Wells Fargo Securities Senior analyst Roger Read explains why Tesoro and Western Refining are able to take advantage of the middle of the US for refining.
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Tuesday, July 17, 2012
Monday, July 16, 2012
Crude Oil, Natural Gas and Gold Market Recap from the CME Group for Monday July 16th
The Next Major Move in Precious Metals Is Close
September crude oil showed positive reversal action on the session, mounting a come back from early morning lows to register its highest close since May 29th. While a weaker than expected report on US retail sales pressured risk appetites, the crude and product markets were able to stabilize and turn higher. A turn lower in the US dollar and reports of a US Navy ship opening fire on a boat in the UAE supported the turn higher in crude oil prices. Chatter that Chinese officials could be closer to extending another round of monetary stimulus provided an added jolt to the crude oil market throughout the session. Gains in the expiring August Brent crude oil contract also offered the WTI market a modest lift.
Natural gas prices are giving back a portion of the post inventory report gains from last week. As I have been discussing at length in this newsletter the price of Nat Gas futures is not in sync with what the current fundamentals will support. The weather is moving toward another round of very hot weather over major portions of the US but the new round of very high temperatures will not last as long as the last bout of hot weather nor will the extreme heat cover as much of the US as the last round. There will be a call on Nat Gas for cooling demand over the next several weeks but based on the latest NOAA forecast the demand pull for Nat Gas may not be as strong as it was back in June.
The gold market swung around on both sides of unchanged today and after the weak morning action that might be considered a psychological victory for the bull camp. In addition to a reversal in the dollar, gold was also benefited at times by renewed US easing talk in the wake of a much softer than expected US retail sales report. As opposed to last week, when silver periodically outperformed the gold market, gold generally outperformed the silver market today. Apparently the rest of the metals complex was undermined by residual slowing fears, while gold was able to break away from the pack and avail itself of some speculative interest ahead of this week's Fed testimony.
Posted courtesy of The CME Group
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September crude oil showed positive reversal action on the session, mounting a come back from early morning lows to register its highest close since May 29th. While a weaker than expected report on US retail sales pressured risk appetites, the crude and product markets were able to stabilize and turn higher. A turn lower in the US dollar and reports of a US Navy ship opening fire on a boat in the UAE supported the turn higher in crude oil prices. Chatter that Chinese officials could be closer to extending another round of monetary stimulus provided an added jolt to the crude oil market throughout the session. Gains in the expiring August Brent crude oil contract also offered the WTI market a modest lift.
Natural gas prices are giving back a portion of the post inventory report gains from last week. As I have been discussing at length in this newsletter the price of Nat Gas futures is not in sync with what the current fundamentals will support. The weather is moving toward another round of very hot weather over major portions of the US but the new round of very high temperatures will not last as long as the last bout of hot weather nor will the extreme heat cover as much of the US as the last round. There will be a call on Nat Gas for cooling demand over the next several weeks but based on the latest NOAA forecast the demand pull for Nat Gas may not be as strong as it was back in June.
The gold market swung around on both sides of unchanged today and after the weak morning action that might be considered a psychological victory for the bull camp. In addition to a reversal in the dollar, gold was also benefited at times by renewed US easing talk in the wake of a much softer than expected US retail sales report. As opposed to last week, when silver periodically outperformed the gold market, gold generally outperformed the silver market today. Apparently the rest of the metals complex was undermined by residual slowing fears, while gold was able to break away from the pack and avail itself of some speculative interest ahead of this week's Fed testimony.
Posted courtesy of The CME Group
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Saturday, July 14, 2012
The Next Major Move in Precious Metals Is Close
What the GLD ETF Chart tells us about GOLD
After making new highs about a year ago we have seen Silver and Gold consolidate for roughly the last twelve months. Technically, it would typically be a bullish scenario with gold from the stand point that the last 12 months’ price action was a sideways consolidation in a bullish pennant formation. However over the last year we have witnessed a series of lower highs and increasingly tested supports levels around $150 on GLD which raises caution.
