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After staying in range for most of the week, crude oil's rebound form 70.76 resumed on Friday and jumped to as high as 76.73. Initial bias will remain mildly on the upside this week for further rebound. Though, we'd continue to expect upside to be limited by 61.8% retracement of 82.97 to 70.76 at 78.31 and bring resumption of fall from 82.97. Below 73.88 will flip intraday bias back to the downside. Also, Sustained trading below 70.76/71.09 support zone will confirm our bearish view that whole rebound from 64.23 is finished at 82.97 already and target another low below 64.23.
In the bigger picture, choppy rebound from 64.23 is treated as a correction to fall from 87.15 only and has possibly finished at 82.97 already. Decisive break of 71.09 will confirm this bearish case and also indicate that whole fall from 87.15 is resuming for 60 psychological level, (50% retracement of 33.2 to 87.15 at 60.18, 100% projection of 87.15 to 64.23 from 82.97 at 60.05). Decisive break there will indicate that fall from 87.15 is developing into a powerful impulsive wave and would target 33.2 low. On the upside, break of 82.97 resistance is needed to invalidate this view. Otherwise, we'll stay bearish in crude oil.
In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall from 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.
The S&P 500 index closed higher on Friday as it extended the rally off August's low. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional gains are possible near term. If December extends the aforementioned rally, August's high crossing at 1120.90 is the next upside target. Closes below the 20 day moving average crossing at 1070.98 would confirm that a short term top has been posted. First resistance is Thursday's high crossing at 1106.50. Second resistance is August's high crossing at 1120.90. First support is the 10 day moving average crossing at 1078.40. Second support is the 20 day moving average crossing at 1070.98.
Crude oil closed higher on Friday and has renewed the rally off August's low. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If October extends the rally off August's low, the reaction high crossing at 81.51 is the next upside target. Closes below the reaction low crossing at 72.63 would temper the near term friendly outlook. First resistance is today's high crossing at 76.59. Second resistance is August's high crossing at 81.51. First support the reaction low crossing at 72.63. Second support is August's low crossing at 70.76.
Natural gas closed higher due to short covering on Friday while extending the trading range of the past two weeks. The mid range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral to bullish hinting that a short covering rebound is possible near term. Closes above the 20 day moving average crossing at 3.973 are needed to confirm that a short term low has been posted. If October renews this year's decline, weekly support crossing at 3.225 is the next downside target. First resistance is last Friday's high crossing at 3.946. Second resistance is the 20 day moving average crossing at 3.973. First support is August's low crossing at 3.697. Second support is weekly support crossing at 3.225.
Gold closed lower due to profit taking on Friday and below the 10 day moving average crossing at 1247.90 signaling that a short term top might be in or is near. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that additional profit taking is possible near term. Closes below the 20 day moving average crossing at 1238.70 would confirm that a double top with June's high has been posted. If October extends the rally off July's low, June's high crossing at 1267.10 is the next upside target. First resistance is Wednesday's high crossing at 1263.20. Second resistance is June's high crossing at 1267.10. First support is the 20 day moving average crossing at 1238.70. Second support is the reaction low crossing at 1232.40.
The U.S. Dollar closed lower on Friday while extending the trading range of the past four weeks. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December renews the rally off August's low, the reaction high crossing at 84.94 is the next upside target. If December extends last week's decline, August's low crossing at 80.75 is the next downside target. First resistance is Tuesday's high crossing at 83.29. Second resistance is August's high crossing at 83.96. First support is last Friday's low crossing at 82.23. Second support is August's low crossing at 80.75.
President Truman used to have a sigh on his desk that the buck stops here. President Obama should have one that says the buck stops with the last administration. If you are going to solve the problem you have to admit you have a problem yet the entire Democratic Party is lost in this sense of what I would call arrogant denial. In fact in some cases it is downright scary. Did anyone see that interview with Harry Reid that sad that he had nothing to do with the bad economy?
The man echo has been the Senate Majority Leader since 2007 and in the senate since 1986 the tear the Bears last won a Super Bowl and yet he gives this Pontius Pilate impression that he washes his hands of the whole thing> Is this guy even in touch with reality? And what are more scary folks is that he actually believes it! And if the economy is a failure and he has been in the Senate since 1986 and he has had nothing to do with the Economy then he is a failure at being a failure.....Read the entire article.
