Oil N Gold: Commodities Extend Weakness as Investors Avoid Risks

Crude Oil prices extend weakness for a third consecutive day as global risk aversion jumps amid Goldman's case. WTI crude oil price slides to 80.8 in European session, after plummeting -2.69% to 83.24 last Friday. Declines in heating oil and gasoline also accelerate with losses of -3% and -2% respectively.

After disclosing production of 29.26M bpd in March (+5.6% y/y), OPEC will probably increase shipment, by +0.9%, in the 4 weeks ending on May 1. This further increases oil supply which is already in a surplus in the market. Member countries are boosting production regardless insufficient demand.

In an interview over the weekend, Qatar's oil minister Abdullah bin Hamad al-Attiyah said there's no need for a special meeting before its October meeting but he mentioned that recent rally in oil price was is 'not related at all to there being a shortage...We see that inventories are at their highest'.

Natural gas has fallen in consolidative phase since April. However, resumption of inventory builds indicates risk of price is to the downside. Gas supply will likely remain ample in coming years as large producers are not going to cut output despite slump in prices.

Although Algeria's energy minister Chakib Khelil plans to seek commitments from 11 gas exporting nations to reduce output, both Russia and Qatar, respectively the biggest and the third biggest holders of the world's reserves, will probably refuse to collaborate.

Gold price slides due to broad based decline in commodities and weakness in the Euro. Currently trading at 1130, the benchmark contract fell to as low as 1124 earlier today. Despite the fall, gold's performance is relatively resilient when compared with oil prices. Some investors buy gold as they lose confidence on currencies on Greece's issue.

Talks on Greece involving the European Commission, the IMF and the European Central Bank have been delayed until April 21 as a volcanic ash cloud disrupted air travel. The market expects the EU and the IMF will impose tough conditions for the rescue package for Greece. The spread between Greek and German 10 year government debt widened +32 bps to 462 bps, the highest level since October 1998.

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Crude Oil Extends Decline on Speculation Recovery in Demand Is Trailing Supply

Crude oil fell for a third day on speculation the commodity’s climb to an 18 month high have outpaced a recovery in global demand. Oil extended losses after tumbling 2.7 percent on April 16, the most in 10 weeks. Prices are being driven by speculation and currency movements and there’s no need for OPEC to review output before its October meeting, Qatar’s oil minister Abdullah bin Hamad al-Attiyah said yesterday. The dollar strengthened against the euro, reducing the appeal of commodities.

“We’ve still got higher than average stockpiles in various markets, including the U.S.,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney. OPEC “will want to see those stockpiles drawn down further before they consider increasing supply.” Crude oil for May delivery fell as much as $1.58, or 1.9 percent, to $81.66 a barrel in electronic trading on the New York Mercantile Exchange. It was at $81.73 at 11:14 a.m. Singapore time. Prices have declined in eight of the nine trading days after touching $87.09 on April 6, the highest since October 2008.

The May contract, which expires tomorrow, lost $2.27 on April 16 to $83.24 a barrel, the biggest drop since Feb. 5. Prices slumped after the U.S. Securities and Exchange Commission accused Goldman Sachs Group Inc. of fraud, triggering a selloff in commodity and equity markets. The more widely held June future was down $1.30, or 1.5 percent, at $83.37 today.

Greece Bailout
The euro fell to a one week low against the dollar after European Union finance ministers told Greece to brace itself for the International Monetary Fund’s conditions on a bailout package. The U.S. currency was at $1.3460 per euro at 10:40 a.m. in Singapore, from $1.3503 April 16 in New York. “There will be fits and starts to do with the recovery story and I think this Goldman news is another event that seems to have exposed the fragility of market confidence,” said CWA’s Hassall. “Longer term, the global recovery story is going to continue to drive the oil market.”

