Phil Flynn: Precautionary Demand

Crude oil prices were rising early Friday and there is better than expected data from Germany and Microsoft, yet in the big picture, there are those that are saying that oil prices have risen in recent months not due to speculation but what we should call “precautionary demand”. According to Dow Jones U.S. sanctions against Iran are hurting growth in that country and creating "precautionary demand" for oil, which is part of the reason oil prices remain at current high levels according to Caroline Freund, the World Bank's chief economist for the Middle East and North Africa.

In other words, countries have been hoarding oil in the event that oil supply might get cut. This has increased demand and prices have gone higher. It is a valid fundamental reason for oil prices to rise and has been a major factor in the pricing oil. The rise is not due to speculators, as the uninformed would have you believe, but the physical buying of extra barrels. As the Iran risk seems to be pushed back that buying has eased a bit.

Dow Jones reported overnight that European Union member states have agreed to postpone by one month the deadline for a review of the oil embargo on Iran. The EU agreed in January to implement a full oil embargo on Iranian crude oil exports by July 1 in response to its nuclear program. But as a concession, to Greece in particular, it agreed to hold by May 1 a review of the effect of a full embargo. That left next Monday's Foreign Affairs Ministers Summit as the last opportunity to agree any change to the embargo.....Read the entire article.

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Commodities Market Summary for Sunday April 22nd

Crude oil closed higher on Friday but remains locked in March's down trending channel. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain neutral to bullish signaling that a low might be in or is near. Closes above Tuesday's high crossing at 105.07 are needed to confirm that a short term low has been posted. If May renews the decline off March's high, the 38% retracement level of the October-March rally crossing at 97.84 is the next downside target. 

Here's our pivot, resistance and support numbers to get the week started tonight!

Daily Pivot Points				Normal Range					Last Bar
Commodity	Chart	S3	S2	S1	PP	R1	R2	R3	H	L	C
Crude Oil		100.48	101.31	102.01	102.84	103.54	104.37	105.07	103.66	102.13	102.72
Natural Gas		1.813	1.858	1.882	1.927	1.951	1.996	2.020	1.971	1.902	1.907
Heating Oil		3.0771	3.0944	3.1098	3.1271	3.1425	3.1598	3.1752	3.1445	3.1118	3.1251
Gasoline RBOB		3.0244	3.0797	3.1169	3.1722	3.2094	3.2647	3.3019	3.2275	3.1350	3.1541
Gold		1606.4	1618.8	1630.1	1642.5	1653.8	1666.2	1677.5	1654.9	1631.2	1641.4
Silver		30.649	30.970	31.374	31.695	32.099	32.420	32.824	32.015	31.290	31.779
Copper		3.5408	3.5692	3.5983	3.6267	3.6558	3.6842	3.7133	3.6550	3.5975	3.6275
Platinum		1544.8	1559.4	1568.7	1583.3	1592.6	1607.2	1616.5	1597.9	1574.0	1578.0
			Extreme Range

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SandRidge Mississippian Trust II Announces Pricing of Initial Public Offering at The Top End of Price Range

SandRidge Mississippian Trust II (the Trust) announced today that it has priced its initial public offering of 26,000,000 common units at a price per common unit of $21.00, which represents the top end of the expected price range of $19.00 to $21.00. The 26,000,000 common units being sold in the offering represent a 52% beneficial interest in the Trust. The underwriters have 30 days to exercise an option to purchase an additional 3,900,000 common units from the Trust to cover over allotments, if any. 

Following completion of the offering, SandRidge Energy, Inc. (NYSE: SD) as sponsor of the Trust, will own approximately 11.3 million common units, assuming no exercise of the underwriters' option, and approximately 12.4 million subordinated units convertible into common units, and the Trust will have a total of 49,725,000 trust units outstanding. The common units have been approved for listing on the New York Stock Exchange, and will trade under the symbol "SDR." The offering, which is subject to customary closing conditions, is expected to close on or about April 23, 2012.

The Trust will own royalty interests conveyed to it by SandRidge that will entitle the Trust to a percentage of the proceeds received by SandRidge from the production of hydrocarbons from currently producing wells and development wells to be drilled by SandRidge on approximately 53,000 net acres in the Mississippian formation in northern Oklahoma and southern Kansas.

Visit the SandRidge Investors page for a list of sponsors and more info.

Take a minute to check out today's "50 Top Trending Stocks"

EXCO Resources to Release 1st Quarter 2012 Results

COT holding EXCO Resources [NYSE: XCO] will be releasing first quarter 2012 results on Tuesday, May 1, 2012, after market close. EXCO will host a conference call on Wednesday, May 2, 2012, at 10:00 a.m. (Dallas time) to discuss the contents of this release and respond to questions.

 Please call (800) 309-5788 if you wish to participate, and ask for the EXCO conference call ID# 70531704. The conference call will also be webcast on EXCO’s website at www.excoresources.com under the Investor Relations tab. Presentation materials related to this release will be posted on EXCO’s website on Tuesday, May 1, 2012, after market close.

 EXCO Resources, Inc. is an oil and natural gas exploration, exploitation, development and production company headquartered in Dallas, Texas with principal operations in East Texas, North Louisiana, Appalachia and West Texas.

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Chevron Announces Webcast on 1st Quarter Earnings

Chevron’s discussion of first quarter 2012 earnings with security analysts will take place on Friday, April 27, 2012, at 8:00 a.m. PST. A webcast of the meeting will be available in a listen only mode to individual investors, media, and other interested parties on Chevron’s website at www.chevron.com under the “Investors” section.