Crude oil rose the most in six weeks after a pipeline that carries Canadian crude to refineries in the U.S. Midwest was closed because of a leak. Futures increased as much as 3.1 percent after Enbridge Energy Partners LP shut its Line 6A, part of a system that can transport 670,000 barrels a day from Canada. Chinese customs figures showed that net imports of crude climbed by 10 percent in August from the previous month.
“It’s all about Enbridge,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “It’s a big line, which supplies a bunch of refineries in the Midwest. Depending on how long it is shut, this could put a big-sized crimp on supplies in the region.” Crude oil for October delivery climbed $2.12, or 2.9 percent, to $76.37 a barrel at 11:07 a.m. on the New York Mercantile Exchange. The contract touched $76.56, the highest level since Aug. 17. Futures are up 2.4 percent this week.
Oil surged the most since Aug. 2, when prices rose above $81 a barrel for the first time since May as a global equity rally bolstered optimism the economy is strengthening Brent crude oil for October settlement climbed 74 cents, or 1 percent, to $78.21 a barrel on the London based ICE Futures Europe exchange. Brent’s premium over New York oil shrank following the pipeline leak. The London-traded contract was $1.84 higher than Nymex oil, compared with a premium of $3.65 on Sept. 7.
Crews are investigating the pipeline situation, said Glenn Herchak, an Enbridge spokesman. He declined to provide information on what the line was carrying and if it was operating at full rates.....Read the entire article.
Crude oil was higher overnight as it extends the rally off August's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
Closes above the reaction high crossing at 75.58 are needed to confirm that a short term low has been posted and would open the door for additional gains near term. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target.
First resistance is Thursday's high crossing at 75.96
Second resistance is the reaction high crossing at 77.03
Crude oil pivot point for Friday morning is 74.70
First support is the reaction low crossing at 72.63
Second support is the reaction low crossing at 71.53
Price changes during the week were mixed, but in most areas, these changes were moderate. The Henry Hub price rose slightly from $3.73 per million Btu (MMBtu) on Wednesday, September 1, to $3.81 per MMBtu yesterday. The report week was shortened due to the Labor Day holiday.
At the New York Mercantile Exchange, the price of the October 2010 futures contract rose about 5 cents, from $3.762 per MMBtu on September 1 to $3.814 per MMBtu on September 8.
Working natural gas in storage as of Friday, September 3, was 3,164 Bcf, following an implied net injection of 58 Bcf, according to EIA’s Weekly Natural Gas Storage Report.
The West Texas Intermediate crude oil spot price rose 68 cents from $73.97 per barrel, or $12.75 per MMBtu, to $74.65 per barrel, or $12.87 per MMBtu.
The natural gas rotary rig count, according to data released by Baker Hughes Incorporated, rose by 4 to 977 as of September 3 (see “Other Market Trends”).
The US Energy Information Administration has slashed its forecast of oil producer club OPEC's oil export earnings by $21 billion this year and by $16 billion in 2011. The agency now sees OPEC earning $731 billion in 2010 compared with its previous forecast of $752 billion a month ago. For 2011, it is forecasting that OPEC will earn $805 billion compared with the $821 billion projected a month ago.
The EIA, statistics arm of the Department of Energy, bases its forecasts on price and production projections from its monthly Short Term Energy Outlook. The agency forecast on Wednesday in its latest STEO that the price of US West Texas Intermediate crude would average $77.37/barrel in 2010 and $82/b in 2011. In its previous Outlook, released in August, the EIA projected an average WTI price of $79.13/b in 2010 and $83.50/b in 2011.
At the same time, the EIA lowered its forecasts of OPEC crude production in both 2010 and 2011. It sees the 12 member group producing 29.37 million b/d this year, 110,000 b/d less than previously forecast, and 29.89 million b/d in 2011, 140,000 b/d less than previously forecast.
The EIA estimated OPEC's 2009 earnings at $571 billion. OPEC's Vienna secretariat said in its annual statistical bulletin in July that the group collectively earned $575.3 billion from crude exports in 2009, down 43% from $1.002 trillion in 2008.
The S&P 500 index closed higher on Thursday as it extended the rally off August's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain neutral bullish signaling that additional gains are possible near term. If September extends the aforementioned rally, August's high crossing at 1120.90 is the next upside target. Closes below the 20 day moving average crossing at 1069.61 would confirm that a short term top has been posted. First resistance is today's high crossing at 1106.50. Second resistance is August's high crossing at 1120.90. First support is the 10 day moving average crossing at 1072.22. Second support is the 20 day moving average crossing at 1069.63.
