Crude Surge!

Let’s forget all that quantitative easing stuff for a moment and focus on some of that old time supply and demand stuff. The Energy Information Agency reported that crude oil supplies hit the highest level ever, in this county, for this time of year. Well at least since the EIA has been tracking monthly data. After a whopper build of 5.0 million barrels, we see supply hit a hefty 366.2 million barrels which according to Dow Jones newswires is the highest level of supply at this time of year since 1931. To put that in perspective, that was a year when the “Model A” was the car of choice for many Americans and Herbert Hoover was President.

Of course this bounty of crude supply did not translate to gasoline supply which according to the EIA fell 4. 4million barrels last week and probably kept the entire petroleum complex from falling totally apart. Gas exports were a contributing factor as the strike in France created an increased demand for our supply. Gasoline production increased last week, averaging 9.2 million barrels per day while imports a mere 1.0 million barrels per day. Over the last four weeks, motor gasoline demand has averaged 9.0 million barrels per day, down by 0.8 percent from the same period last year.

Distillates, according the EIA, fell by 1.6 million barrels. If the French had not been siphoning off supply, that number might have been larger. The impact of the strike influenced our demand numbers which averaged 3.9 million barrels per day over the last four weeks, up by 8.7 percent from the same period last year. Distillate fuel demand has averaged 3.9 million barrels per day over the last four weeks, up by 8.7 percent from the same period last year.

The EIA reported that refineries operated at 83.7 percent of their operable capacity last week and over all oil use hit the lowest level since December. Demand is still weak over all and may be restricted somewhat by the price spike caused by the QE2 threat! With oil trading in a tight trading range for the majority of this year it is time to get Phil's daily buy and sell points. Just call him at 800-935-6487 or email him at pflynn@pfgbest.com. You can also catch him every day on the Fox Business Network!

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ExxonMobil Beats Street

ExxonMobil is set to open higher on earnings, with Jason Gammel, Macquarie Capital USA

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Bloomberg Analysis: Crude Oil Faces Resistance at $81.74 a Barrel

Crude oil in New York is facing resistance at $81.74 a barrel, setting the stage for prices to climb to $87 or fall to $78, based on levels using Fibonacci analysis, the Schork Group Inc. said. Intra-day futures prices have straddled the 76.4 percent retracement level of $81.74 for nine of the past 11 trading sessions, Schork Group President Stephen Schork said in a report yesterday. Prices may push to the top of the Fibonacci range at $87.15, the highest price this year, or drop to $78.40, depending on whether the U.S. Federal Open Market Committee decides to buy government securities to boost economic growth.

“This is the textbook definition of sideways trading, What are the markets waiting for?” the report said. “We are waiting for the FOMC meeting and its implication for the dollar before we place our bets.” The FOMC, which makes decisions on money supply and U.S. interest rates, is set to meet on Nov. 2 and Nov. 3. A decision to buy government securities, known as quantitative easing, may cause the dollar to decline against other currencies, increasing the investment appeal of commodities. The $78.40 a barrel level for crude is the 61.8 percent retracement from the $87.15 high for the year.

Futures for December delivery on the New York Mercantile Exchange traded at $82.13, up 19 cents, at 3:21 p.m. Singapore time. Prices have risen 3.5 percent this year. The Fibonacci sequence, identified by Italian mathematician Leonardo Fibonacci in the 13th century, is used by traders in financial markets to predict points of support and resistance.

Courtesy Bloomberg News

Bloomberg reporter Christian Schmollinger can be reached at christian.s@bloomberg.net

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Musings: Iran Gaining Control of Iraq Without Firing A Shot?

In early July we wrote an article entitled “Middle East: Oil Industry’s And World’s Next Black Swan?” At that time all eyes in the oil industry and among American citizens were focused on the developments with BP’s Gulf of Mexico Macondo well, which was then spewing oil and creating one of the world’s worst environmental disasters. We suggested that maybe people should be scanning the horizon for the next industry Black Swan.

We went on to offer our best guess on what that Black Swan might be, the Middle East. We said that many people wouldn’t consider the Middle East to be a Black Swan, an unknowable and thus unanticipated event, but rather just an ignored developing trend. In that article we said: “A number of recent data points have emerged that suggest the Middle East may become a focal point of political and possibly military action before the end of the year, or maybe even earlier.”

