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Crude oil was higher overnight as it consolidates above the 20 day moving average crossing at 76.16. November has stalled above the 20 day moving average this week as concerns over demand have helped to limit near term gains.
At the same time, stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If November extends the rally off last week's low, the reaction high crossing at 78.86 is the next upside target. Closes below last Thursday's low crossing at 73.58 would renew the decline off this month's low.
First resistance is Monday's high crossing at 77.17
Second resistance is the reaction high crossing at 78.86
Crude oil pivot point for Wednesday morning 76.28
First support is last Thursday's low crossing at 73.58
Second support is the reaction low crossing at 73.08
Crude oil advanced for the fifth time in six days in New York as an increase in Chinese manufacturing and a decline in U.S. supply bolstered speculation fuel demand in the world’s two biggest energy consumers will rise. Futures retraced yesterday’s 0.4 percent drop after a purchasing managers’ index showed manufacturing in China, the fastest growing major economy, accelerated for a second month. An Energy Department report today will probably show crude inventories in the U.S. fell last week, according to a Bloomberg News survey of analysts.
“There is still reasonable demand out there, and perhaps the sentiment toward economic optimism is still quite positive,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. Crude for November delivery rose as much as 44 cents, or 0.6 percent, to $76.62 a barrel in electronic trading on the New York Mercantile Exchange. It was at $76.45 at 1:37 p.m. Singapore time. Yesterday, the contract decreased 34 cents to settle at $76.18, snapping a four day rally.
Futures are down 3.5 percent this year. For September, the contract has climbed 6.3 percent and is poised for a 1.1 percent gain for the third quarter. An index of China’s manufacturing released today by HSBC Holdings Plc and Markit Economics rose to 52.9, the highest in five months, from 51.9 in August. The data are seasonally adjusted and readings above 50 indicate an expansion. China overtook the U.S. as the world’s largest energy user last year.....Read the entire article.
The U.S. stock indexes closed firmer today despite a weak consumer confidence index reading that sunk the U.S. dollar. The indexes this week have hit fresh multi month highs. Bulls still have upside near term technical momentum as the stock market continues to "climb a wall of worry." We are half way through the historically bearish period from September to October, and the stock indexes have so far performed very well. It is my bias that if this autumn were to see serious market turbulence, it would likely have occurred during September.
Crude oil closed down $0.41 at $76.11 a barrel today. Prices closed near mid-range again today. Bulls and bears are on a level near term technical playing field. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the September high of $78.86 a barrel.
Natural gas closed up 4.5 cents at $3.961 today. Prices closed near mid range again today and saw tepid short covering in a bear market. The bears still have the solid overall near term technical advantage. Prices have seen a bearish downside "breakout" from a sideways trading range at lower price levels.
Gold futures closed up $9.80 at $1,308.40 today. Prices today closed near the session high, scored another fresh record high and scored a big and bullish "outside day" up on the daily bar chart, whereby the high is higher and low is lower than the previous day's trading range, with a higher close. A weaker U.S. dollar and safe haven buying interest following some dour U.S. economic data today boosted gold. Gold bulls have the solid overall near term technical advantage and gained more power today.
The U.S. dollar index closed down 33 points at 79.22 today. Prices closed nearer the session low today and hit another fresh eight month low. Prices also scored a bearish "outside day" down on the daily bar chart. Bears have the solid overall near term technical advantage.
An oil and gas entrepreneur in the US has devised an inexpensive way to capture oil and natural gas vapors around a well site, and sell them to make money. These vapors are often flared (burned), or vented into the atmosphere, and trust me, if people really knew how much oil and gas was flared around the world every day, even in first world countries, the media outcry would make the "water fracking" issue look like a kindergarten party. In fact satellite images show intense flaring occurring, principally in third world countries. Shell has just committed $2 billion to reduce flaring from its operations in Nigeria.
“Air pollution requirements related to oil and gas production from the states are becoming increasingly restrictive,” says co-inventor Dr. Paul Trost. And Trost's solution can be profitable. He adds that a study near Denver in the hydrocarbon rich Denver Basin containing almost 8000 oil and gas wells showed the “fugitive” hydrocarbons, gases emanating from production tanks can be captured and sold at a profit rather than burned in a flare. Just like water evaporates in a dish, oil and gas evaporates from the production tank at a well site, and escapes into the atmosphere or alternately is burned (flared).
