Phil Flynn: Jobs Baby Jobs!

Oh sure I can talk about Iran and The possibility of cracks showing in the EU oil embargo but let's face it today at least for awhile it jobs baby jobs! The oil market has been driven to and fro with a lot of bullish and bearish forces at play but the strength of the US jobs market will be the determining g factor as to wither we go higher or lower today. Oil was able to shake off a bearish Department of Energy Inventory report in part because there are worries about the resolve of Europe to embargo Iranian oil.

Other counties such as Japan and other Asian refiners are looking for alternative sources of oil which of course would be short term bullish. Yet with weak demand short term right now there is no fear that there will be a shortfall of oil. But back to the bullish word that China will imports a record amount of oil in 2012 as they look to rebuild and expand their strategic reserves. And on balance strong economic data in the US! Now the final piece of all of these forces will be Jobs, baby Jobs.

Reuters News Reported that " Japan's biggest refiner JX Nippon Oil & Energy Corp is talking with top exporter Saudi Arabia and other oil producers to source crude to replace any disruption to its imports from Iran, the company's president said on Thursday. Fresh U.S. sanctions on Iran over its nuclear program could make it difficult for refiners in Japan, Iran's number three crude buyer, to pay Tehran for its oil. Japan is seeking an exemption to U.S. sanctions that President Barack Obama signed into law on Saturday. The sanctions, if enforced, would penalize financial institutions for undertaking transactions with Iran's central bank, exposing the U.S. operations of Japanese banks that deal with Iran."

Bloomberg News Reported " The leader of financially struggling Italy questioned the scope and timing of a possible European Union halt to Iranian oil purchases, raising an obstacle to stiffer sanctions on Iran’s nuclear activities. Penalties set to be announced on Jan. 30 should be phased in and exempt crude sold by Iran to pay off debts to Eni SpA, Italy’s largest oil company, Prime Minister Mario Monti said. “An oil embargo is conceivable as long as it remains gradual and excludes the deliveries that serve to reimburse the billion euros in debts that Iran owes to Eni, our national company,” Monti told France’s Le Figaro in an interview published today.

Europe’s sanctions threat and an Iranian demand that U.S. warships stay out of the Persian Gulf have stirred new tensions between Iran and the West, contributing to higher energy prices. EU sanctions decisions require that all 27 member states go along. An oil supply dislocation might further damage the economies of Italy and Greece, two countries at the forefront of the European debt crisis. Italy is battling to get by without a bailout and Greece is seeking a second package.


Phil Flynn can be reached at pflynn@pfgbest.com


Get Ready For This weeks Trading with Today's 50 Top Trending Stocks

Iran Tension Fails to Push Crude Oil Through Resistance

Crude oil closed lower due to profit taking on Friday as it consolidates some of the rally off December's low. The mid range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. Closes below the 20 day moving average crossing at 98.86 would signal that a short term top has been posted.

First resistance is Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is the 10 day moving average crossing at 100.78. Second support is the 20 day moving average crossing at 98.86.


Precious Metals, Equities and Crude Oil Long Term Outlook

Rigzone: Crude Ends Lower On Weak Equities, Dollar Gains

Crude oil futures fell Friday despite an improving U.S. jobs picture as traders focused on declines in equities markets and a stronger dollar.

Light, sweet crude oil for February delivery settled 25 cents, or 0.3%, lower at $101.56 a barrel on the New York Mercantile Exchange after trading as high as $102.80 earlier in the session. Brent crude oil on the ICE Futures exchange rose late in the session to trade 80 cents higher at $113.06 a barrel.

After trading higher early Friday, a lower opening for the U.S. stock market held oil futures in negative territory. Equities have served as a guide for oil prices in recent months, and worries about Italy's debt situation kept investors from cheering an improving U.S. employment picture.

A stronger dollar against the euro also took some wind out of the oil market. A rising dollar typically weighs on oil as it makes crude oil more expensive for buyers in other currencies.....Read the entire article.


Five Best Trade Ideas for the Next Two Weeks

EIA: Current Natural Gas Forward Prices Signal Rising....But Still Low Prices in 2012

Source: U.S. Energy Information Administration, based on Bloomberg.

Note: Forward prices are derived each month (January-December) by adding the locational basis swap to the NYMEX Henry Hub futures price for the given month at each location. The ranges reflect the minimum and maximum monthly price for months in 2012. For example, a January 2012 NYMEX Henry Hub futures contract valued at $3.50/MMBtu and a January 2012 Transco Zone 6-NY basis swap valued at $2.50/MMBtu would yield a $6.00/MMBtu price at Transco Zone-6 NY.

---

Natural gas forward market prices (as of December 28, 2011) signal a continuation of low natural gas prices into 2012. Winter 2011-2012 forward prices were recently the lowest in over ten years, and, of the eight trading points identified, only Transco Zone 6-NY (New York City) and PG&E Citygate (Northern California) show 2012 forward monthly price ranges that include prices above $4/MMBtu. Natural gas spot prices remained low throughout 2011 relative to prior years, reaching a two-year low in November. The spot natural gas price at Transco Zone 6 New York, shown in the graph, is above next year's average monthly trading ranges due to recent cold weather-driven demand. Current spot natural gas prices are lower than the 2012 forward contract range at several natural gas trading points identified in the chart.