With the fed pulling any extensions on further quantitative easing in the form of QE3 or other programs, the bullish case has lately been criticised. However I am still a firm believer that gold in most respects is a currency, and the only one that can maintain its value. There are very serious issues looming in Europe and across the world that are far from resolution. With few tools left in the toolbox to stimulate world economies, further easing can never be ruled out.
Silver, after breaking through strong resistance around $19- $20 in September 2011 went almost parabolic in spring 2011 prior to giving up most of its gains in the last year. There seems to be significant support around $26 on SLV, however this level has been tested quite frequently over recent months and this again raises caution. While silver owes some of its moves to its industrial application, the high correlation between the two metals is not to be ignored.
I think the long term trade will be long in both metals, but I’m waiting to see a significant breakout out of these consolidations on heavy volume to confirm a direction. I would like to see both precious metals break out of their respective consolidations and ultimately have further confirmation in the USD. Any major headlines over the next couple months involving Europe or quantitative easing may provide us with the trigger for the next big move.
Get My FREE gold cycles and trading analysis here at The Gold & Oil Guy.com
Chris Vermeulen
Make sure to also read "Gold Cycles Will Soon Forecast Where Prices Are Headed"
After making new highs about a year ago we have seen Silver and Gold consolidate for roughly the last twelve months. Technically, it would typically be a bullish scenario with gold from the stand point that the last 12 months’ price action was a sideways consolidation in a bullish pennant formation. However over the last year we have witnessed a series of lower highs and increasingly tested supports levels around $150 on GLD which raises caution.
With the fed pulling any extensions on further quantitative easing in the form of QE3 or other programs, the bullish case has lately been criticised. However I am still a firm believer that gold in most respects is a currency, and the only one that can maintain its value. There are very serious issues looming in Europe and across the world that are far from resolution. With few tools left in the toolbox to stimulate world economies, further easing can never be ruled out.
Silver, after breaking through strong resistance around $19- $20 in September 2011 went almost parabolic in spring 2011 prior to giving up most of its gains in the last year. There seems to be significant support around $26 on SLV, however this level has been tested quite frequently over recent months and this again raises caution. While silver owes some of its moves to its industrial application, the high correlation between the two metals is not to be ignored.
I think the long term trade will be long in both metals, but I’m waiting to see a significant breakout out of these consolidations on heavy volume to confirm a direction. I would like to see both precious metals break out of their respective consolidations and ultimately have further confirmation in the USD. Any major headlines over the next couple months involving Europe or quantitative easing may provide us with the trigger for the next big move.
Get My FREE gold cycles and trading analysis here at The Gold & Oil Guy.com
Chris Vermeulen
Make sure to also read "Gold Cycles Will Soon Forecast Where Prices Are Headed"
Friday, July 13, 2012
What the GLD ETF Chart tells us about GOLD
Gold had remained in a rough 1550-1640 range for several weeks now. Tonight, we look at the GLD ETF, which represents the Gold spot price movements. Over the past 5 months we can see in the chart below the clear downtrend lines.
Recently, in the past 6 weeks we have seen a series of 3 higher lows including today where a lower gap filled in and then Gold reversed upwards.
What Gold needs to do, in terms of this GLD ETF is clear the 158 hurdle on a closing basis to set up a stage for a new advance. I would expect in the intervening months to October for Gold to continuing meandering and correcting to as low as 1445-1455, my longstanding Gold worst case low targets I’ve had since last September.
Near term key levels are 150 on the downside and 158 on the upside. If we close below 150 on GLD ETF then we should be looking for my 1445-1455 areas to be hit this summer before a low. If we clear 158 on the GLD ETF, then the triple bottom at 1520 is likely confirmed and we can start tracking some upside for Gold.
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Using ETF's to Invest in MLP's
If you have been thinking about taking advantage of the dividends associated with MLP's but can't decide on a ticker, maybe an ETF is the way to go. In todays video Dean Zayed, CEO of Brookstone Capital, tells us how to play this using ticker AMJ as well as a couple of others.