Crude oil closed lower on Thursday due to profit taking as it extends the trading range of the past two weeks. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 75.58 are needed to confirm that a short-term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target. First resistance is the reaction high crossing at 75.58. Second resistance is today's high crossing at 75.96. First support is August's low crossing at 70.76. Second support is May's low crossing at 70.35.
Natural gas closed lower on Thursday as it extends the trading range of the past two weeks. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are neutral to bullish hinting that a short covering rebound is possible near term. Closes above the 20 day moving average crossing at 3.996 are needed to confirm that a short term low has been posted. If October renews this year's decline, weekly support crossing at 3.225 is the next downside target. First resistance is last Friday's high crossing at 3.946. Second resistance is the 20 day moving average crossing at 4.048. First support is August's low crossing at 3.697. Second support is weekly support crossing at 3.225.
Gold closed lower due to profit taking on Thursday as it consolidates some of the rally off July's low. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. If August extends the rally off July's low, June's high crossing at 1267.10 is the next upside target. Closes below the 20 day moving average crossing at 1237.10 are needed to confirm that a double top with June's high has been posted. First resistance is Wednesday's high crossing at 1263.20. Second resistance is June's high crossing at 1267.10. First support is today's low crossing at 1242.30. Second support is the 20 day moving average crossing at 1237.10.
The U.S. Dollar closed higher on Thursday as it extends the trading range of the past four weeks. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If December renews the rally off August's low, the reaction high crossing at 84.94 is the next upside target. If December extends last week's decline, August's low crossing at 80.75 is the next downside target. First resistance is Tuesday's high crossing at 83.29. Second resistance is August's high crossing at 83.96. First support is last Friday's low crossing at 82.23. Second support is August's low crossing at 80.75.
After years of peak oil scare stories, could the world soon be drowning in oil? OPEC has just cut its oil demand forecast for OPEC produced oil, citing a slow down in the global economy as the supportive effects of government stimulus wear off and increased non OPEC oil supply. The organization noted that, "the impact of the slowing economic recovery on oil demand is already evident as growth in oil consumption is slowing down and has even turned negative in some parts of the world," according to Fox Business.
Their latest move highlights the twin drivers of any potential oil glut scenario: The stagnation of demand growth from major developed economies such as the U.S. and Europe The growth of non OPEC oil supply. Already, the U.S. is sitting on more oil than it has in decades.
Fortune: Despite the Iraq War and the resulting production disruptions, despite the moratorium on drilling in the Gulf, despite turmoil in Nigeria and ongoing cross border trans-shipment quarrels in Central Asia and the multiple, repeated declarations that "peak oil" has arrived and supplies will inevitably dwindle, the United States has more petroleum on hand today than it has had since at least the beginning of the first Gulf War.....
At the same time, consumers have finally responded to higher gas prices and, perhaps, concern over the environmental impacts of burning fossil fuels. Miles driven by U.S. motorists have fallen over the last couple of years for the first time since such statistics have been collected, indicating that the American love affair with the automobile could be waning. And gasoline demand in China, the world's largest automotive market, may not skyrocket after all, as the government ramps up its drive to replace internal combustion engines with electric vehicles.
Global demand forecasts are coming down as well:
"In the last 18 months we've seen this big trend emerge," says David Kirsch, research director at PFC Energy in Washington, D.C. "We spent five to 10 years in a supply-constrained market, characterized by the growth of the BRIC countries [Brazil, Russia, India and China] and concerns over the security of supplies."
Now, Kirsch remarks, because of the financial crisis and the time it will take to pare down the debt of the major OECD nations, demand growth over the next decade is likely to be lower than previously forecast.
Yet at the same time one good auction does not solve all of Europe’s problems either. The Portugal bond auction may have eased concerns regarding a total global market meltdown but them Beige Book and dismal demand numbers from the MasterCard Spending Pulse report as well as a downward revision to the demand outlook from the Energy Information Agency has oil traders questioning about the strength of future demand growth the total oil demand growth outlook.
The first sign that things might not be so great was a report from The Energy Information Agency’s much anticipated Short Term Energy Outlook. The EIA revised lower their outlook for demand because of what they see as a slowing economy. The EIA lowered their forecasted GDP growth number from growth projections of 3.1 and 2.7 percent for 2010 and 2011, respectively down to growth of 2.8 percent in 2010 and 2.3 percent in 2011.
That decrease in economic optimism caused them to lower their crude price projection to the current average of.....Read the entire article.
