Crude Oil Bulls Hold The Near Term Advantage

Crude oil closed higher on Thursday while extending the trading range of the past seven days. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If December extends the rally off this month's low, the 50% retracement level of the May-October decline crossing at 95.32 is the next upside target. Closes below the 20 day moving average crossing at 89.04 are needed to confirm that a short term top has been posted.

First resistance is the 50% retracement level of the May-October decline crossing at 95.32. Second resistance is the 62% retracement level of the May-October decline crossing at 100.08. First support is the 20 day moving average crossing at 89.04. Second support is the reaction low crossing at 83.40.


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Trends in Eagle Ford Drilling Highlight the Search for Oil and Natural Gas

Rapid growth in horizontal drilling at the Eagle Ford shale formation in Texas, like activity described in the previous story on the Bakken formation, has resulted in significant increases in crude oil and natural gas production. Increasing natural gas volumes have also boosted production of lease condensate (recovered as a liquid from natural gas in lease separation facilities) and natural gas liquids (extracted further "downstream" at natural gas processing plants).

The animated map shows that the Eagle Ford shale comprises three "windows" (roughly parallel acreage swaths). Production from these windows is increasingly liquids rich moving generally from south to north. The circular yellow and green producing well markers signify the more "oily" wells, with the red markers representing wells that produce mostly natural gas.

Eagle Ford Shale Drilling & Production (click image to animate)

 In 2007, total Eagle Ford liquids production (crude oil and condensate) was less than 21 thousand barrels, none of which was from horizontal wells. In 2010, production averaged nearly 29 thousand barrels per day (bbl/d), and was approaching 60 thousand bbl/d by year's end; virtually all was from horizontal wells. Production continues to rise in 2011; according to the Railroad Commission of Texas, Eagle Ford liquids production averaged 74 thousand bbl/d through July.


In major shale plays, drilling activity depends largely on the resource mix and relative fuel prices. For example, drilling in the Barnett shale focuses on natural gas. By contrast, operators in the Bakken formation tend to drill mainly for crude oil. In the Eagle Ford, however, the animation underscores how operators target a combination of crude oil, condensate, and natural gas liquids due to their relative price premium over natural gas. 


Source: U.S. Energy Information Administration, based on data from HPDI, LLC.

Note: Dot color is determined by the well's gas oil production ratio, or the volume of natural gas produced relative to oil. The higher the ratio (from green to red), the more gas is being produced. Dot size represents the well's production volume: either gas measured in barrels of oil equivalent per day (BOEPD) or oil measured in barrels. The lower right inset graph represents combined oil and natural gas production on a BOEPD basis.

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Phil Flynn: Greased Lightening!

Greece throws the world in turmoil as France and Germany says that the Greece referdum is a vote on whether Greece wants to stay in the Euro Zone. In the mean time, Big Bad Ben Bernanke says that QE 3d is a real possibility as he lowers the growth and jobs forecast for the US economy. The Energy Information agency added a few surprises with a big build in crude oil and a disturbing drop in distillates that could send chills across your spine if you heat your home with heating oil. Yet the markets seemr to hope that the nova convening G20 can bring order back to the market place in a world where we don't know where the next crisis might come from.

Now austerity is one issue but having a sugar daddy to pay your bills is another. Greek PM Papandreou threw caution to the wind for what purpose no one is quite sure. If it was to save his political backside well perhaps he is one. European leaders on the other hand reframed the debate by telling the people of Greece that the referendum vote about the Greek bailout package may be a vote on whether they want to be in or out of the EU.

German Chancellor Angela Merkel and French President Nicolas Sarkozy has pulled the plug on the euro zone rescue aid driving Greek bonds to 100% and perhaps putting the country on the verge on bankruptcy. Sarkozy says that there will be, "no French taxpayer money, no German taxpayer money" until the question is answered. In the meantime global markets tank but are finding hope that somehow the G20 will restore sanity or a split in Papandreou inner circle might find hope that Greece will accept its partners handout.....Read Phil's entire article.