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CME Crude Oil, Natural Gas and Gold Report for Friday July 13th
August crude oil prices established a higher high during the initial morning hours, helped by a rebound in risk taking sentiment in the wake of an as expected Chinese GDP report. While China's second quarter growth slowed to a pace not seen in three years, the reading appeared to inspire greater speculation for more economic stimulus. That is seen as a force bolstering the demand prospects for crude oil. The market also appears to be supported by reports of tighter North Sea supplies and greater US sanctions against Iran.
August natural gas prices traded in a tight overnight range as they consolidated yesterday's upside reversal action. This came after the market soldoff in reaction to yesterdays EIA storage data that showed a slightly larger than expected injection of 33 bcf. Total storage stands at 3,135 bcf or 19.7% above the 5 year average. Over the last four weeks natural gas storage has increased 191 bcf. Some traders viewed the EIA storage data as a positive because the weekly injection was about one third of the longer term average injection for this week of the year.
Gold traded nearly flat, but remained on course for a second consecutive week of losses as worries about the euro zone debt crisis and the absence of stimulus measures in the United States buoyed the dollar and its safe haven appeal. Spot gold was little changed at $1,570.14 an ounce, heading for a weekly decline of 0.8 percent.
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August natural gas prices traded in a tight overnight range as they consolidated yesterday's upside reversal action. This came after the market soldoff in reaction to yesterdays EIA storage data that showed a slightly larger than expected injection of 33 bcf. Total storage stands at 3,135 bcf or 19.7% above the 5 year average. Over the last four weeks natural gas storage has increased 191 bcf. Some traders viewed the EIA storage data as a positive because the weekly injection was about one third of the longer term average injection for this week of the year.
Gold traded nearly flat, but remained on course for a second consecutive week of losses as worries about the euro zone debt crisis and the absence of stimulus measures in the United States buoyed the dollar and its safe haven appeal. Spot gold was little changed at $1,570.14 an ounce, heading for a weekly decline of 0.8 percent.
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Wednesday, July 11, 2012
Gold Cycles Will Soon Forecast Where Prices Are Headed
Gold and stock market forecaster have been using cycles in price that repeat every certain amount of trading days to help them spot key reversal areas in the financial market. Almost everything in life seems to go in cycles and commodity prices and the stock market are no different.
As we all know the market is very difficult to forecast when using only one set of analysis like cycles. Analyzing price action, volume, market sentiment, market breadth, trends and inter-market analysis are the other key areas which one must understand before they can be in the zone (ZEN) with the financial market and properly forecast future prices.
This report will show you just how well cycles work if applied and traded properly.
The chart below is of gold and shows its short term trading cycles. I will admit this chart is hard on the eyes and as ugly as they get to bear with me.
Three different cycles have been applied to the chart using a short, intermediate and long term cycle wave length. The general idea here is that you want to trade with the underlying trend, then use these short term cycles to profit from weekly price swings.
Gold has been in a down trend for a year so the focus should be on shorting the bounces. Focusing on selling short gold during a time with 2 or more cycles are topping as you stand a great chance of the price moving in your favor within 1-3 days.
Once the price starts to move in your favor you want to scalp to profits once the short term (green) cycle drops near a reversal level. Once this takes place I always tighten my stops to breakeven, lock in some profits and continue to wait for another cycle to reach the bottom at which point I take more profit off the table and tighten my protective stop once again.
As you can see this is not the perfect system but it makes money, and if you apply more analysis to the market you can lock in more of these moves using intraday charts, volume, and sentiment levels.
How to Find Market Cycles
You must have an analysis tool that can read the market and find cycles within it. Once you know how many days the most frequent cycles are occurring you can then use a custom cycle indicator to overlay them on the charts as seen in the gold chart above. The visual overlay is the key to spotting market reversals and areas to add to a position or trim profits. Look at the chart below for a visual of how I find my cycles.
Gold Cycle Forecast Conclusion:
In short, gold overall remains in a down trend. But from looking at the gold chart and its short term cycles I have a feeling we will be seeing price trade sideways this week and a bounce next week.
The next week will be very interesting as these cycles will actually give us an early warning if the overall gold market is about to bounce or sell off. The question is what the cycles do in the next few days while gold flirts with support…
It does take some time/experience to read the cycles and get a feel for how they move so don’t worry about it if you don’t fully grasp the idea from this short article.