We suggested that maybe people should be scanning the horizon for the next industry Black Swan
In July, the focus of Middle East developments was on when Iran might be able to complete building a nuclear weapon. That timetable is dependent upon the country’s ability to produce enriched uranium, which is being done in one or maybe more nuclear facilities. The buzz at that time among military and intelligence sources was that Israel was preparing an air strike to destroy Iran’s nuclear facilities as it had done a number of years earlier.

Supporting that view was Congressional testimony from Secretary of Defense Robert Gates and Central Intelligence Agency head Leon Panetta that Iran would be completing development of a nuclear weapon in one to two years time at the outside. Also revealed in Defense Secretary Gates’ testimony was that the U.S. had overhauled its NATO missile defense plans based on intelligence that Iran could fire “scores or hundreds” of missiles against Europe in salvoes rather than one or two at a time. Sec. Gates did not mention Israel in his testimony but clearly that nation is considerably closer to Iran than most of Europe......Read the entire article > Iran Gaining Control of Iraq Without Firing A Shot?

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Crude Oil Technical Outlook For Thursday Morning Oct. 28th

Crude oil was higher due to short covering overnight as it consolidates some of Wednesday's decline. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term.

Closes above the reaction high crossing at 84.80 are needed to confirm that a short term low has been posted. If December renews last week's decline, trendline support drawn off the August-September lows crossing near 78.57 is the next downside target.

First resistance is Monday's high crossing at 83.28
Second resistance is the reaction high crossing at 84.80

Crude oil pivot point for Thursday morning 81.72

First support is last Wednesday's low crossing at 79.90
Second support is the uptrend line drawn off the August-September lows crossing near 78.57

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Wednesday, October 27, 2010

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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SP 500 Signals Turning Bearish, Crude Wants to Move Higher

The S&P 500 index closed lower due to profit taking on Wednesday as it consolidates some of this fall's rally. The mid range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1165.21 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. First resistance is Monday's high crossing at 1193.00. Second resistance is April's high crossing at 1203.00. First support is today's low crossing at 1167.80. Second support is the 20 day moving average crossing at 1165.21.

Crude oil closed lower due to profit taking on Wednesday as it consolidates some of the decline off this month's high. The mid range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are turning bullish signaling that a short term low might be in or is near. Closes above the reaction high crossing at 84.80 are needed to confirm that a low has been posted. Closes below the reaction low crossing at 79.90 are needed to confirm that a short term top has been posted. First resistance is last week's high crossing at 84.80. Second resistance is this month's high crossing at 85.08. First support last week's low crossing at 79.90. Second support is the August-September uptrend line crossing near 78.43.

Natural gas closed slightly higher on Wednesday due to short covering as it consolidated some of this year's decline. Stochastics and the RSI are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.941 are needed to confirm that a short term low has been posted. If December extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 10 day moving average crossing at 3.825. Second resistance is the 20 day moving average crossing at 3.941. First support is Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed lower due to profit taking on Wednesday and remains poised to extend this month's decline. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices is possible near term. If December extends this month's decline, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. Closes above the 10 day moving average crossing at 1345.40 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1345.40. Second resistance is this month's high crossing at 1388.10. First support is last Friday's low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed higher due to short covering on Wednesday as it extends the rebound off last Friday's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish hinting that a short term low might be in or is near. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. If December extends the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. First resistance is today's high crossing at 78.51. Second resistance is the reaction high crossing at 78.61. First support is last Friday's low crossing at 75.85. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.

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B.I.G. Drowning in Crude

This week’s inventory report from the department of Energy showed a huge increase of 5.007 million barrels of crude oil versus expectations for a build of 1 million barrels. Gasoline inventories, on the other hand were down 4.387million barrels versus expectations for a build of 625 thousand barrels. Finally, distillate inventories were down 1.613 million barrels, which was slightly more than the forecast for a draw of 1.5 million barrels.

Below we highlight the weekly stockpiles of crude oil, gasoline, and distillates so far this year and compare them to their historical average. As shown in the charts, while stockpiles have been above average all year for all three, distillates and gasoline have been following their typical seasonal patterns. Crude oil, however, is a different story. As shown, not only have inventory levels of crude been above average all year, but they haven’t been following the seasonal script either. While they should have been declining over the last several months, stockpiles have actually remained relatively unchanged. With today’s large build, crude oil stockpiles are now at their highest point of 2010, and at a higher point relative to the historical average than at any other point this year.

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