Wednesday Market Summary - Crude Oil , Natural Gas and Gold

Crude oil closed higher on Wednesday while extending last week's trading range. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If December extends the rally off this month's low, the 50% retracement level of the May-October decline crossing at 95.32 is the next upside target. Closes below the 20 day moving average crossing at 88.48 are needed to confirm that a short term top has been posted.

First resistance is the 50% retracement level of the May-October decline crossing at 95.32. Second resistance is the 62% retracement level of the May-October decline crossing at 100.08. First support is the 20 day moving average crossing at 88.48. Second support is the reaction low crossing at 83.40.

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Natural gas was lower on Wednesday while extending October's trading range. Stochastics and the RSI are turning neutral signaling that sideways trading is possible near term. Closes above the reaction high crossing at 4.039 are needed to confirm that a short term low has been posted.

If December renews this year's decline, monthly support crossing at 3.225 is the next downside target.

First resistance is the 25% retracement level of the June-October decline crossing at 4.133. Second resistance is the 38% retracement level of the June-October decline crossing at 4.336. First support is last Thursday's low crossing at 3.724. Second support is monthly support crossing at 3.225.

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Gold closed higher on Wednesday and the high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional strength is possible near term.

If December extends the rally off September's low, the 62% retracement level of the 2008-2011 rally crossing at 1775.20 is the next upside target. Closes below the reaction low crossing at 1604.70 would confirm that a short term top has been posted.

First resistance is the 62% retracement level of the 2008-2011 rally crossing at 1775.20. Second resistance is the 75% retracement level of the 2008-2011 rally crossing at 1826.50. First support is the reaction low crossing at 1604.70. Second support is September's low crossing at 1535.00.

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Gold Ready to Attack Prior Highs in the 1900’s

From David Banister at Market Trend Forecast.......

It’s been several weeks since I’ve written about Gold and we have had a wild ride since the 1910-1920 highs in August.  At the time as we approached I forecasted a major correction was nigh and we were shorting the rise from 1862-1910 prior to a huge $208 drop that took place over just a few days.  We covered our short at $1725 and then Gold rallied back to a double top at $1920 and then fell back to $1531.

That pullback to $1531 qualifies as a Fibonacci retracement of the 34 month rally from $681 to $1920, and would also qualify for a price low for a 4^th major wave correction that I discussed in prior forecasts.  My initial targets for the Gold pullback were $1480-$1520 if the $1650 area was violated.  Most recently we have seen Gold run up to 1681 which is another Fibonacci resistance zone a few times and then back off to the low $1600’s.

With the recent push over $1681, we can now confirm the 4^th wave is over at $1531 lows and that the 5^th wave is likely in the very early stages, but beginning to build steam. I will say that we want to make sure the 1650-1680’s areas are defended by Gold on any pullbacks in order for this forecast to remain valid.  During this 5^th wave up, eventually we should see the $2380 ranges in Gold, but it will not take place overnight.  In the next few months I am looking for Gold to attack the $1900 range, possibly even by year end, and then in 2012 attacking the $2000 plus ranges.

With all of the Macro events in Europe changing on an almost daily basis, the whipsaws in both the precious metals and equities markets are difficult to forecast and trade for most investors. However, Gold has been moving in defined Fibonacci and wave patterns for ten years now, and has about three years left in a 13 year bull cycle if I’m right.

Below is the updated weekly chart of Gold.  You can see prior low’s as they related to oversold indicators, and where we just came off the 1531 lows and its Fibonacci pivot along with the oversold indicators below.

Look for Gold to attack 1775 first, then 1800, 1840, then 1900 in the coming 6-10 weeks or so.

Gold Forecast

You can get 3-5 updates a week on Gold, SP500, and Silver by visiting my website at Market Trend Forecast

Check out David's latest articles at "The Market Trend Forecasts"

Crude Oil Bulls Cling to a Technical Advantage After a Rough Go in Tuesday Trading

Crude oil closed down $2.34 a barrel at $90.86 on Tuesday. Prices closed near mid range today and saw more profit taking pressure from recent gains. A higher U.S. dollar index and weaker stock indexes pressured crude again today. Crude bulls still have the overall near term technical advantage, but are fading and need to show fresh power soon.