Oil at $90 a barrel would be harmful and may “jeopardize the market,” according to Angola’s oil minister, Jose Maria Botelho de Vasconcelos. A “good level” is between $70 and $80, he said yesterday at a gas conference in Oran, Algeria. Angola and Qatar are members of the Organization of Petroleum Exporting Countries, which pumps 40 percent of the world’s oil. The group slashed output by a record 4.2 million barrels a day beginning January 2009 to prevent a supply glut as the global economy sank into recession. Ministers voted to maintain official output targets at a March 17 meeting in Vienna.

Speculators
Hedge fund managers and other large speculators trimmed bets on rising oil prices for the first time in three weeks, U.S. Commodity Futures Trading Commission data showed.
Speculative net long positions, or the difference between orders to buy and sell the commodity on the New York Mercantile Exchange, decreased 12 percent to 113,364 contracts on April 13, the commission said last week. Brent crude oil for June settlement fell as much as $1.36, or 1.6 percent, to $84.63 a barrel on the London based ICE Futures Europe exchange. The contract was at $84.77 at 11:10 a.m. Singapore time.

Reporters Gavin Evans can be reached at gavinevans@bloomberg.net and Yee Kai Pin at kyee13@bloomberg.net


The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010


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Precious Metals & Oil ETF Trend Trading

Last week was exciting with broad market and gold forming an intraday reversal pattern after a long overbought rally, then broke down though short term key support levels. While this move lower was tough on the pocket book for those who chased the market up the past few days and/or were not moving their protective stops up, this move is good for the health of the market.

This pullback is actually a good thing for us active traders who wait for low risk setups and don’t chase prices higher, but rather buy on the dips in a bull market when most of the risk has been flushed out already. Trading with low risk setups is not the most exciting type of trading because there are not a ton of setups but if one can be patient and wait for these plays it is a very profitable strategy in the long run.

Those traders who live and breathe the market focusing on trading intraday price action most likely made a small fortune last week with Fridays sell off in stocks and precious metals. You can see how some of us took advantage of this sharp pullback last week with my before and after videos.

Below are the charts showing what I am currently thinking is going to happen for gold, silver, gold stocks and oil. I will be tracking the market with intraday charts to help pin point a low risk entry point for a possible short or long position as the market unfolds this week.

GLD – Gold Trading ETF

The chart below is an updated chart which I have showed several times. It shows how gold corrected, bottomed and is now trending back up. This week I will be watched closely to be sure we take a position which has the highest probability of working in our favor if and when a low risk setup occurs.



SLV – Silver Trading ETF

Silver really took a hit on Friday. It is now trading near support but there is not much we can do until we see what happens on Monday. There could be a bounce or more down side, tough to call right now…. And it’s not something you want to be on the wrong side of.



Gold Stocks – Gold Stock Trading

Gold stocks did not drop as much as I thought they would which indicates the market is still very bullish on gold. There is still potential for more downside… so I am letting the market unfold before doing anything.



USO – Oil Trading Fund

You can see oil moved down sharply on Friday and is now testing both a price support level and trendline support. Although this looks like a perfect setup, the market is designed to shake people out of positions before continuing the move. So it is likely for oil to dip which would break both these support levels triggering stop orders. Then the price should drop to the key support level where support should be found for at least a bounce or a new bottom.



Precious Metal & Oil ETF Trading Conclusion:

In short, the market had a nice correction on Friday and the heavy selling volume indicates that we are getting close to a larger correction which should provide two swing trades, a shorting opportunity and a new buying opportunity in the coming days, weeks or months depending how long the market takes with this pullback/correction.

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Where is Crude Oil Headed Next Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets and looks ahead to where oil is headed next week.





