Crude Oil Plummets on Disappointing Jobs Report

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Crude oil was lower as it extended Thursday's decline and renewed the decline off March's high. Stochastics and the RSI are bearish signaling that additional weakness is possible near term. In Friday mornings session the June contract lost more the $3.50 by 10 a.m. EST.

If June extends the decline off March's high, the 38% retracement level of the October-March rally crossing at 98.14 is the next downside target. Closes above the 10 day moving average crossing at 104.03 would signal that a short term low has been posted.

First resistance is the 10 day moving average crossing at 104.03. Second resistance is Tuesday's high crossing at 106.43. First support is the overnight low crossing at 101.10. Second support is the 38% retracement level of the October-March rally crossing at 98.14.

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Apache Reports Strong First Quarter Results as Record Production Leverages Higher Oil Prices

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Apache Corporation (ticker APA) reported record worldwide production in the first quarter of 2012 as the company benefitted from higher prices for oil and natural gas liquids and its balanced approach helped it weather the continuing deterioration of North American natural gas prices. Daily production increased 7 percent over the same period the prior year, adjusted for dispositions.

Worldwide production was 769,000 barrels of oil equivalent (boe) per day, compared with 732,000 boe per day the same period the year before. Last year's total included 11,000 boe per day from certain assets in Canada and East Texas that were sold in the second half of 2011. U.S. liquids production reached 148,000 barrels per day, representing an 11 percent increase over first quarter 2011 results, as global liquids production rose 6 percent over the same period.

Apache reported earnings of $778 million, or $2.00 per diluted share, for the three month period ending March 31, 2012, reflecting the impact of a $390 million non cash, after tax reduction in the carrying value of its oil and gas properties in Canada stemming from lower North American natural gas prices. For the same period last year, Apache reported earnings of $1.1 billion, or $2.86 per diluted share.....Read the entire report at ApacheCorp.com

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Equities Fight to Hold Up While EU & US Data Give Mixed Signals

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Investors and traders just can’t seem to catch a break when it comes to economic news. For example Tuesday in the United States we saw strong ISM manufacturing numbers which surprised the market. The numbers were way above expectations and it triggered a feeding frenzy in US based investments like stocks and the green back.

The following session Italy reported terrible PMI and unemployment rate numbers which took most of the wind out the European and US stocks. One day the data is great, next day it’s bad…

The strong numbers in the US have everyone including myself thinking that this week’s jobless claims (unemployment rate) will be down. If this is the case then we will see stocks jump along with the dollar, much like what we saw trader do last Tuesday which is what Jim Cramer says best – BUY BUY BUY.

Normally we do not see the dollar index rally along with stocks but if EU continues to show signs of weakness then it is very likely the dollar and equities inverse relationship could decouple. Reason being investors around the globe will focus their money on the more stable US investments like the dollar and US stocks.

The Dollar is Trading at a Major Tipping Point....Read the entire article.


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Prices Fall on Anemic Growth and Inventory Gains

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Chip Hodge of Manulife Asset Management said it best “Prices should be lower because there’s no shortage of oil and we’re looking at rather anemic economic growth, we’re getting robust builds in supply.” That combined with worsen job numbers put commodity bulls at a disadvantage in Wednesdays session.

Crude oil closed lower due to profit taking on Wednesday as it consolidates some of Tuesday's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If June extends Tuesday's rally, the reaction high crossing at 109.13 is the next upside target. Closes below the 20 day moving average crossing at 103.76 would confirm that a short term top has been posted. If June renews the decline off March's high, the 38% retracement level of the October-March rally crossing at 98.14 is the next downside target. First resistance is Tuesday's high crossing at 106.43. Second resistance is the reaction high crossing at 109.13. First support is the 20 day moving average crossing at 103.76. Second support is April's low crossing at 101.22.

Natural gas closed lower due to profit taking on Wednesday as it consolidated some of the rally off April's low. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends the rally off last week's low, the reaction high crossing at 2.607 is the next upside target. Closes below the 20 day moving average crossing at 2.144 would signal that a short term top has been posted. First resistance is Tuesday's high crossing at 2.385. Second resistance is the reaction high crossing at 2.607. First support is the 20 day moving average crossing at 2.144. Second support is the reaction low crossing at 1.982.