The problem becomes bigger when a combination of gas and oil are produced with the gas being injected into a pipeline having pressure. The oil then is also pressurized and the pressurized gases (like gas in a pop can) then “flash” or boil off like a shaken beer can. In certain areas these gases are captured and directed to a flare for burning rather than being allowed to vent to the atmosphere.
Trost’s invention, called the V3RU (Variable Volume Vapor Recovery Unit), is different than other vapor recovery systems in that it uses a flexible accumulator (bag) to capture the vapors. “It swells up like it is taking a deep breath,” says Trost. “The bag thus captures both the flash gas and also any contained liquids. We exhale it slowly into compressor for injection and sale to a pipeline. It’s a variable volume bag and it’s safety rated. The alternative energy industry already uses it around breweries located in or adjacent to cities.” Without a bag, Trost says oxygen can get at the vapour and then it won’t meet pipeline specifications. The gas is then useless and must be flared. Using a bag allows some back pressure to be used, so it won’t let air in, and the gas retains its purity and suitability for pipeline sale.
Trost says the payout for the V3RU increases as the oil content of the natural gas increases, and also as the oil gets lighter (has a higher API rating) and contains more condensate. Typically the V3RU will range in cost from $8,000-$30,000. He gives a real life example of a gas/condensate well in Colorado that was producing about 30 BOPD and 400 mcfd, but high pipeline pressures were causing a large amount of “flash” gas, containing both recoverable oil and gas, was being lost. Application of the V3RU will allow the operator was able to capture an additional 8-10 boe/d, resulting in roughly a 2 year payout.
The product has been used almost exclusively in the Denver Basin, Trost says, but it is now starting to be used in other areas. Trost is a board member of Nextraction Energy (NEX-TSXv), which will be using the V3RU vapor recovery system to meet air quality regulations at Nextraction’s newly discovered gas-condensate well located at the Pinedale Anticline play in Wyoming.
Or at the very least beware of the end of the US fourth quarter. The quarter was a dream especially the month of September for stock market and precious metal bulls. Yet it seems as the quarter is coming to an end the markets with the most strength are running out of steam as funds and traders look to book profits as the markets failed to take out key resistance. For gold and all the talk about $1300.00 per once, the market never officially made it there and at the end of the quarter it seems that close is good enough. So unless we get some bearish news on the dollar it seems that 1300 an ounce won’t be hit at least until the next quarter. The stock market is rounding out a profit taking top as traders look to book profits from the best September since 1939.
Yes this is a September to remember but also remember that this is a profit taking business and it appears that unless the data gets us real excited the correction should start. The market in gold and stocks has been helped by the Fed. Ben Bernanke and his band of money printing merry men have engineered this latest gold and stock market rally. Now if only they can get it to trickle down to the oil market. Oil prices, while higher, are a bit less inclined to get excited about the recent stock market strength. With supply near record high and high stock prices not necessarily being reflected in real oil demand oil traders are less.....Read the entire article.
Short term traders should now be on the sidelines in gold as a daily Trade Triangle flashed an exit signal at $1,291.70. Long and intermediate term traders should continue to hold long positions in gold.
Crude oil was lower overnight as it consolidates some of last Friday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term.
If November extends the rally off last week's low, the reaction high crossing at 78.86 is the next upside target. Closes below last Thursday's low crossing at 73.58 would renew the decline off this month's low.
First resistance is Monday's high crossing at 77.17
Second resistance is the reaction high crossing at 78.86
Crude oil pivot point for Tuesday morning is 76.40
First support is last Thursday's low crossing at 73.58
Second support is the reaction low crossing at 73.08
Volatility in oil trading increased as the US market opened. WTI crude oil for November delivery initially soared to as high as 77.17 after Trichet's comments on the Eurozone's outlook. Yet, gains were pared and price tumbled to 75.52 as Moody's downgrade of Anglo Irish Bank Corp's debt rating intensified worries about out peripheral economies in the Eurozone.
Crude oil ended the day flat at 76.52. Gold moved narrowly around 1300 as heightened sovereign concerns drove capitals to safe haven assets. Price settled at 1298.6, unchanged from last Friday's close. Profit taking was seen Asian session today.
ECB president Trichet acknowledged recent economic data has been 'better than expected' and said that the central bank expects 'the recovery to proceed at a moderate pace, with a positive underlying momentum but also with uncertainty surrounding the outlook'. The economy is 'out of the recession' but he and other members in the governing Council will remain cautious and prudent for this year and next.