The natural gas price at the Henry Hub in Louisiana informs much of the rest of the country, with prices largely following price movements at Henry. Similarly, forward prices, except for the Northeast (represented here by the Transco Zone 6-NY trading point), closely mirror 2012 forward prices at the Henry Hub. Northeast gas prices behave differently, with spot and forward prices higher during colder months due to expectations regarding pipeline constraints in transporting natural gas to the Northeast during times of high natural gas demand.

Source: U.S. Energy Information Administration, based on Ventyx's Energy Velocity Suite.

Phil Flynn: The Widow Maker Is Making OUT

They of course call it the widow maker or the unimaginative perhaps the heating oil gasoline spread. The Spread has been soaring as the heating oil market is reflecting all of the news that can pact supply by the preponderance of news that has driven oil. The news is getting more bullish for heating oil, diesel and fuel oil and more bearish for oil.

Whether you are talking about the agreement in principle by the European Union to impose an oil embargo on Iran or the closure of Petro Plus refineries in Europe the spread just continues to soar. Of course the other side of that coin is the fact that gasoline demand is weak. As we told you the EU will move forward on an oil embargo and the US made it harder for Iran to sell oil by new banking sanctions. This will tighten Distillate supply in Europe while gasoline demand is tanking!

The MasterCard Spending Pulse showed just how weak by reporting that Gasoline demand in the United States plunged 1.297 million bpd or 13.7% to 8.160 million bpd during the week ended Dec. 30, according to data released today by SpendingPulse, which is published by MasterCard Advisors, the professional arm of MasterCard Worldwide.

SpendingPulse reported 57.122 million bbl of gasoline was sold at retail outlets during the week reviewed, tumbling 9.079 million bbl versus the prior week. While the market was focused on the Iranian drama and word that the EU as expected would put on sanctions the good news was that French refiners decide not to call for a national strike. Also Heating oil is getting a boost from the return of winter, that north eastern cold blast is driving prices in many commodities. Even OJ is soaring as fears that a freeze in Florida may do damage to the Orange trees.

And a frosty reception the French 10 year auction may give us a break to get long. Gold looks like it has hit bottom. Now some say that gold rallied in response to the EU sanctions on Iran but it seems strange that oil fell back and gold did not. It shows you that there is something more to the gold rally. Gold of course did perform better in terms of the Euro as safe haven European buying seemed to gravitate towards the yen Silver on the other hand was weaker.

Of Course despite the recent weakness in silver and it ignominious correction the average annual price of $35.12 per ounce last year, set a new price record and was a 74% gain over the 2010 average annual price of $20.19 per ounce. We are seeing some long gold short silvers as the small investors are not ready to believe in the precious metals rally just yet.

Natural Gas could not stay below $300 for very long. A blast of winter and a upcoming injection report more than likely cause some short covering. That is despite a warm up in the Midwest! Winter? What winter? We should see a 76 bcf withdrawal and will leave supply at a record high for this time of year.

More Rain In Argentina? Maybe? The Beans pull back a bit Some experts are saying that id Argentina crop could be down by 2 to four million tons but could lose as much as 10 million if they do not get rain.


Check out Phil's service by emailing him at pflynn@pfgbest.com


Precious Metals, Equities and Crude Oil Long Term Outlook

Crude Oil Bulls "Cling" to Bullish Trade Triangles

Crude oil closed lower due to profit taking on Thursday as it consolidates some of the rally off December's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If February extends the rally off December's low, the 75% retracement level of the 2011 decline crossing at 104.84 is the next upside target. Closes below the 20 day moving average crossing at 98.84 would signal that a short term top has been posted.

First resistance is Wednesday's high crossing at 103.74. Second resistance is the 75% retracement level of the 2011 decline crossing at 104.84. First support is the 10 day moving average crossing at 100.55. Second support is the 20 day moving average crossing at 98.84.

Crude oils chart Analysis Score of +90 this market remains very much in a strong upward trend, despite today’s pullback. The crude oil market has resistance starting at $104 up to the $105 level. Long and intermediate term traders should be long this market with appropriate money management stops. Monthly, weekly and daily Trade Triangles all remain bullish.


Five Best Trade Ideas for the Next Two Weeks

ONG: Crude Oil Daily Technical Outlook For Thursday Jan. 5th

Crude oil lost some upside momentum after breaching 103.37 resistance but retreat is so far shallow. Intraday bias remains on the upside and sustained break of 103.37 will confirm resumption of whole rise from 75.94 and should target 114.83 key resistance next. Meanwhile, break of 98.30 support is needed to signal topping. Otherwise, we'll stay cautiously bullish in crude oil even in case of deeper retreat.

