CME Morning Crude Oil Market Report For Tuesday June 19th

August crude oil prices traded lower throughout the overnight and early morning hours but were able to turn positive heading into the US opening. It is possible that reports that G-20 leaders were boosting IMF's funding, along with hopes that further stimulus could come from a two day FOMC meeting and potential interest rate cut by the ECB has offered a modest lift to crude oil.

August Brent crude oil registered a new 17 month low this morning, and it too has been able to climb back into positive territory. It is also possible that slow progress in talks between world powers over Iran's nuclear program in Moscow have presented a measure of support to the crude oil market. Negotiations over easing sanctions on Iran made little progress yesterday and seemed to come with tough language.

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Just Like the Good Old Days....Crude Oil Down, Natural Gas Up

Crude oil closed down $1.05 a barrel at $83.00 today. Prices closed nearer the session low today and scored a bearish “outside day” down on the daily bar chart. The stronger U.S. dollar index weighed on crude oil prices today. The crude bears still have the solid overall near term technical advantage. There are still no early technical clues to suggest a market bottom is close at hand.

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Natural gas closed up 17.7 cents at $2.644 today. Prices closed near the session high again today and hit a fresh four week high. Short covering and bargain hunting were featured again today. Bulls have gained good upside near term technical momentum recently to suggest a market low is in place. Bulls and bears are now on a level near term technical playing field.

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Gold futures closed down $0.70 an ounce at $1,627.30 today. Prices closed nearer the session high today on some chart consolidation following recent gains. The key “outside markets” were bearish for gold today as the U.S. dollar index was higher and crude oil prices were lower. Yet, gold managed to have only small losses, which does suggest safe haven demand for gold is present. Gold market bulls have the slight near term technical advantage.

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Chesapeake's New Chair to be Named

Chesapeake Energy's new chairman and additional directors will be named by Friday, reports CNBC's Kate Kelly.



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Working Crude Oil Storage Capacity at Cushing, Oklahoma Rises

As of March 31, 2012 working crude oil storage capacity at the Cushing, Oklahoma storage and trading hub was 61.9 million barrels, an increase of 6.9 million barrels (13%) from September 30, 2011 and 13.9 million barrels (29%) from a year earlier, as reported in EIA's recently released report on Working and Net Available Shell Storage Capacity.

Utilization of working storage capacity on March 31, 2012 was 64%, an increase from the 53% observed in September 2011, but lower than the 86% observed on March 31, 2011. The report also noted that operating shell storage capacity increased 8.1 million barrels (12%) from September 30, 2011 to reach 74.6 million barrels.

Both storage capacity and the level of inventories held at Cushing are closely watched market indicators, as Cushing is the market hub for West Texas Intermediate (WTI) crude oil that is the basis for crude oil futures contracts traded on the New York Mercantile Exchange. High inventory levels at Cushing have been a symptom of transportation constraints that have resulted in WTI trading at a discount relative to comparable grades of crude oil since early 2011.

Growing volumes of U.S. crude oil production, along with a higher level of imports from Canada, have helped contributed to the record levels of inventories at Cushing. Increased flows of crude oil from these two sources, along with expectations for future increases, have consequently created the need for additional storage at the hub.

Weekly data show that as of June 1, 2012, crude oil inventories held at Cushing were 47.8 million barrels, the highest level on record and very close to total working storage capacity as of March 2011. However, due to the growth in storage capacity between March 2011 and March 2012, the utilization rate for working storage capacity at Cushing has actually declined over the past 14 months.

SP 500 and Crude Oil Monday Morning Madness

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Crude oil prices are trading lower in early trading today. Trading has turned choppy but bears still have the overall near term technical advantage. In July crude, look for buy stops to reside just above resistance at $84.00 and then at $85.00. Look for sell stops just below technical support at $83.00 and then at $82.50.

In S&P 500 futures Prices hit a fresh four week high overnight. The shorter term moving averages (4-, 9- and 18- day) are bullish early today. The 4 day moving average is above the 9 day and 18 day. The 9 day is above the 18 day moving average. Short term oscillators (RSI, slow stochastics) are neutral to bullish early today.

Today, shorter term technical resistance comes in at the overnight high of 1,347.00 and then at 1,360.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday's low of 1,324.40 and then at 1,305.80. Sell stops are likely located just below those levels.

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The Facts Behind Oil Prices

Posted courtesy of Gary Morsches at the CME Group....

Following up on my post about the benefits of speculation, and what really impacts the price of oil and gasoline, it’s worth sharing this infographic we designed to visually break down the elements that determine the price of energy. As you can see, it’s a mixture of many factors, each of which carries a varying amount of influence depending on current economic and geopolitical conditions.

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Crude Oil, Natural Gas and Gold Market Commentary For Thursday Evening June 14th

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Crude oil closed higher on Thursday as it consolidates above the 87% retracement level of the 2011-2012 rally crossing at 81.36. The high range close sets the stage for a steady to higher opening when Friday's night session begins. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If July renews this spring's decline, last October's low crossing at 77.05 is the next downside target. Closes above the 20 day moving average crossing at 87.21 are needed to confirm that a low has been posted. First resistance is the reaction high crossing at 87.03. Second resistance is the 20 day moving average crossing at 87.21. First support is Tuesday's low crossing at 81.07. Second support is last October's low crossing at 77.05.