Moreover, 'the rate of inflation could increase slightly in the short term but should remain moderate over the policy-relevant horizon. The comments were more upbeat than what the Fed Chairman Ben Bernanke said at a Princeton University conference last week. Bernanke said, despite stimulus measures, the US economy is only recovering at a slower pace than the central bank had expected. The Fed signaled.....Read the entire article.
Kuwait's oil minister Monday said the country is worried about compliance with production quotas by members of the Organization of Petroleum Exporting Countries and will discuss the matter at the group's forthcoming meeting. Sheikh Ahmad Abdullah Al-Sabah also said the 12 member OPEC group is unlikely to change production quotas at the next meeting in Vienna, scheduled for Oct. 14, as current oil prices are "comfortable".
Al-Sabah told reporters he isn't concerned about global crude oil demand, but is worried about OPEC members conforming to production quotas, saying there have been "slippages here and there". "Compliance with their (OPEC) quotas is very important," said the Kuwaiti minister, who is scheduled to meet his Indian counterpart during his three day visit to India.
Al-Sabah's comments come as some member states produce far more than the amount allotted to them under OPEC's production quota system. Higher production by any member could lead to oversupply in the market and hurt global prices. Last week, the oil minister of Angola, an OPEC member, said the country is still producing 1.9 million barrels a day of oil, according to the Angola Press news agency. The southern African nation says its quota is 1.656 million barrels a day, but data from OPEC's general secretariat show Angola's allocation is 1.517 million barrels a day.....Read the entire article.
Crude oil fell in New York, snapping four days of gains, as the dollar strengthened against the euro and analysts forecast an increase in U.S. gasoline supplies, signaling demand recovery in the largest crude user may falter. Futures slipped as U.S. equities dropped and the euro weakened from a five month high against the dollar after renewed signs of debt problems at European banks and countries such as Ireland and Portugal. An U.S. Energy Department report tomorrow may show gasoline stockpiles climbed to the highest level in six months.
“We really haven’t made any headway into stockpiles,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Activity hasn’t improved. The crude market followed equity markets overnight.” The November contract lost as much as 40 cents, or 0.5 percent, to $76.12 a barrel in electronic trading on the New York Mercantile Exchange, and was at $76.26 at 10:54 a.m. Singapore time. Yesterday it added 3 cents to settle at $76.52. Prices are down 4 percent this year.
The dollar traded at $1.3428 per euro after rising 0.3 percent yesterday. A stronger U.S. currency limits investor need for assets to hedge against inflation. Brent crude oil for November delivery declined as much as 42 cents, or 0.5 percent, to $78.15 on the London based ICE Futures Europe exchange. Yesterday it fell 30 cents, or 0.4 percent, to settle at $78.57. November Brent’s premium to the corresponding West Texas future in New York narrowed to $1.96 a barrel today, down from $3.45 a week earlier.....Read The Entire Article.
The U.S. stock indexes closed weaker today on some profit taking pressure from recent gains. The indexes early on today hit fresh multi month highs. Bulls still have some upside near term technical momentum as the stock market continues to "climb a wall of worry." We are half way through the historically bearish period from September to October, and the stock indexes have so far performed very well. It is my bias that if this autumn were to see serious market turbulence, it would likely have occurred during September.
Crude oil closed down $0.21 at $76.28 a barrel today. Prices closed near mid range today. Bulls and bears are on a level near term technical playing field. The next near term upside price objective for the bulls is producing a close above solid technical resistance at the September high of $78.86 a barrel.
Natural gas closed down 9.3 cents at $3.916 today. Prices gapped lower on the daily bar chart, hit a fresh contract low and closed near mid range today. The bears have the solid overall near term technical advantage and gained more power today as prices saw a bearish downside "breakout" from the recent sideways trading range at lower price levels.
Gold futures closed up $0.10 at $1,298.20 today. Prices today closed near mid range in quieter trading as the market pauses and consolidates after setting a fresh all time record high of $1,301.60 an ounce on Friday. A stable U.S. dollar today limited buying interest in gold. However, some fresh economic and financial worries coming out of the European Union did limit selling interest in gold. Bulls still have the solid overall near term technical advantage.
The U.S. dollar index closed down 10 points at 79.50 today. Prices closed nearer the session low today and hit a fresh eight month low. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 82.00.