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Crude Oil Weekly Technical Outlook

Crude oil had a rebound attempt last week but failed at 86.39, below near term high of 87.09, and reversed sharply. The close below near term rising trend line argues that rise from 69.50 is over after hitting 61.8% projection of 69.50 to 83.16 from 78.56 at 87.00. But we'll need more evidence to confirm. Hence, we'll stay neutral first. On the upside, above resistance will suggest that recent rally is still in progress for 90 psychological level before making a top. On the downside, however, firm break of 38.2% retracement of 69.50 to 87.09 at 80.37 will confirm that rise from 69.50 is over and will bring deeper fall to 61.8% retracement at 76.22 and below.

In the bigger picture, note again that medium term rise from 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Our preferred view is that rise from 33.2 is in form of a three wave structure (73.23, 65.05, ?) and should be near to completion. Strong resistance is expected around 90 psychological level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring reversal. Hence, even though another rally cannot be ruled out, upside potential should be limited. On the downside, break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Bulls Lose Their Momentum.....Crude Oil Closes Below 20 Day Moving Average

Crude oil closed lower on Friday and below the 20 day moving average crossing at 83.56 confirming that a short term top has been posted. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If May extends today's decline, the 38% retracement level of the February-April rally crossing at 80.66 is the next downside target. Closes above Wednesday's high crossing at 86.39 would temper the near term bearish outlook. First resistance is today's high crossing at 85.44. Second resistance is this month's high crossing at 87.09. First support is today's low crossing at 82.52. Second support is the 38% retracement level of the February-April rally crossing at 80.66.

Natural gas closed higher due to short covering on Friday and the high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. Multiple closes above the reaction high crossing at 4.334 are needed to confirm that a low has been posted. If May renews this winter's decline, weekly support crossing at 3.502 is the next downside target. First resistance is the reaction high crossing at 4.334. Second resistance is the 25% retracement level of the October-April decline crossing at 4.405. First support is the reaction low crossing at 3.857. Second support is the early April low crossing at 3.810.

The U.S. Dollar closed higher due to short covering on Friday as it consolidates some of the decline off March's high. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends this week's decline, March's low crossing at 79.73 is the next downside target. Closes above the 20 day moving average crossing at 81.30 are needed to confirm that a short term low has been posted. First resistance is today's high crossing at 81.04. Second resistance is the 20 day moving average crossing at 81.30. First support is Wednesday's low crossing at 80.14. Second support is March's low crossing at 79.73.

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Phil Flynn: Crude Oil is Having a Hard Time Following Through

Oil is having a hard time following through on its bullish momentum especially which is particularly disappointing to the bulls especially after China’s red hot GDP numbers. Strong growth numbers out of China seemed to not inspire the type of buying frenzy that one might imagine. Mixed data out of the US and the fact that oil should be getting close to a seasonal peak perhaps is weighing down the marketplace. China did take some steps t o try to slow their economy down from overheating by attacking surging real estate prices and that may be another reason why China’s surging prosperity didn’t trickle down to the oil market. The Financial Times reported that the Chinese State Council said that anyone buying a second home in China would need to put up a 50 per cent deposit up front. That is up from 40 per cent previously. First time homebuyers in China buying homes s bigger than 90 square meters have to put up 30 per cent. The Financial Times says that China instead of raising rates like Australia and India, China has targeted a 22 per cent reduction in new loans from a record $1,400bn last year and twice asked lenders to set aside more cash as reserves.

The last time China's growth accelerated to more than 11 per cent, in the first quarter of 2006, the central bank raised rates within a month. Still the Times said that China's cabinet signaled caution in ending crisis policies, saying first-quarter economic growth was largely driven by stimulus policies and a comparison with low levels in 2009. I think the bulls would like to end the week with the front month closing over $85 to confirm their bullish aspirations which is getting harder to do as we are seeing a lot of rolls continuing from the May into the June and other contract. June has more open interest now yet with record volume and a lot of rocking and rolling to do we could see the contango continue to widen.