In the bigger picture, fall from 114.83 has finished at 74.95 already. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not completed yet. As long as 89.16/17 support holds, we'd favor a break of 114.83 resistance to resume the rally from 33.2. However, break of 89.16/17 will indicate that rebound from 74.95 has completed and whole fall from 114.83 is possibly resuming for another low below 74.95.

Nymex Crude Oil Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts


Check Out Today's 50 Top Trending Stocks

EIA: The Strait of Hormuz is the World's Most Important oil Transit Choke Point

The Strait of Hormuz (shown in the oval on the map), which is located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Hormuz is the world's most important oil choke point due to its daily oil flow of almost 17 million barrels per day (bbl/d) in 2011, up from between 15.5-16.0 million bbl/d in 2009-2010. Flows through the Strait in 2011 were roughly 35% of all seaborne traded oil, or almost 20% of oil traded worldwide.

On average, 14 crude oil tankers per day passed through the Strait in 2011, with a corresponding amount of empty tankers entering to pick up new cargos. More than 85% of these crude oil exports went to Asian markets, with Japan, India, South Korea, and China representing the largest destinations.
At its narrowest point, the Strait is 21 miles wide, but the width of the shipping lane in either direction is only two miles, separated by a two mile buffer zone. The Strait is deep and wide enough to handle the world's largest crude oil tankers, with about two-thirds of oil shipments carried by tankers in excess of 150,000 deadweight tons.

Several alternatives are potentially available to move oil from the Persian Gulf region without transiting Hormuz, but they are limited in capacity, in many cases are not currently operating or operable, and generally engender higher transport costs and logistical challenges.

• Alternate routes include the 745-mile Petroline, also known as the East-West Pipeline, across Saudi Arabia from Abqaiq to the Red Sea. The East-West Pipeline has a nameplate capacity of about 5 million bbl/d, with current movements estimated at about 2 million bbl/d.
• The Abqaiq-Yanbu natural gas liquids pipeline, which runs parallel to the Petroline to the Red Sea, has a 290,000-bbl/d capacity.
• Additional oil could also be pumped north via the Iraq-Turkey pipeline to the port of Ceyhan on the Mediterranean Sea, but volumes have been limited by the closure of the Strategic Pipeline linking north and south Iraq.
• The United Arab Emirates is also completing the 1.5 million bbl/d Abu Dhabi Crude Oil Pipeline that will cross the emirate of Abu Dhabi and end at the port of Fujairah just south of the Strait.
• Other alternate routes could include the deactivated 1.65-million bbl/d Iraqi Pipeline across Saudi Arabia (IPSA) and the deactivated 0.5 million-bbl/d Tapline to Lebanon.

EIA's World Oil Transit Chokepoints analysis brief contains additional information about other chokepoints, and the Middle East & North Africa overview contains additional information about countries in the region.

Today's 50 Top Trending Stocks

ONG: Crude Oil Daily Technical Outlook For Wednesday Jan. 4th

The retreat from 101.77 was relatively brief and crude oil got strong support from 4 hours 55 EMA. Subsequent rally sent crude oil back to 103.18 so far. Intraday bias is back on the upside for 103.37 resistance. Break there will confirm that rise from 74.95 has resumed and should target 114.83 resistance next. On the downside, below 98.30 minor support will dampen this immediate bullish view and flip bias back to the downside to extend the consolidation from 103.37 instead.

In the bigger picture, fall from 114.83 has finished at 74.95 already. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not completed yet. As long as 89.16/17 support holds, we'd favor a break of 114.83 resistance to resume the rally from 33.2. However, break of 89.16/17 will indicate that rebound from 74.95 has completed and whole fall from 114.83 is possibly resuming for another low below 74.95.

Nymex Crude Oil Continuous Contract 4 Hour, daily, Weekly and Monthly Charts


Check out our Five Best Trade Ideas for the Next Two Weeks

Will Crude Oil be the New Gold Standard in 2012?

Crude oil is on the move. Tensions, technicals and Trade Triangles are propelling crude oil higher!

February crude oil closed higher on Tuesday as it extended the rally off December's low. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.

If February extends the rally off December's low, November's high crossing at 103.28 is the next upside target. Closes below the 20 day moving average crossing at 98.70 would signal that a short term top has been posted.

First resistance is November's high crossing at 103.28. Second resistance is the May 2011 high crossing at 105.34. First support is the 20 day moving average crossing at 98.70. Second support is the 38% retracement level of the October-November rally crossing at 92.73.

With a Chart Analysis Score of +100, this market is in a strong upward trend. The crude oil market has resistance starting at $102 up to the $103 level. Long and intermediate term traders should be long this market with appropriate money management stops.

Monthly Trade Triangles for long term trends is bullish. Weekly Trade Triangles for intermediate term trends is bullish. And daily Trade Triangles for short term trends are bullish.

Just click here to check out Adam Hewisons first video of 2012.


Five Best Trade Ideas for the Next Two Weeks