The likelihood of building a pipeline to carry new sources of oil from the northern part of the country to the south, with CNBC's Bertha Coombs. And it's up to President Obama to decide whether the pipeline should be built, over the objections of environmentalists.
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Wednesday, September 28, 2011
Rigzone: Crude Oil Diplomacy to the Rescue? Cuban Drilling off Keys to Begin by Year End
Specifically, oil deposits in the Florida Straits between Key West and Cuba.
Spain's largest oil company, Repsol-YPF, has contracted the massive Italian made Scarabeo 9 semi submersible oil rig, currently en route from Singapore, to arrive in the Florida Straits by the end of the year after the end of hurricane season to begin exploring Cuba's offshore reserves. Repsol-YPF, which drilled Cuba's first onshore well in 2004, intends initially to drill six wells with the Scarabeo 9 rig.
Cuba, which currently produces a paltry roughly 50,000 barrels of oil per day from onshore sources, is understandably keen to begin exploiting its offshore reserves, which estimates place between 5-20 billion barrels of crude in a 43,000 square mile drilling area containing 59 maritime fields it has designated off its northern coast. While Fidel Castro's close ally, Venezuelan Hugo Chávez currently dispatches 120,000 bpd to Cuba on very favorable financing terms, the arrangement is heavily dependent on the friendship between octogenarian Castro and cancer stricken Chávez, hardly a recipe for permanency.
While Repsol-YPF is the first out of the gate, other concessionaires include Norway's Statoil, India's state owned Oil and Natural Gas Corporation (ONGC) and Brazilian state oil company Petroleo Brasileiro, or Petrobras. Note the total absence of U.S. oil companies, that'll punish those pesky Commies.....Read the entire Rigzone article.
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Oil N' Gold: Crude Oil Daily Technical Outlook For Wednesday Sept. 28th
Crude oil's recovery from 77.11 temporary low might extend further high. But in any case, we'll stay bearish as long as 90.52 resistance holds. We are still favoring the case that whole decline from 114.83 is ready to resume and break of 77.11 should send crude oil through 75.71 support to 70 psychological level next.
In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.
Posted courtesy of Oil N' Gold.Com
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Tuesday, September 27, 2011
Don't Be Fooled By This Rally, Crude Oil Bears Maintain The Advantage
This was not enough based on both our long term monthly and intermediate term weekly Trade Triangles which remain in the negative column. As you may recall we are tying the crude oil market with the equity markets. As the equity markets go, so does crude oil at the moment. Intermediate and Long term traders should continue to be short the crude oil market.
November crude oil closed up $4.18 a barrel at $84.42 today. Prices closed near the session high today. A rallying U.S. stock market and weaker U.S. dollar index boosted crude today. The crude bulls did gain fresh upside near term technical momentum today. A bullish double bottom reversal pattern may be forming on the daily bar chart.
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 75
Mike Paulenoff: Is Crude Oil Readying for More Downside?
As of this moment, my optimal scenario for the nearby NYMEX oil price calls for a period of stability and/or a recovery rally that grinds into the 80.50-82.00 resistance area prior to another downside pivot that presses the price structure to new lows beneath 75.71 on the way to 70.00-65.00 thereafter.
At the risk of missing such a downleg in the absence of the anticipated recovery bounce, I will watch from the sidelines for a while longer prior to deciding if I should commit funds to a short position -- in the ProShares UltraShort DJ-UBS Crude Oil (SCO), into NYMEX price weakness (though always a hazardous strategy to short oil into weakness).
That said, only a rally that sustains above 82.00 will neutralize the imminent threat of another plunge in oil prices and the U.S. Oil Fund ETF (USO).
Trade School 101 .... Double Tops and Pivot Points Explained
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Crude Oil and Gold Market Commentary For Tuesday Morning Sept. 27th
Closes above the 20 day moving average crossing at 86.68 are needed to confirm that a short term low has been posted. If November extends last week's decline, August's low crossing at 76.61 is the next downside target.
First resistance is the 10 day moving average crossing at 84.83. Second resistance is the 20 day moving average crossing at 86.68. First support is Monday's low crossing at 77.11. Second support is August's low crossing at 76.61. Crude oil pivot point for Tuesday morning is 79.64.
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Gold was sharply higher due to short covering in Monday evenings overnight session trading as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that additional weakness is possible near term.
If December extends this month's decline, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target. Closes above the 20 day moving average crossing at 1794.30 are needed to confirm that a short term low has been posted.