The other factor holding oil back is the dollar. The dollar seems to be gaining strength on the ongoing on again off again Greek worries. Oh no. It’s not resolved yet? The Financial Times reported that “Greece capitulated to market pressure yesterday and took an important step towards a bailout from its Eurozone partners and the International Monetary Fund as it formally sought "consultations" over a €30bn-plus loan package to stave off default.” With uncertainty surrounding the latest bailout once again going into the weekend traders may seek the safe haven of the dollar so they can sit back and enjoy their recent stock market profits. Yes that soaring stock market has also provided support. Yet the run while impressive may face some profit taking especially after Google missed the whisper number

Natural Gas’s little foray above $400 ended in an ignominious fashion. The EIA reported that wworking gas in storage was 1,756 Bcf according to EIA estimates. This represents a net increase of 87 Bcf from the previous week and a whopping 16.3 per cent above the five year average. So much for that preseason hurricane premium. Of course ample supplies o cheap natural gas is the unsung hero and a part of the incredible manufacturing come back. Think of the natural gas price as an economic stimulus package that the taxpayer does not have to pay for. We still feel the best way to trade energies and other commodities at this point is to trade the ranges.

Phil can be reached at pflynn@pfgbest.com And make sure to watch him on the Fox Business Network broadcasting all weekend long!

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Crude Oil Daily Technical Outlook For Friday

Crude oil's recovery was limited below 87.09 resistance and drops sharply since then. With 4 hours MACD crossed below signal line, intraday bias is turned neutral again. Note that consolidation from 87.09 is still in progress and deeper fall to 82.51 or below could be seen. Nevertheless, strong support is expected at 61.8% retracement of 78.56 to 87.09 at 81.82 to conclude the correction and bring rally resumption. Break of 87.09 will target 90 psychological level next.

In the bigger picture, medium term rise from 33.2 is still in progress and could extend further higher. Nevertheless, there is no change in the view that it's the second wave of the whole correction that started in 2008 at 147.27. Hence, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, below 78.56 support will be the first signal of topping and will turn focus back to 69.50 support for confirmation.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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Dow and S&P Update Video....Can We Keep Going Higher Forever?

We owe trillions of dollars, but Crude oil is at $86 a barrel, the DOW, S&P, and NASDAQ are making new highs almost everyday and unemployment is officially at 9.7%.

Everything is great! Happy days are here again... Right?

So is the DOW, S&P, and NASDAQ all going to keep going higher forever? Or are the teachings of a dead mathematician going to reverse this juggernaut of a market?

In our new video we show you exactly what we mean and how the these indices could be very close to a very important tipping point.

This is without a doubt, one of the most important videos we have ever made and if you are concerned about your financial future, you don't want to miss it.

As always, our videos are free to watch and there are no registration requirements.


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Where is Crude Oil Headed on Friday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Closes Lower, Bulls Still Maintain The Advantage

Crude oil closed down $0.34 at $85.50 a barrel today. Prices closed nearer the session low today and saw mild profit taking. Crude oil bulls still have the solid overall near term technical advantage. The next upside price objective for the bulls is producing a close above solid technical resistance at the April high of $87.09 a barrel.

Natural gas closed down 19.2 cents at $4.007 today. Prices closed near the session low today and were pressured by a bearish weekly natural gas storage report. Bears have the solid near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at last week's high of $4.334.

Gold futures closed up $0.50 at $1,160.10 today. Prices closed near the session high today and were supported by speculative bargain hunting buying after prices were under selling pressure early on. A stronger U.S. dollar index did limit gains in gold, however. Bulls still have the solid near term technical advantage. A nine week old uptrend line is in place on the daily bar chart.

The U.S. dollar index closed up 28 points at 80.58 today. Prices closed near mid-range today. While no serious chart damage has occurred recently the bulls have faded and need to show more power soon. The bulls still have the overall near term technical advantage.


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Phil Flynn: Forget those Fed Fund Futures, Oil is the key!