Find out more on cycles and trading at The Gold & Oil Guy.com
Rising Production in the Permian Basin
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The Permian Basin, a long time oil and natural gas producing region in west Texas and eastern New Mexico, is showing signs of new life. The active rig count has grown from 100 rigs in mid 2009 to over 500 rigs in May 2012. According to data from the Texas Railroad Commission and the New Mexico Energy, Minerals and Natural Resources Department, oil production from the Permian has increased fairly steadily over the past few years, reaching the 1 million barrels per day (bbl/d) threshold in late 2011, the first time since 1998.
Growing oil production in the Permian Basin and other Texas plays, most notably the Eagle Ford shale, may be starting to strain existing takeaway capacity and is creating a need for Texas oil to serve more distant refineries. While new pipeline projects are scheduled to come online, current transportation constraints have caused Permian crude oil, which is priced in Midland, Texas, to sell at a significant discount to WTI beginning in January 2012.
The Permian Basin, a long time oil and natural gas producing region in west Texas and eastern New Mexico, is showing signs of new life. The active rig count has grown from 100 rigs in mid 2009 to over 500 rigs in May 2012. According to data from the Texas Railroad Commission and the New Mexico Energy, Minerals and Natural Resources Department, oil production from the Permian has increased fairly steadily over the past few years, reaching the 1 million barrels per day (bbl/d) threshold in late 2011, the first time since 1998.
Sources: U.S Energy Information Administration, based on Baker Hughes, Railroad Commission of Texas, and New Mexic
Growing oil production in the Permian Basin and other Texas plays, most notably the Eagle Ford shale, may be starting to strain existing takeaway capacity and is creating a need for Texas oil to serve more distant refineries. While new pipeline projects are scheduled to come online, current transportation constraints have caused Permian crude oil, which is priced in Midland, Texas, to sell at a significant discount to WTI beginning in January 2012.
Tuesday, July 10, 2012
CME Group Crude Oil, Natural Gas and Gold Market Recap for Tuesday July 10th
Natural gas remains on a bit of a roller coaster ride... big decline on Friday, strong recovery on Monday and yet another sell off today. This type of trading action is very indicative of a market forming a top as well as a market that is laden with uncertainty. The main uncertainty that continues to hover over this market is will the rest of the summer weather result in enough cooling related demand to prevent the industry from hitting storage capacity limitations prematurely.
The EIA in the latest forecast (see below for the main highlights) is projecting inventory at the end of October to hit a record high of 4 TCF. With maximum storage capacity of just 4.1 TCF (EIA numbers) that leaves just 100 BCF storage space available for injections during the month of November... which are common...especially if winter type weather gets a late start. This also assumes that storage capacity is equally distributed in all three regions...which it is not. We could hit capacity limitation in the Producing region well before other regions.
The other issue overhanging this market is what will be the strategy of the utility sector in how much coal versus Nat Gas they consume for power generation. At current prices the economics are favorable to coal and I would expect utilities to burn more coal in lieu of Nat Gas and unless the Nat Gas price falls back to below the $2.70 to $2.75 level this move back to coal will continue. If so hitting record high inventory levels could then occur earlier than the EIA projection of the end of October.
After an early attempt to rally gold prices fell back and in the process the August gold fell back to this week's lows. Adverse currency market action, a noted reversal in equities and selling in a number of physical commodity markets seemed to leave gold in a patently bearish posture. Surprisingly gold was initially lifted on hopes for favorable progression in the Euro zone debt crisis but that story line ultimately seemed to be responsible for the washout in gold prices. In retrospect, seeing evidence of added weakness in the Chinese economy, in the wake of the Chinese trade deficit released seemed to spark fears that more serious slowing was in the offing before the Chinese begin to pull out the really aggressive stimulus guns.
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The Slide in Metals, Corn & Crude Oil
CNBC's Sharon Epperson discusses the day's activity in the commodities markets and looks at where oil and precious metals are likely headed tomorrow.
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