Additional financial and operating information will be contained in the Earnings Supplement that will be available under “Events & Presentations” in the “Investors” section on the website.

 Get your Free trend analysis for Chevron, ticker CVX

Crude Oil Remains Locked in March's Down Trending Channel

Crude oil [May contract] closed lower on Thursday, as it remains locked in March's down trending channel. The mid-range close sets the stage for a steady opening on Friday. Stochastics and the RSI remain bullish signaling that a low might be in or is near. 


Closes above the 20 day moving average crossing at 103.83 are needed to confirm that a short term low has been posted. If May renews the decline off March's high, the 38% retracement level of the October-March rally crossing at 97.84 is the next downside target. 


First resistance is the 20 day moving average crossing near 103.83. Second resistance is the reaction high crossing at 105.49. First support is last Tuesday's low crossing at 100.68. Second support is the 38% retracement level of the October-March rally crossing at 97.84.

Schlumberger Declares Quarterly Dividend

The Board of Directors of Schlumberger Limited (NYSE:SLB) today declared a quarterly dividend of $0.275 per share of outstanding common stock. The dividend is payable on July 13, 2012 to stockholders of record at the close of business on June 1, 2012.

Webcast - Live Q1 2012 Schlumberger Earnings Conference Call 04/20/12 at 9:00 a.m. ET Click here for webcast

Halliburton 1st Quarter Earnings Soar by a Whopping 23%

Halliburton (HAL) announced today that income from continuing operations for the first quarter of 2012 was $826 million, or $0.89 per diluted share, excluding $300 million ($191 million, after-tax, or $0.20 per diluted share), for an estimated loss contingency related to the Macondo well incident. Income from continuing operations for the first quarter of 2011 was $558 million, or $0.61 per diluted share, excluding a charge of $46 million, aftertax, or $0.05 per diluted share, related primarily to reserving certain assets as a result of political sanctions in Libya.

Reported income from continuing operations for the first quarter of 2012 was $635 million, or $0.69 per diluted share, compared to $512 million, or $0.56 per diluted share, for the first quarter of 2011. Reported net income attributable to company for the first quarter of 2012 was $627 million, or $0.68 per diluted share, compared to $511 million, or $0.56 per diluted share for the first quarter of 2011.....Read the entire First Quarter Earnings Announcement.

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Crude Oil Closes Lower on Unexpected Inventory Build

Crude oil [May contract] closed lower on Wednesday following today's stocks report that showed crude oil supplies increased more than expected. The low range close sets the stage for a steady to lower opening on Thursday.

Stochastics and the RSI remain bullish signaling that a low might be in or is near. Closes above the 20 day moving average crossing at 104.07 are needed to confirm that a short term low has been posted. If May renews the decline off March's high, the 38% retracement level of the October-March rally crossing at 97.84 is the next downside target.

First resistance is the 20 day moving average crossing near 104.07. Second resistance is the reaction high crossing at 105.49. First support is last Tuesday's low crossing at 100.68. Second support is the 38% retracement level of the October-March rally crossing at 97.84.

Just click here for your FREE trend analysis of crude oil ETF USO

Natural gas [May contract] closed lower on Wednesday as it extended the multi year decline. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If May extends the multi year decline, monthly support crossing at 1.620 is the next downside target. Closes above the 20 day moving average crossing at 2.147 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 2.023. Second resistance is the 20 day moving average crossing at 2.147. First support is today's low crossing at 1.940. Second support is monthly support crossing at 1.620.

Just click here for your FREE trend analysis of UNG, the Natural Gas ETF

Gold closed lower [June contract] on Wednesday extending the decline off last week's high. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling sideways to lower prices are possible near term.

If June extends the decline off February's high, the 75% retracement level of the December-February rally crossing at 1595.00 is the next downside target. Closes above the reaction high crossing at 1685.40 are needed to confirm that a short term low has been posted.

First resistance is the reaction high crossing at 1685.40. Second resistance is the reaction high crossing at 1699.60. First support is this month's low crossing at 1613.00. Second support is the 75% retracement level of the December-February rally crossing at 1595.00.

Just click here for your FREE trend analysis of gold ETF GLD

Williston Basin Crude Oil Production and Takeaway Capacity are Increasing

Crude oil production from the Williston Basin (primarily the Bakken formation) recently increased to more than 600 thousand barrels per day (bbl/d), according to Bentek Energy, LLC (Bentek), testing the ability of the transportation system, oil pipelines, truck deliveries, and rail to move crude oil out of the area (see chart below). The current price gap between Bakken crude oil and West Texas Intermediate (WTI) shows the effects of this constraint. Bentek projects more transportation capacity coming online in 2012, potentially alleviating this constraint.




 Due to pipeline capacity constraints, Williston Basin producers rely on rail and trucks to move additional crude oil out of the region. Because of these transportation constraints, Bakken crude oil currently sells at a discount of $7.50 per barrel to WTI. This discount was as much as $28 per barrel in February 2012 and is expected to continue as long as transportation constraints persist.

Currently, North Dakota has only one refinery, which processes about 58 thousand bbl/d of crude oil. Crude oil is delivered to other markets using a combination of pipeline, rail, and truck. Delivery capability as of April 2012 was: 450 thousand bbl/d by oil pipeline; 150 thousand bbl/d by rail; and small volumes by truck. However, in 2012, incremental additions to rail and oil pipeline capacity for the Williston Basin could total 350 thousand bbl/d.

Which Bakken picks should you trade? Here is a preview of our MarketClub Trade Triangle Chart Analysis and Smart Scan technology that will help you get in and out of those trades.