Ben Bernanke spoke yesterday and the oil market listened. Of course listening to Ben Bernanke and his comment about the price of oil made one wonder whether or not Big Ben gave traders the green light to buy oil. Among other things that the Fed Chairman said about the economy was that the current price of oil was not a threat to the economy. "At this point oil prices are not a serious threat to the recovery," Bernanke told a Congressional Committee. "Clearly if it moves a lot it would be a negative, so we have to watch it."

Of course they have to watch it. If oil prices spin out of control it could endanger an economic recovery which begs the question, at what point does Bernanke see oil prices as a threat? Obviously that is a difficult question as the price of oil can move higher comfortably as long as it accompanies strong economic growth. With Mr. Bernanke basking in the light of some strong data and earnings, it seems the oil price right now is a concern but not a major one. My guess is that Mr. Bernanke’s point of pain on oil is $90 for the rest of the year. That means that instead of watching Fed fund futures for an estimate of when interest rates will raise, perhaps we'd do better to watch the crude oil curve.

If we see oil go solidly above $90 a barrel then perhaps that would be the month we would expect a rate increase. Which means according to the oil market price with the December contract trading currently at 8990, there is an approximate 98 percent chance the Fed will raise rates in December and with January at 9006 over a 100% chance they will increase early next year? If the front month oil contract goes solidly over $90, the pressure on the Fed would be enormous to try to do something despite the subdued core inflation rate.

China is hot, hot, hot. So hot that it's getting too hot for the Chinese government to handle? China's GDP came in at a three year high blistering rate of 11.9% raising fear this morning that China is going to have to do something dramatic to try to slow things down. At the same time Chinese consumer prices climbed 2.4 percent in March which was less than expected. Yet at the same time this is a number that is fraught with danger for the future of the Chinese government. Those fears about China may be one reason the oil market seems less than impressed with China’s strong GDP or perhaps the market feels that yesterday move up in oil basically priced strong China growth in.

How much of the Iranian threat is priced in. Some traders took note of the story about Iran’s capability to shutdown the critical oil export choke point the Straits of Hormuz. Bloomberg News reported, “Iran’s build-up of its defenses gives it the capability to block a major Persian Gulf oil- transit route and project military strength on its territory, the U.S. Defense Department’s intelligence director said. “It does have the ability to restrict access to the Straits of Hormuz with its naval forces temporarily and threaten U.S. forces with missiles,” U.S. Army Lieutenant General Ronald Burgess, director of the Defense Intelligence Agency, told the Senate Armed Services Committee. Iran has taken steps to strengthen its military defenses and cultivate allied terrorist groups targeting the U.S. and Israel, Burgess told the committee. “Iran can conduct limited offensive operations with its strategic ballistic missile program and naval forces,” Burgess said.

Iran has threatened to block the Straits of Hormuz before. The EIA says that narrow Straits of Hormuz between Iran and Oman (21 miles width at its widest point) is the most important choke point for oil shipments from the Persian Gulf. Roughly 17 million barrels per day, more than 20% of the world’s total oil supply, transit this route. If the Straits of Hormuz were blocked, only a small share of the oil could be transported along alternative routes. The most viable is a 745-mile long east-west pipeline through Saudi Arabia to the Red Sea. The possibility that Iran might try to close these straits would cause the mother of all oil spikes but at the same time it would also be the end of the Iranian regime as we know it. The global outrage from such a move would be met with swift and lethal resistance.

Oil also got a boost yesterday on the EIA which showed a surprisingly large crude draw on the East Coast. I suspect that that number will be adjusted somewhat next week to the upside but that does not help us this week. The EIA said that crude oil inventories decreased by 2.2 million barrels from the previous week. At 354.0 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 1.1 million barrels last week, and are above the upper limit of the average range.

Phil Flynn can be reached at pflynn@pfgbest.com. And make sure to watch him every day on the Fox Business Network!