Gold closed lower on Wednesday and the mid range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain neutral to bullish signaling sideways to higher prices are possible near term. Closes above the reaction high crossing at 1699.60 are needed to confirm that a short term low has been posted. If June renews the decline off February's high, the 75% retracement level of the December-February rally crossing at 1595.00 is the next downside target. First resistance is the reaction high crossing at 1681.30. Second resistance is the reaction high crossing at 1699.60. First support is April's low crossing at 1613.00. Second support is the 75% retracement level of the December-February rally crossing at 1595.00.

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Chesapeake Energy Earnings Report For 1st Quarter 2012

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Chesapeake Energy Corporation (NYSE:CHK) today announced financial and operational results for the 2012 first quarter. For the 2012 first quarter, Chesapeake reported a net loss to common stockholders of $71 million ($0.11 per fully diluted common share), ebitda of $597 million (defined as net income (loss) before income taxes, interest expense, and depreciation, depletion and amortization) and operating cash flow of $910 million (defined as cash flow from operating activities before changes in assets and liabilities) on revenue of $2.419 billion and production of 333 billion cubic feet of natural gas equivalent (bcfe).

The company’s 2012 first quarter results include various items that are typically not included in published estimates of the company’s financial results by certain securities analysts. Excluding such items for the 2012 first quarter, Chesapeake reported adjusted net income to common stockholders of $94 million ($0.18 per fully diluted common share) and adjusted ebitda of $838 million. The primary excluded item from the 2012 first quarter reported results is a net unrealized noncash after tax mark to market loss of $167 million resulting from the company’s natural gas, liquids and interest rate hedging programs. A reconciliation of operating cash flow, ebitda, adjusted ebitda and adjusted net income to comparable financial measures calculated in accordance with generally accepted accounting principles is presented on pages 18 – 20 of this release......Click here to read the entire earnings report

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Blackstones Wien Bearish on Crude Oil for First Time

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Byron Wien, the 79 year old chairman of Blackstone Group LP’s advisory services unit, is forecasting an annual drop in oil prices for the first time in his career as swelling production pushes global inventories higher.

Wien, who joined the world’s biggest private equity firm in 2009, said the U.S. will extract more crude by fracking rocks and expects the furor over a potential conflict with Iran to dissipate. Brent crude lost 2.8 percent last month after surging 14 percent in the first quarter on concern Iran may disrupt Middle East exports in retaliation for a European oil embargo.

Russia and Saudi Arabia, the biggest crude producers, are pumping near record levels, helping push February inventories in developed nations to the equivalent of 59.6 days of demand, the most since 2009, according to the International Energy Agency.

“The Iran premium is going to come out of the price of Brent,” Wien, who was previously a chief strategist at Morgan Stanley, said in an April 26 television interview on “Bloomberg Surveillance” with Tom Keene. “There’s an Iran premium in the price of oil, thinking that Israel will strike Iran, and I don’t think Israel will”.......Read the entire Bloomberg article.

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Crude Oil Trends Appears to Change....Ball is in the Bulls Court

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Crude oil closed higher on Tuesday and above the reaction high crossing at 105.50 confirming that a short term trend change has taken place. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends today's rally, the reaction high crossing at 109.13 is the next upside target. If June renews the decline off March's high, the 38% retracement level of the October-March rally crossing at 98.14 is the next downside target. First resistance is today's high crossing at 106.43. Second resistance is the reaction high crossing at 109.13. First support is April's low crossing at 101.22. Second support is the 38% retracement level of the October-March rally crossing at 98.14.

Natural gas closed higher on Tuesday as it extended the rally off April's low. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends the rally off last week's low, the reaction high crossing at 2.607 is the next upside target. Closes below the 10 day moving average crossing at 2.134 would signal that a short term top has been posted. If June renews the multi year decline, monthly support crossing at 1.620 is the next downside target. First resistance is today's high crossing at 2.385. Second resistance is the reaction high crossing at 2.607. First support is the 10 day moving average crossing at 2.134. Second support is the reaction low crossing at 1.982.

