Phil Flynn: Crude Oil After QE 2

People are finally starting to get it. And that is that the Federal Reserve policy moves markets and that quantitative easing drives up the price of oil. Most had never heard the term "quantitative easing" when the Fed made their move to print money the first time in March, 2009. The Fed made this move to try to save the economy from what they thought was leading us to a deflationary depression. For those of you who still need enlightening, quantitative easing is basically the monetary policy of last resort. When even zero percent interest rates fail to generate economic activity, the central banks flood the banks with excess cash reserves by buying back paper debt the banks hold with freshly printed money.

The hope is therefore, that these banks will in turn lend that freshly printed money to businesses and you and I, who in turn will expand and spend, thereby, hopefully, hire people and create more jobs. It also hopes to take away that deflationary mood by devaluing the U.S. dollar making commodities more expensive. Quantitative easing by the Fed is the greatest economic story of modern times. Back in 2009 when I tried to explain this concept, many looked at me as if I was from outer space. QE was a mystery to them and all they could figure was it was those evil oil and commodity speculators that were driving up prices. Prominent oil bulls went as far as saying the value of the dollar had nothing to do with the value of crude.

They seemed to believe that the sudden surge oil was due to the world hitting its peak ability to get oil that was running out. Others railed against speculators saying they caused the run up in prices yet failed to mention the dollar or the financial crisis when they spewed their diatribe to anyone who would listen, even Congress. Now of course the world is more familiar with the inflationary impact of quantitative easing. In fact if they were not, well they got a crash course after the last Fed meeting......Read the entire article.


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A Republican Congress Means Buy Natural Gas

Dan Dicker explains his stance that you must buy natural gas if the Republican party takes control and details what plays you need.



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Crude Oil Technical Outlook For Wednesday Morning Nov. 3rd

Crude oil was higher overnight as it extended this week's rally above the 20 day moving average. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If December extends this week's rally, October's high crossing near 85.08 is the next upside target. Closes below October's low crossing at 79.90 are needed to confirm that a short term top has been posted.

First resistance is the overnight high crossing at 84.74
Second resistance is October's high crossing at 85.08

Crude oil pivot point for Wednesday morning is 83.73

First support is the 10 day moving average crossing at 82.44
Second support is October's low crossing at 79.90



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Commodity Corner: Crude Rallies Ahead of Fed's Stimulus Move

Crude futures rallied to a near six month high Tuesday as the dollar fell ahead of the U.S. Federal Reserve's anticipated decision to implement another stimulus plan. Light, sweet crude for December delivery rose 95 cents, settling at $83.90 a barrel. Analysts expect the Fed to announce a plan to purchase $500 billion of long term securities during its meeting this week. The plan is intended to accelerate growth, decrease unemployment, increase inflation, and boost flagging economic recovery. Economic growth or a weaker dollar contributes to an increase in oil prices.

Meanwhile, the ICE Dollar Index, which measures the dollar against six major currencies, slid to its lowest level in two weeks at $76.74. A weaker dollar increases the commodity's appeal, making it cheaper for foreign currencies to purchase. Crude futures fluctuated Tuesday between $82.83 and $84.34.

Due to cooler temperatures, natural gas for December delivery climbed up 3.8 cents to settle at $3.87 per thousand cubic feet. Analysts hope the colder weather will drive demand because U.S. inventory levels are nearing record levels this month. U.S. natural gas stockpiles at the end of last week were at 3.75 trillion cubic feet; the record high was reached in November at 3.84 trillion cubic feet. Natural gas traded between $3.75 and $3.93 Tuesday. Reformulated gasoline blendstock also settled higher, gaining 1.67 cents to reach $2.11 a gallon Tuesday. RBOB gasoline peaked at $2.12 and bottomed out at $2.09.

Courtesy of 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 Nov. 2nd

The S&P 500 index closed higher on Tuesday and the high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are diverging but turning neutral to bullish signaling that sideways to higher prices are possible near term. If December extends the rally off August's low, April's high crossing at 1203.00 is the next upside target. Closes below the 20 day moving average crossing at 1173.62 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1193.00. Second resistance is April's high crossing at 1203.00. First support is the 20 day moving average crossing at 1173.62. Second support is last Wednesday's low crossing at 1167.80.

Crude oil closed higher on Tuesday and the high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. Today's close above the reaction high crossing at 83.28 confirms that a low has been posted and opens the door for a test of October's high crossing at 85.08. Closes below the reaction low crossing at 79.90 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 84.34. Second resistance is October's high crossing at 85.08. First support is the reaction low crossing at 79.90. Second support is the August-September uptrend line crossing near 79.01.