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Crude Oil Trades Little Changed Near $86 on Stronger Dollar, Growth in China

Crude oil fluctuated around $86 a barrel as economic growth in China accelerated and a stronger dollar dampened the investment appeal of commodities. Oil traded between $85.32 and $86.27 today as the economy in China, the second largest oil user, expanded by 11.9 percent in the first quarter. The dollar snapped a five day losing streak against the euro, and U.S. oil supplies fell for the first time in 11 weeks in a government report yesterday.

“The market’s sitting on top of what looks like very impressive data coming out of China,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “You’ve got the dollar pretty strong this morning, yet oil prices are not getting clobbered, which is not something we would have seen three or four months ago.” Crude oil for May delivery rose 15 cents to $85.99 a barrel at 9:53 a.m. on the New York Mercantile Exchange. Oil has climbed 75 percent in the past year.

China’s growth in gross domestic product was higher than the median 11.7 percent estimate in a Bloomberg News survey of 24 economists. The U.S. is the largest energy consuming country. Chinese refiners processed 34.56 million metric tons of crude in March, 18 percent more than the same month last year, according to China Mainland Marketing Research Co., which compiles data for the government. That’s the highest level after volume reached 34.6 million tons in December.

“Today’s sentiment still seems bullish with strong economic statistics from China,” said Andy Sommer, an analyst at EGL AG in Dietikon, Switzerland. The dollar advanced 0.7 percent against the euro to $1.3553 from $1.3653 yesterday in New York.

U.S. Supplies
U.S. crude oil inventories dropped 2.2 million barrels, or 0.6 percent, last week to 354 million barrels, the Energy Department reported yesterday. It was the first decline since the week ended Jan. 22. Supplies were 5.1 percent above the five year average, down from 7.1 percent the week before. Manufacturing production in the U.S. accelerated in March as factories spearheaded the recovery from the worst recession since the 1930s.

Output at factories climbed 0.9 percent after a 0.2 gain in February that was revised from a previously estimated decline, Federal Reserve figures showed today. Warmer weather caused utility use to drop by the most in four years, limiting the overall gain in industrial production to 0.1 percent, less than anticipated. The number of Americans filing claims for jobless benefits unexpectedly increased last week, indicating the improvement in the labor market will take time to unfold.

U.S. Jobs
Initial jobless applications increased by 24,000 to 484,000 in the week ended April 10, the highest level since Feb. 20, Labor Department figures showed today in Washington. A Labor Department spokesman said the rise in claims was due more to administrative factors reflecting volatility around Easter than economic reasons.

Brent crude oil for May, which expires today, rose $1.30, or 1.5 percent, to $87.45 a barrel on the London-based ICE Futures Europe exchange. Earlier, it touched $87.58, the highest level since October 2008. The more actively traded June contract gained 86 cents, or 1 percent, to $87.76 a barrel.

Reporter Margot Habiby can be contacted at mhabiby@bloomberg.net.


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Mid-Week Gold & Oil Trading Report

From guest analyst Chris Vermeulen....

In my last report I showed some cycles for the price of gold and how they were starting to roll over which would in turn put some selling pressure on both gold and silver this week.

Last Monday we saw gold and silver open higher but both were met with selling for the entire trading session. Since then gold and silver have been drifting higher on light volume with some occasional waves of selling on higher volume. It looks as though gold and silver have started a 5-14 day pause or pullback.

GLD – Gold Exchange Traded Fund

You can see from the chart below that the price of GLD looks to have bottomed after completing several typical price patterns from the breakdown we saw in December. The recent 4 months have provided a solid looking chart which should help gold take another run at the $1500 mark in the coming months.



USO Oil Fund



Crude Oil Futures – 120 minute chart of April 14, 2010

As the saying goes, buy on rumor (expectations) sell on the news. Well the price of oil moved up in the early morning anticipating the news (inventory numbers) at 10:30am ET would be in line with estimates. Then we saw profit taking started 2 hours before the number came out which is normal to see. But traders forecasted 1.4 million barrels as the number but the number came out at -2.2 million which was a big surprise for everyone. This sent oil sharply higher providing traders who caught the breaking news with an easy money trade. This type of action does not happen often so it’s a great little bonus for day traders.