Natural gas closed down 14.7 cents at $3.782 today. Prices closed nearer the session low today. The bears still have the solid overall near term technical advantage.

Gold futures closed down $6.60 an ounce at $1,719.20 today. Prices closed nearer the session high today after being under stronger selling pressure early on today. The market was pressured by a stronger U.S. dollar index and lower crude oil prices.

Profit taking from recent gains in gold was seen again today. No chart damage has occurred this week. Bulls still have the overall near term technical advantage. A five week old uptrend is still in place on the daily bar chart.

Phil Flynn: Confidence Game

When it comes to the markets confidence is key. Yet obviously if you look at the last 24 hours confidence has been shaken. Whether it be the call for a Greek referendum on the EU bailout or the weakness in the Chinese manufacturing data or the situation with the bankruptcy of MF Global confidence has been shaken. And despite the blow to confidence, the markets are something that you can believe in. You can also believe in the protections offered the customer provided by the exchanges.

The oil market, despite the absence of MF Global traders, had a very low volume and oil prices acted like they would have if all traders were present. They reacted as you might expect to the movement from the Japanese yen and dollar intervention and the economic data. They reacted to strong Libyan oil production that rose 245,000 barrels to 345,000, the highest level since March. Or strong production out of Iraq and the highest OPEC oil production since 2008.....Read Phil's entire article.


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Crude Oil Declines Below $90 on China Manufacturing Slowdown, European Debt

Crude oil fell below $90 a barrel for the first time in a week in New York on speculation commodity demand will falter as Chinese manufacturing slows and European leaders struggle to contain the region’s debt crisis.

Futures slid as much as 3.8 percent, after posting their biggest gain last month since May 2009, amid signs of higher production from OPEC members as Libya bolstered exports. China’s Purchasing Managers’ Index fell for the first time in three months in October, a report showed. Greek Prime Minister George Papandreou said he will submit the European Union’s new financing deal for a national referendum.

“The list of things weighing on the market is long,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, who correctly predicted that this year’s oil rally would stall. “There’s the Chinese PMI, the Greek referendum taking EU leaders by surprise, the euro-dollar collapsing.”

Oil for December delivery declined as much as $3.56 to $89.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.56 as of 12:48 p.m. London time. Futures fell 0.1 percent yesterday and climbed 18 percent in October......Read the entire article.


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Shell Prepares for Start of Offshore Alaska Drilling

Royal Dutch Shell (RDSA) is currently deploying some workers and infrastructure in Alaska to start drilling for oil and gas in the Arctic next summer as the oil giant is "optimistic" that new legal challenges won't derail an exploration plan on which it has spent $4 billion, a senior executive said Monday.

"We are already spending money building resources, putting people in place to be ready to drill in the summer of 2012," Marvin Odum, president of Shell Oil Co., the U.S. unit of the Anglo-Dutch giant, told Dow Jones Newswires in an interview. "Because the buildup time to have all the resources on time, it's a fairly long runway we have to start working [on] now to be ready next summer. Spending is going to ramp up after the end of year, in the first months of next year."

The remarks came after some environmental groups filed this month a formal challenge to air quality permits that Shell needs to drill in the Arctic. The permits under question were approved by the U.S. Environmental Protection Agency in September and they allow Shell to use the drillship "Discoverer" and a fleet of icebreakers and other vessels in the Chukchi and Beaufort Seas. In September, other environmental groups also sued the Interior Department for approving the company's exploration proposal for the Beaufort.

"We expect legal challenges every step of the way. But we are cautiously optimistic that we will be in a position to drill next year," Odum said.....Read the entire article.


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Crude Oil Bulls Have the Advantage Despite Overbought Conditions

Crude oil closed lower on Monday while extending last week's trading range. The mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.

If December extends the rally off this month's low, the 50% retracement level of the May-October decline crossing at 95.32 is the next upside target. Closes below the 20 day moving average crossing at 87.00 are needed to confirm that a short term top has been posted.

First resistance is the 50% retracement level of the May-October decline crossing at 95.32
Second resistance is the 62% retracement level of the May-October decline crossing at 100.08

First support is the 20 day moving average crossing at 87.00
Second support is the reaction low crossing at 83.40


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