Natural gas closed higher on Tuesday as it consolidates some of Monday's decline. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If December extends last week's rally, the reaction high crossing at 4.207 is the next upside target. If December renews this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is Monday's high crossing at 4.187. Second resistance is the reaction high crossing at 4.207. First support is last Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed higher on Tuesday and the high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices is possible near term. If December extends the rally off last week's low, October's high crossing at 1388.10 is the next upside target. If December renews the decline off October's high, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. First resistance is Monday's high crossing at 1366.40. Second resistance is October's high crossing at 1388.10. First support is the reaction 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 Tuesday as it extends the decline off last week's high. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. 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. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. First resistance is last 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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They Just Don't Get BP!

Marek Fuchs honks and snorts at BP and their ever flowing one time charges.




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Crude Oil Rises to a Six Month High on U.S. Stimulus Bets

Crude oil surged to its highest level in six months as the dollar weakened against major currencies on speculation the Federal Reserve will take measures to stimulate the economy. Crude rose 1.2 percent as the dollar’s decline boosted the appeal of commodities as an alternative investment. The Fed will probably start a fresh round of stimulus tomorrow, announcing a plan to purchase at least $500 billion of long term securities, according to economists surveyed by Bloomberg News.

“It’s the weaker dollar and expectations for the stimulus package,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “Half a trillion dollars was supposedly priced in since we rallied from September to October, but people are already anticipating that it could be larger.” Crude for December delivery rose 95 cents to $83.90 a barrel on the New York Mercantile Exchange, the highest settlement price since May 3. Oil has risen 7.4 percent in the past year.

The Fed, meeting in Washington today and tomorrow, is expected to announce a program of securities purchases to spur growth, reduce unemployment and increase inflation, said 53 of 56 economists surveyed by Bloomberg News. The Dollar Index, which tracks the U.S. currency against six major peers, slid 0.7 percent to 76.738 at 3:25 p.m. in New York, the lowest level in two weeks on a closing basis......Read the entire article.


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Phil Flynn: Giving OPEC Too Much Credit

When Ali Naimi speaks the markets listen but should they? Some gave credit to yesterday’s big rally in oil to comments by the “Alan Greenspan” of oil, the de facto leader of the OPEC cartel, Ali Naimi, who said that oil was in a comfortable range between $70 and $90. Some took that to mean that Mr. Naimi was hoping for 90 barrel oil. Or could it be that oil rallied because China’s data was stronger than expected. Or could it have been the the Federal Reserve and their major money printing binge. The truth is that oil popped on the data and gained more strength on the reports of the bomb going off in Athens, Greece.

OPEC is not the driving force in the oil market. In fact the man that the oil market listens to is Ben Bernanke and not Ali. Mr. Naimi's impact, like Greenspan's, is in the past not the present. Oil of course also listens to the Forex market. Overnight the Aussies shook up the global markets by a “pre-emptive” 25 basis point rate hike 4.75% its first rate increase since May. Natural gas prices lost ground. The main reason was that oil was higher.

The natural gas versus crude spread was very evident. Of course the fact that we have a global glut of gas may have weighed on market sentiment as well. Reuter’s News reported that according to the International Energy Agency the globe has a natural gas glut that could last for a decade. Reuters says that, “An existing natural gas glut could run for as much as 10 years, Nobuo Tanaka, executive director of the International Energy Agency (IEA) said on Monday.

”If we assume the current level, the gas glut may go on for as long as 10 years, but there is uncertainty about how strong demand will be from China, so it could be much shorter," Tanaka told reporters in Singapore, where he is attending an industry meeting. Qatar, the world's largest exporter of liquefied natural gas (LNG), said earlier it expected the global gas glut to end......Read the entire article.


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Crude Oil Stochastics and RSI are Turning Bullish, Higher Prices Likely

Crude oil was higher overnight as it extended Monday's rally above the 20 day moving average. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term.

Closes above last Monday's high crossing at 83.28 are needed to confirm that a short term low has been posted. If December renews last month's decline, trendline support drawn off the August-September lows crossing near 79.00 is the next downside target.

First resistance is Monday's high crossing at 83.86
Second resistance is the reaction high crossing at 84.80

Crude oil pivot point for Tuesday morning is 82.71

First support is the reaction low crossing at 79.90
Second support is the uptrend line drawn off the August-September lows crossing near 79.00


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