Gold closed slightly higher on Tuesday and the mid-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bullish signaling sideways to higher prices are possible near term. Closes above the reaction high crossing at 1699.60 are needed to confirm that a short term low has been posted. If June renews the decline off February's high, the 75% retracement level of the December-February rally crossing at 1595.00 is the next downside target. First resistance is the reaction high crossing at 1681.30. Second resistance is the reaction high crossing at 1699.60. First support is April's low crossing at 1613.00. Second support is the 75% retracement level of the December-February rally crossing at 1595.00.

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Will Crude Oil Break Through Support This Week?

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The June crude oil market rallied every day last week. The market put in higher lows and higher highs on a daily basis after it tested the support trendline (#3 on the chart) last week on Monday morning. Any technical trader would say last week had all of the necessary ingredients for a bull run.

On Monday crude oil was under pressure following unfavorable reports out of Spain and the United States coupled with profit taking ahead of a Labor Day Holiday in Europe and Asia.

The selloff seemed to be targeting the dominant trendline and the 20 day moving average (#1 on the chart) above the highs on the daily chart that kept Crude Oil in a downward channel until Thursday of last week when it closed above. This line was the dominant resistance for months, and may be the dominant support if the market can stay above in the near term.

If oil does not sell off any further, the near term target would likely be a price of $105.50. This price is where the high price from April 17th and the upper resistance trendline will converge on the chart (#2 on the chart). Closes above this number should be seen as a very bullish signal.

Any closes below #3 on the chart would likely invite heavy selling pressure on the June crude oil, as it would signal a break in the support trendline that the market has held since December 2011.

Crude Oil, Natural Gas and Gold Market Commentary For Monday April 30th

Why the U.S. Dollar is Critical for the S&P 500 Index this Week

Crude oil [June contract] closed higher on Monday and the high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 105.50 are needed to confirm that a short term trend change has taken place. If June renews the decline off March's high, the 38% retracement level of the October-March rally crossing at 98.14 is the next downside target. First resistance is the reaction high crossing at 105.50. Second resistance is the reaction high crossing at 105.99. First support is April's low crossing at 101.22. Second support is the 38% retracement level of the October-March rally crossing at 98.14.

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Natural gas [June contract] closed higher on Monday and above the 20 day moving average crossing at 2.143 as it extended the rally off last week's low. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends the rally off last week's low, the reaction high crossing at 2.335 is the next upside target. If June renews the multi year decline, monthly support crossing at 1.620 is the next downside target. First resistance is today's high crossing at 2.294. Second resistance is the reaction high crossing at 2.335. First support is the 10 day moving average crossing at 2.102. Second support is the reaction low crossing at 1.982.

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Gold closed higher [June contract] on Monday and the high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling sideways to higher prices are possible near term. Closes above the reaction high crossing at 1699.60 are needed to confirm that a short term low has been posted. If June renews the decline off February's high, the 75% retracement level of the December-February rally crossing at 1595.00 is the next downside target. First resistance is the reaction high crossing at 1681.30. Second resistance is the reaction high crossing at 1699.60. First support is April's low crossing at 1613.00. Second support is the 75% retracement level of the December-February rally crossing at 1595.00.

Dollar Likely Holds Clues Regarding the Immediate Future

Why the U.S. Dollar is Critical for the S&P 500 Index this Week

Recently I have been advising members of my service to be cautious as the market appears to be at a major crossroads. The U.S. Dollar Index is on the verge of a major breakdown. If a breakdown occurs it will be clear that the Federal Reserve will have officially stopped any potential rise in the U.S. Dollar. 

If the U.S. Dollar pushes down below the recent lows and we get continuation to the downside, we will break the recent bullish pattern. Furthermore, if the Dollar starts to weaken it should benefit equities and other risk assets such as oil. Higher energy prices would not be long term bullish for equity markets so there is concern if the Dollar really starts to extend lower.

Over the past few months the Dollar has been producing a series of higher highs and higher lows, however the current cycle may break the pattern.....as can be seen here.

"Why the U.S. Dollar is Critical for the S&P 500 Index this Week"