First resistance is the 10 day moving average crossing at 1746.80. Second resistance is the 20 day moving average crossing at 1794.30. First support is Monday's low crossing at 1535.00. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20. Golds pivot point for Tuesday morning is 1598.70.
Is gold coming back? Don't miss our recent articles.......
Understanding The Key Support Levels For Gold
Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity
Bloomberg: Crude Oil Gains on Optimism Europe Will Tame Debt Crisis, Boosting Fuel Demand
Futures gained as much as 3.6 percent, trimming the biggest quarterly decline since the global financial crisis in 2008. U.S. Treasury Secretary Timothy F. Geithner predicted Europe will intensify efforts to contain its debt problems after being pressured at international meetings in Washington last week. European stocks climbed for a third day.
“It’s a ‘risk on’ day for oil,” said Thorbjorn Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark, who predicts Brent will average $107 in the fourth quarter. “Investors are hoping the European Central Bank will pull a rabbit out of the hat, in the form of an increase in the strength of the bond buying program.”
Crude for November delivery climbed as much as $2.90 to $83.14 a barrel in electronic trading on the New York Mercantile Exchange. It was at $82.62 at 1:44 p.m. London time. Oil has dropped 13 percent since the end of June, the biggest quarterly loss since the three months ended December 2008. Prices are down 7 percent this month and 9.6 percent this year......Read the entire Bloomberg article.
Is gold coming back? Don't miss our recent articles.......
Understanding The Key Support Levels For Gold
Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity
Monday, September 26, 2011
J.W. Jones: Understanding The Key Support Levels For Gold
Gold bulls and inquiring minds are perplexed by last week’s mayhem in the precious metals markets. In addition to gold and silver, copper prices also went into free fall last week which is an ominous sign for the broader economy in general. We live in interesting times as geopolitical uncertainty, social acrimony, and financial collapse shape the world around us.
The situation in Europe continues to worsen and central banks and wealthy individuals are trying to find safe havens to protect their wealth. Most gold bugs believed that gold and silver would be the answer, but in this environment that hypothesis did not play out. In addition, the Federal Reserve came out with operation twist which market participants despised. Since the 3rd round of Quantitative Easing was not announced, risk assets such as the S&P 500, gold, and silver sold off sharply.
Many gold investors believed that gold is a “safety” trade. I would agree with them if the objective is to remain “safe” from ever rising inflation. In a “run for the exits” sell off caused by deflationary pressure and debt destruction, gold will generally show relative strength versus equities. However, I would remind readers that during the deflationary period back in 2008, gold held up far better than the S&P 500, but prices were volatile.
The gold futures chart from 2008 is shown below:
As can be seen from the chart above, gold futures were volatile throughout 2008 with the March high point representing a 19.83% gain for the year. The low point for gold futures in 2008 was in October and represented a loss of 21.07%. The total return for gold futures in 2008 was 1.94%. Clearly gold futures showed volatility throughout 2008, but gold clearly outperformed the S&P 500 during the same period of time.
The S&P 500 was lower by 37% in 2008, thus gold was clearly the safer asset during 2008 in terms of return. However, one asset class was safer still and had considerably less volatility . . . the U.S. Dollar. In 2008, the U.S. Dollar index futures closed the year with gains around 8.44% with far less volatility than gold or the S&P 500. I am pointing this out to readers because a similar situation is unfolding presently.
Moving forward to the present, the U.S. Dollar Index futures have put on an impressive rally that started back on August 30, 2011. Since August 30th, the Dollar Index futures are trading higher by around 7%. As it turns out, on August 31st I entered a long call ratio spread using the UUP ETF with members of my service and we were able to lock in a gain of around 30% recently.
The daily chart of the U.S. Dollar Index futures is shown below:
All of the calls for hyperinflation in 2011 and a massive crisis in the U.S. Dollar are not coming to fruition. In fact, the opposite is occurring as deflationary pressures are helping force the U.S. Dollar higher. I would point out that the majority of economists and analysts were all predicting hyperinflation for several years and so far they have been wrong. Gold nor any other asset can rally forever, but long term investors must understand that even during a raging bull market corrections and pullbacks are commonplace and healthy.
I want to point out that I sent out multiple articles warning about the possibility that gold prices could sell off or correct dramatically. In every instance, my email inbox was littered with hate mail and vitriolic remarks from gold bugs. Back on August 29th, I wrote the following in my article, What Could Lie Ahead for the S&P 500 and Gold:
“There is an ominous pattern starting to form on the gold daily chart which if it is carved out and triggered, it could produce the next leg of this selloff.”