Mid-Week Trading Conclusion:

In short, metals have had a nice run recently and the charts are pointing to a short breather before the next upward thrust.

Oil is holding up strong on the daily chart and with today’s extra boost in price, its looking like it may want to start a new leg higher if the momentum carries over for a few more days.

We saw the major indexes surge higher on rising volume indicating buyers are in a panic to buy in fear of missing more gains. There really is no reason to be buying at these prices other than trading off emotions in fear of missing more upside. The problem for these traders is that money is made by those who buy dips in the bull markets. Buying over extended rallies is a dangerous game, especially with the market as overbought as this one. The trend is our friend and if we do get a 1-2 day pullback in stocks we could take small position to buy on a dip.

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Crude Oil Daily Technical Outlook For Thursday Morning

Crude oil retreats after hitting as high as 86.39 but at this point, intraday bias remains cautiously on the upside for 87.09 resistance. As noted before, choppy correction from 87.09 has possibly completed at 82.51 already. Break of 87.09 will confirm rally resumption for 90 psychological level next. On the downside, however, below 84.20 minor support will argue that correction from 87.09 is still in progress and flip intraday bias back to the downside for another test on 82.51. Though, strong support should be seen from 61.8% retracement of 78.56 to 87.09 at 81.82 to conclude the correction and bring rally resumption.

In the bigger picture, medium term rise from 33.2 is still in progress and could extend further higher. Nevertheless, there is no change in the view that it's the second wave of the whole correction that started in 2008 at 147.27. Hence, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, below 78.56 support will be the first signal of topping and will turn focus back to 69.50 support for confirmation.....
Nymex Crude Oil Continuous Contract 4 Hours Chart.




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Crude Oil Extends Gains on Unexpected Decline in U.S. Supply, Increase in Demand

Crude Oil climbed for a second day in New York after a U.S. government report showed an unexpected drop in supplies as gasoline demand increased the most in five years.
Oil rose 2.1 percent yesterday as crude stockpiles dropped 2.2 million barrels last week, the Energy Department said, the first decline in 11 weeks. Supplies were forecast to climb 1.3 million barrels, based on analyst estimates in a Bloomberg News survey. Gasoline use rose 1.3 percent in the four weeks ended April 9, the biggest gain since August 2004.

“The draw in crude was unexpected by the market and is a bit of a release because we have had so many weeks of builds, along with stronger imports into the U.S.,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Demand for gasoline was also up.” Crude oil for May delivery gained as much as 37 cents, or 0.4 percent, to $86.21 a barrel and was at $86.12 in electronic trading on the New York Mercantile Exchange at 9:25 a.m. Singapore time. Yesterday, the contract gained $1.79 to settle at $85.84, ending a five day decline.

U.S. gasoline consumption climbed 119,000 barrels in the four weeks ended April 9 to 9.14 million barrels a day, the Energy Department said. That’s the highest level since October. The dollar traded at $1.3661 per euro from $1.3653 yesterday. A weaker dollar makes commodities more attractive as an alternative investment.
....Read the entire article.


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Where is Crude Oil Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Bulls Hold Solid Near Term Advantage

crude oil closed up $1.91 at $85.96 a barrel today. Prices closed nearer the session high today and were supported by a weaker U.S. dollar index and a bullish weekly DOE stocks report. Crude oil bulls have the solid overall near term technical advantage and gained more upside momentum today.

Natural gas closed up 3.2 cents at $4.192 today. Prices closed near mid-range today on more short covering in a bear market. Bears still have the near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at last week's high of $4.334.

The U.S. dollar index closed down 32 points at 80.30 today. Prices closed near mid-range today and hit a fresh five week low. While no serious chart damage has occurred recently the bulls have faded and need to show fresh power soon. The bulls still have the overall near term technical advantage.