Crude oil rose to a three week high after the government reported an unexpected decline in U.S. stockpiles and applications for unemployment benefits fell, bolstering optimism that the economic recovery will accelerate. Supplies dropped 1.85 million barrels to 359.9 million in the week ended Sept. 3, the Energy Department said today in a weekly report. Inventories were forecast to climb by 1 million barrels, according to a Bloomberg News survey of analysts. Initial jobless claims fell by 27,000 to 451,000 in the week ended Sept. 4, Labor Department figures showed.
“The oil statistics today were bullish to neutral,” said Carl Larry, president of Oil Outlooks and Opinions LLC in Houston. “The economic numbers, in particular the jobless claims, were an encouraging sign. The main driver of the market right now is the economy.” Crude oil for October delivery rose 94 cents, or 1.3 percent, to $75.61 a barrel at 11:23 a.m. on the New York Mercantile Exchange. The contract reached $75.96, the highest level since Aug. 19.
Brent crude oil for October settlement climbed 19 cents to $78.36 a barrel on the London based ICE Futures Europe exchange. Gasoline supplies declined 243,000 barrels to 225.2 million. Stockpiles were forecast to fall 1 million barrels, according to the median of 16 responses from analysts surveyed by Bloomberg News. Initial jobless claims dropped by 27,000 to 451,000, Labor Department figures showed today in Washington. Benefits applications were projected to decrease to 470,000 from a previously reported 472,000 for the prior week, according to the median forecast of 46 economists in a Bloomberg News survey.....Read the entire article.
Crude oil was higher overnight as it extends the trading range of the past eight days. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
Closes above the reaction high crossing at 75.58 are needed to confirm that a short term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target.
First resistance is the reaction high crossing at 75.44
Second resistance is the reaction high crossing at 75.58
Crude oil pivot point for Thursday morning is 74.48
First support is the reaction low crossing at 70.76
Second support is May's low crossing at 70.35
I am going to step out on a limb in this report and cover what I think to be an intermediate top in the precious metals sector. Everyone I speak with and from the hundreds of emails I get I would say the vast majority are bullish on gold and silver. That being said, I feel we are 3-8 days away from a pop and drop in the price of gold.
Below are my explanation and charts of what I think is unfolding.
HUI – Gold Bugs Index
This chart tracks a basket of gold companies and can be used as a leading indicator for gold bullion at times. This index tends to lead the price of gold before rallies and also during declines. I have seen this lead by a few hours and even up to 7 days. I find it out perform when gold is about to rally, and under perform when gold is topping or about to start another move down.
It looks as though we are forming a triple top which also happens to be at a previous 2009 resistance level. Each time this level has been reached sellers take control and send the market sharply lower. There have been several long upper wicks formed in the past few sessions telling me that buyers are pushing the price up, but sellers hit the sell button pulling the market right back down. If this triple tops plays out, I would expect a multi month correction to take place.
UUP – US Dollar ETF
The US Dollar looks to have found support at the March/April lows and has put in a very solid rally. If the chart pattern is correct then it looks as though the dollar will breakout to the upside and run to $24.75 area. The relationship between the dollar and the precious metals sector is generally inverse, meaning if the dollar rallies both gold and stocks should fall.
GLD – Gold Bullion ETF
The chart of gold has identical patterns no matter if it’s this ETF or spot gold price. So this analysis goes for both ETF and gold bullion prices. Anyways, the past two times gold rallied for this length of time without any sizable pauses we saw the price of gold drop $70 per ounce, and $140 per ounce which is equivalent to $7-$10 drop on this GLD fund which is a decent size move.
The chart is screaming of a nasty correction to occur any day now. With gold testing the June highs I feel its only days away. What I am looking for is a pierce of the June high. That will suck in the rest of the bulls as they jump on the band, and cause all the shorts to cover their positions. This causes a pop, and once buying starts to dry up, the big money will start to sell down the price to trigger the stops and start a multi day waterfall sell off.
With the declining volume as the price grinds its way higher it tells me fewer individuals want to buy in at these high prices. Once the price starts to slide it will cause the stops to triggered. And because there have not been any substantial pullbacks along the way, there is a larger number of stops sitting in the market waiting to get hit.
Mid-Week Precious Metals Trading Report:
In short, I feel precious metals are on the verge of a sharp correction which may only last a few days, but the drop will be substantial. I still think we could see a few more up days or sideways session before this happens as the June high for gold bullion should be penetrated before the market truly reverses back down.
Anyone long gold, silver or PM stocks should be thinking of tightening their stops and for the gold bugs to mentally prepare them selves for a correction.