The daily chart of gold is shown below:
“While it is far too early to determine if a head and shoulders pattern will be carved out or if lower prices take place, I am of the opinion that this selloff will offer an attractive entry point for longer term investors. At this point it is a bit too early to get involved, but if my analysis is accurate the next leg of the gold bull market will be potentially extreme.”
As it turns out, the head and shoulders pattern did not play out as I had hypothesized but a double top did emerge which ultimately produced similar price action. The extreme nature of the recent sell off backs up my analysis in that gold prices had gone parabolic and we needed to see regression back to the mean in terms of price.
We are seeing that process unfold now, but as I stated in the article above the completion of this sell off is going to offer an attractive entry point for long term gold investors. While I have routinely discussed pullbacks and corrections regarding gold, I continue to be a longer term bull.
Gold has sold off sharply in the past week, but the following chart illustrates some key support levels for the yellow metal:
While gold and silver sold off sharply, the S&P 500 was also under extreme pressure. My most recent article written on September 21 prior to the Federal Reserve announcement illustrated two outcomes based on what rhetoric came from the meeting. Unfortunately for equity investors my downside prognosis is holding sway. The follow is an excerpt from my article entitled The S&P 500 & the Dollar Ahead of the Fed Statement:
“The flip side of that argument would see the S&P 500 jamming into recent resistance around the 1,230 price level. If prices rolled over and momentum picked up, a test of the recent August lows would likely transpire and could produce a breakdown and a lower low.
When looking at recent price action, the S&P 500 Index has put in a series of higher lows which is a bullish signal, however the S&P 500 has a long road ahead to break out above the 2011 highs. If the S&P 500 carves out a lower high on the S&P 500 Index at 1,230, 1,250, or even 1,280 and subsequently takes out the August lows then the secular bear will be back. The weekly chart of the S&P 500 Index ($SPX) shown below illustrates key support levels:
For now I am just going to sit in cash and wait for Mr. Market to provide me with some better clues. The trading range is pretty wide going from around 1,100 to 1,280.”
My downside scenario played out last week, but I will be watching closely to see if the S&P 500 can push below the August lows. If the August lows are taken out, we could see support come in around the 1,085 price level. If that level breaks down then the 1,008 – 1,040 price range will be in play.
The daily chart of the S&P 500 Index is shown below with the key support levels illustrated:
In closing, last week was wild in terms of price action and volatility was nearly palpable. I am anticipating some additional volatility this coming week. Gold prices could bounce as price is sitting right at the key 50 period moving average. If gold works through the 50 period moving average additional downside will be likely.
Similar to gold, if the S&P 500 is able to push through the August lows additional sellers will step in as stops will be triggered on a breach of the S&P 1,100 price level. News flow and headline risk coming out of Europe will continue to impact price action. I would also point out to members that there is a standing chance that the U.S. government could shut down as budget issues continue to manifest within the confines of the U.S. Congress.
Risk remains extremely high.
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Adam Hewison: All Eyes Continue To Focus On Europe
All eyes continue to be focused on the European problem, especially Greece. We still believe Greece will default on their debt. And we still think that the politicians are looking for an easy way out of this economic malaise, unwilling to accept the consequences of their actions.
Last week we saw all the markets under pressure. For the last couple of days we’ve seen some minor support coming to the equity markets. And just today we have seen support come into the metals markets at much lower levels than most folks anticipated.
The November contract for crude oil appears to be finding support at the $78 a barrel level. While it is too early to say that this market has made a bottom, the action indicates that the momentum for the moment has stopped going down.
All of our Trade Triangles remain negative, with resistance coming out just around the $81.80 level basis November. As you may recall we are tying the crude oil market with the equity markets. As the equity markets go, so does crude oil at the moment. Short, Intermediate and Long term traders should continue to be short the crude oil market.
Crude oil closed higher due to short covering on Monday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.
If November extends this month's decline, August's low crossing at 76.61 is the next downside target. Closes above the 20 day moving average crossing at 86.96 would temper the near term bearish outlook.
First resistance is the 10 day moving average crossing at 85.65. Second support is the 20 day moving average crossing at 86.96. First support is today's low crossing at 77.11. Second support is August's low crossing at 76.61.
Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 90
Has gold found support? Read "Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity"
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