Natural gas closed sharply higher on Thursday and above the 20 day moving average crossing at 2.487 signaling that a double bottom with April's low appears to have been posted. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are oversold and are turning neutral to bullish with today's rally hinting that sideways to higher prices are possible near term. Multiple closes above the 20 day moving average crossing at 2.487 are needed to confirm that a short term low has been posted. If July renews the decline off May's high, April's low crossing at 2.136 is the next downside target. First resistance is today's high crossing at 2.522. Second resistance is May's high crossing at 2.838. First support is today's low crossing at 2.168. Second support is April's low crossing at 2.136.

Gold closed higher on Thursday as it extends this week's rally off last Friday's low. The high range close sets the stage for a steady to higher opening when Friday's night session begins trading. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If August renews the rally off May's low, April's high crossing at 1674.30 is the next upside target. Closes below the 20 day moving average crossing at 1591.10 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 1632.00. Second resistance is May's high crossing at 1674.30. First support is the 20 day moving average crossing at 1591.10. Second support is May's low crossing at 1529.30.

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Natural Gas Steals The Headlines on EIA Injection Report

Today's story in Nat Gas is all about the weekly EIA injection report which came in below all of the market expectations today sending the market into an instant short covering rally that is still underway as of this writing. The inventory injection was below the market consensus as well as below last year and the five year average for the same week.

So far the weekly injections have underperformed for the entire injection season so far. This pattern will have to continue to avoid storage from hitting maximum capacity limitations before the end of the injection season (normally around the end of November to early December). Keep in mind in the short term the market will have limited upside as rising prices will eliminate the economic advantage of Nat Gas over coal for power generation.

This switching has contributed strongly to injections underperforming for the last three months. I still view this market as trading most of the time in the $2.25 to $2.50/mmbtu trading range.

Today's EIA report was bullish from the perspective that the injection was below the consensus level and bullish when compared to last year and the five year average injection level for the same week. The EIA injection was 7 BCF below the consensus (74 BCF) and below last year's injection and below the injection level for the five year average for the same week.

The net injection of 67 BCF was less than my model forecast (70 BCF) this week and at the very low end of the range of market projections. The inventory surplus narrowed modestly versus both last year and the more normal five year average also. The current inventory level is now 666 BCF above the five year average.

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CNBC's Sharon Epperson discusses todays spike in natural gas prices and the day's activity in the commodities markets and looks at where crude oil and precious metals are likely headed tomorrow.

CME: Simplest Way to Describe Oil Market....Uncertainty

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The simplest way to describe the oil markets as well as the broader risk asset markets is in one word "uncertainty". Uncertainty is coming from many different directions all at the same time. June is the month of events and thus the month of above normal uncertainty. In the last five trading sessions oil prices have reversed direction each day demonstrating the lack of conviction by the majority of market participants. Each 30 second news snippet hitting the media airwaves sends the market in different directions as traders and investors try to sort out what is the next issue to emerge from the growing risk pyramid.

Today the first of the many June events will become clearer as OPEC decides what their forward production levels will be. There has been a group of OPEC members or the hawks...Iran & Venezuela in particular who are calling for a cut in production to bolster prices after about a $25/bbl decline over the last month or so. On the other hand the doves led by Saudi Arabia are looking to actually increase the official production ceiling and were showing no signs of agreeing to a cut ahead of the official meeting. History has told us that the position the Saudi's take heading into the meeting is generally the outcome of the meeting. All signs suggest history will repeat itself today and there will be no cuts in production with the official ceiling staying the same of raised marginally. I am expecting a rollover of the existing agreement.

This seems to be the outcome that the consensus of market participants has been expecting for the last several weeks and if the expectations are met I do not expect any major move in oil prices after the meeting communiqué is issued solely based on the outcome of the OPEC meeting. Oil prices are likely to remain in the $80 to $90/bbl range basis WTI and $95 to $105/bbl trading range basis Brent until the next round of events hit staring on Sunday. The outcome of the OPEC meeting...especially one that is likely to be a status quo meeting is certainly not the most important issue facing all of the risk markets in the short term and certainly not the main price driver for oil or the major risk asset markets.....Read the entire report.

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Crude Oil Continues in Trading Range Slightly Above 87% Retracement

Crude oil closed lower on Wednesday but remains above the 87% retracement level of the 2011-2012 rally crossing at 81.36. The low range close sets the stage for a steady to lower opening when Thursday's night session begins. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If July renews this spring's decline, last October's low crossing at 77.05 is the next downside target. Closes above the 20 day moving average crossing at 87.66 are needed to confirm that a low has been posted. First resistance is the reaction high crossing at 87.03. Second resistance is the 20 day moving average crossing at 87.66. First support is Tuesday's low crossing at 81.07. Second support is last October's low crossing at 77.05.

Natural gas closed lower on Wednesday as it extended the decline off May's high. 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 July renews the decline off May's high, April's low crossing at 2.136 is the next downside target. Closes above the 20 day moving average crossing at 2.496 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 2.496. Second resistance is May's high crossing at 2.838. First support is Tuesday's low crossing at 2.173. Second support is April's low crossing at 2.136.

Gold closed higher on Wednesday as it extends the rebound off last Friday's low. The high range close sets the stage for a steady to higher opening when Thursday's night session begins trading. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term. If August renews the rally off May's low, April's high crossing at 1674.30 is the next upside target. Closes below the 20 day moving average crossing at 1586.90 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 1632.00. Second resistance is May's high crossing at 1674.30. First support is the 20 day moving average crossing at 1586.90. Second support is May's low crossing at 1529.30.

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