I hope my bi-weekly trend reports helps shed some light on the market for you. My trading alerts and frequent updates are reserved only for subscribers, so if you would like more trading analysis, updates and trades please join me at The Gold And Oil Guy.Com
The U.S. stock indexes closed firmer today and saw short covering. While the months of September and October have been historically unkind to the stock market bulls, the indexes are starting out the month of September on some decent footing. Bulls and bears in the indexes are presently on a level near term technical playing field. The first few trading days of this extra important month for the stock market are slightly favoring the stock market bulls.
Crude oil closed up $0.63 at $74.72 a barrel today. Prices closed nearer the session high today on short covering. A weaker U.S. dollar and firmer U.S. stock indexes today help support crude. Crude oil bears still have the slight overall near term technical advantage.
Natural gas closed down 4.8 cents at $3.804 today. Prices closed near the session low today. The bears have the solid overall near term technical advantage. A 2 1/2 month old downtrend is still in place on the daily bar chart.
Gold futures closed down $1.30 at $1,258.00 today. Prices closed nearer the session low on some profit taking pressure. Early prices did hit a fresh 10 week high. Bulls still have upside near term technical momentum and have the solid technical advantage. Prices are also in a six week old uptrend on the daily bar chart.
The U.S. dollar index closed down 24 points at 82.89 today. Prices closed near mid range today. Bulls and bears are now back on a level near term technical playing field. Bulls' next upside price objective is to close prices above solid technical resistance at 84.00.
Remember the European financial crisis? Sure you do! You remember I know you do. It was when Greece looked like it hit the skids and it appeared they were headed for default!
And worries surrounded countries with the acronym PIIGS (Portugal, Italy, Ireland, Greece and Spain) were ready to go over the edge! The stock market was crashing and oil prices were plunging and it looked like we were getting ready for a major global market meltdown.
But then when all was nearly lost, the EU stepped up to the plate with a whopping 750 billion euro rescue package and instituted a series of European Bank stress tests to assure the world that gosh oh golly things were going to be ok and magically all of the problems seemed to go away.
The Euro came roaring back and the risk trade was back in vogue and oil was saved from a plunging deflationary bloodbath. I hope you remember that crisis because it may be back. We may be seeing that the European crisis is not over after all.....Read the entire article.
Crude oil traders are showing increasing confidence that U.S. economic growth will rebound next year as they take advantage of the widening gap between current prices of crude and contracts for delivery six months from now. The price advantage, or contango, to buy and hold crude more than doubled to $5.76 a barrel last month from $2.60 at the end of July, as contracts for October delivery fell 9.4 percent and March dropped 5.3 percent. ConocoPhillips hired the tanker TI Europe for storage in the Gulf of Mexico, according to data on the website of RS Platou A/S, an Oslo based shipbroker.
Crude, gasoline and heating oil inventories reached a 20 year high last month as the U.S. Commerce Department said the economy probably expanded at a 1.6 percent annual pace in the second quarter from an initially reported 2.4 percent. The gap, or curve, between the price of oil for immediate delivery and for March has increased to a three month high, making storage a profitable wager on an American rebound next year.
“Demand is going to look a lot better in 2011,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, who predicted prices will rise to $80 next year. “By then the overall numbers on things like industrial production, housing, investment and probably even consumer sentiment will be better.” October futures rose 63 cents, or 0.9 percent, to $74.72 a barrel at 10:05 a.m. on the New York Mercantile Exchange. The March contract rose 6 cents to $80.35. The spread narrowed by 7.5 percent to $5.63.....Read the entire article.
Crude oil was lower overnight as it consolidates some of the rally off August's low. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.
Closes above the reaction high crossing at 75.58 are needed to confirm that a short term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target.
First resistance is the 20 day moving average crossing at 74.52
Second resistance is the reaction high crossing at 75.58
Crude oil pivot point for Wednesday morning is 73.78
First support is the reaction low crossing at 70.76
Second support is May's low crossing at 70.35
With retail traders anxious to find a bottom in natural gas prices, let's take a look at what our trading tols are telling us about natural gas ETF UNG.
"Smart Scan Chart Analysis" is showing some near term rallying power. However, this market remains in the confines of a longer term downtrend that should be traded with extremely tight money management stops.
Based on a pre defined weighted trend formula for chart analysis, UNG scored -75 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10....Last Hour Close Above 5 Hour Moving Avg
+15....New 3 Day High on Friday
-20....Last Price Below 20 Day Moving Avg
-25....New 3 Week Low,Week Ending Sept 4th
-30....New 3 Month Low in September -75....Total Score