The U.S. stock indexes closed higher again today and hit fresh 1 1/2 year highs. The stock index bulls have the solid overall near term technical advantage. Gentle, nine week old uptrends are in place on the daily bar charts. There are no early technical clues to suggest a market top is close at hand in the stock indexes.

Gold futures closed up $5.10 at $1,158.50 today. Prices closed near mid-range today and were supported by speculative bargain hunting buying after Tuesday's mild sell off. A weaker U.S. dollar index and sharply higher crude oil prices also supported buying interest in gold. Bulls still have the solid near term technical advantage. A nine week old uptrend line is in place on the daily bar chart.



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Crude Oil Bulls Charge Ahead on Surprise Draw

Lifted by a bullish drop in U.S. crude inventories, as well as upbeat economic data on the domestic front, crude futures snapped a recent losing streak on the New York Mercantile Exchange Wednesday to soar past an $85 resistance area. On target to test $90 in the near term, the price of light, sweet crude oil for May delivery added $1.79 to yesterday's final price tag to close higher at $85.84 a barrel. Also rising on today's commodity exchange, NYMEX gasoline futures scaled above $2.32 a gallon, while natural gas spot prices at the Henry Hub burned brighter at $4.20 Mcf.

Rally Reignites
"I think we're seeing the rally that drove oil prices to 18 month highs starting up again," commented Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. The analyst underscored several supportive factors helping to prop up the price per barrel of crude today, including weakness in the dollar, encouraging retail sales for March and positive earnings reports out of U.S. companies. "The stronger earnings reports can point to improving economic conditions, which have played a primary role in rallying oil prices," McGillian explained.

Furthermore, the Energy Information Administration posted surprisingly supportive technical data for the previous week, which renewed risk appetite for the energy commodity and pushed prices back into positive territory. Specifically, crude oil supplies, expected to have grown by 1.4-1.5 million barrels, fell by 2.2 million barrels in the week to Apr. 9. Also paring down bearish levels, gasoline stocks shed 1.1 million barrels last week, trumping forecasts for a mere 600,000 barrel loss.

From reporter Nancy Agin at Rigzone


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Gas Prices Reflect Little Worry over Hurricane Forecast

Last week's price action of natural gas futures suggested there is little concern among buyers about the potential for a more active hurricane season disrupting available gas supply from the Gulf of Mexico. Gas prices bounced around the $4 per Mcf level most of the week, responding to news about the upcoming revision to the EIA's 914 survey of domestic gas production and gas storage inventory data rather than recognition that the latest Colorado State University (CSU) hurricane forecasting team had boosted their estimate of the number of tropical storms, hurricanes and major hurricanes.

There is little concern among gas buyers about the potential for a more active hurricane season disrupting available gas supply from the Gulf of Mexico. In its traditional early spring forecast revision, the hurricane forecasting team, led by Professors Philip Klotzbach and William Gray of the Department of Atmospheric Science at CSU, lifted its forecast for the number of tropical storms, hurricanes, major hurricanes and storm days in each category that can be expected this hurricane season into the upper end of its earlier December 9th forecasted ranges.

The forecasting team now expects 15 named storms, eight hurricanes and four major hurricanes. If the forecast materializes, this year's storm season will resemble the hurricane seasons of 2003, 2004, 2005 and 2008. As we know, those years included some of the worst hurricanes to hit the Gulf Coast and Southeast United States in recent years, Katrina, Rita, Ike, Ivan and Isabelle to name a few.



To reinforce the potential for a significantly more active and potentially destructive storm season, the CSU team provided its estimates for hurricane landfalls. The CSU team predicts that a major hurricane has a 45% chance of hitting somewhere along the U.S. East Coast including the Florida peninsula, which compares to a 31% average for the last century. The probability of a major hurricane landing somewhere along the Gulf Coast extending from the Florida Panhandle westward to Brownsville.....Read the entire article.


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