Crude oil futures were little changed as U.S. stocks rebounded from an early decline and the dollar fluctuated against the euro. Oil rose 72 cents in the last hour of trading to erase a loss as the Standard & Poor’s 500 Index rebounded. The greenback was steady against the euro on renewed signs of debt problems at banks in the 16 nation region. “The equity market is back up unchanged, that brings crude unchanged,” said Richard Ilczyszyn, a market strategist at Lind-Waldock, a broker in Chicago. “Crude oil is very susceptible to currencies and equities right now.”
Crude for November delivery rose 3 cents to settle at $76.52 a barrel on the New York Mercantile Exchange. The price ranged from $75.52 to $77.17, the highest level since Sept. 14. “After a brief period over the past few weeks where the oil market appeared to disconnect from equities, the linkage appears to be alive and well again,” analysts including Lawrence Eagles at JPMorgan Chase & Co. said in a report today. The Reuters/Jefferies CRB Index of 19 commodities rose 0.2 percent to 284.08 at 2:30 p.m. in New York. The dollar gained 0.1 percent against the euro to $1.3474. November crude rose 2.1 percent last week as the dollar weakened after the Federal Reserve said it may take more steps to ease monetary policy.
The Standard and Poor’s index rose 0.1 percent at 2:30 p.m. before falling 0.6 percent to 1,142.16 at 4:28 p.m. Brent crude oil for November delivery fell 30 cents, or 0.4 percent, to settle at $78.57 a barrel on the London based ICE Futures Europe exchange. ‘Hard to Get Bullish’ “The dollar and the stock market are the two drivers,” said.....Read the entire article.
Crude oil price changed little in Asian session after Friday's rally but the near term outlook remained firm as the dollar weakened. Current trading at 76.6, the benchmark WTI contract stayed in the middle of the 70-80 trading range. The chance of going higher and lower is balanced for today but it's unlikely for a break out of the range. Gold price moves narrowly around 1300. While the macroeconomic backdrop is favorable for further gains, a pullback on profit taking cannot be ruled out as the metal has advanced for 7 out of the past 8 weeks.
Dollar's weakness is a main theme sending commodities higher in recent weeks. The USD Index plunged below 80 for the first time since March last week and has dropped -10% from June's peak. USD should continue to be pressured as long as speculations on Fed's additional QE measures remain intact. Today in Asia, EURUSD soared to as high as 1.3494 before retreating. Investors trimmed investments on the euro as Ireland will disclose the final expenses of bailing out Anglo Irish Bank Corp. later this week. In fact, the euro fell against 15 out of 16 currencies as concerns about banking crisis in the Eurozone resurfaced. The euro's weakness against dollar is only mild in comparison with others. USDJPY changed little at 84 although the government may implement a stimulus plan of up to 4.6 trillion yen to boost recovery. Meanwhile the BOJ Governor Masaaki Shirakawa said the central bank is 'ready to implement appropriate action in a timely manner if judged necessary'. A deflationary Japanese economy and the government's currency intervention and stimulus policy are theoretically negative for Japanese yen. Yet, strength in the currency indicates that the effects of a unilateral intervention are limited.
We have a light calendar today. Japan's corporate service price contracted -1.1% in August, slightly better than expectations of -1.2% and unchanged from July, while trade surplus stayed unchanged at +0.59 trillion yen in August from a month ago. The money supply (M3) in the Euro zone probably grew +0.3% y/y in August, following a +0.2% increase in July.
Commitments of Traders:
Speculators showed mixed expectations on the energy complex as they were more bullish on fuels than crude oil. Net length for crude oil declined -4 437 to 43 900 contracts as the Enbridge pipeline 6A resumed operations earlier than market expectations. Net lengths for heating oil and gasoline increased, by 7 083 and 4 367, to 17 891 and 35 232 respectively. Net short for natural gas rose for a 7th week even though price has fluctuated around the $4 level. Traders lacked incentives to trade the futures as we saw both long and short positions declined during the week but the drop in the former was 6 times higher. The fundamental outlook was largely unchanged with gas supply remaining sufficient and hurricanes failing to disrupt production activities.
Performance was also discordant in the precious metal complex. Net length for gold slipped for the first in 7 weeks although price has set new record highs. Some traders entered short positions as they viewed the rally overstressed. While some market participants began to worry about a gold price bubble, gold has only set a record in USD terms but remained below June's levels in terms of many other currencies. Moreover, it's far from the peak when calculated in real terms. We believe gold's long term uptrend remains intact if the low rate environment persists. Net lengths for silver and platinum increased further while that for palladium dropped in concert with price decline.
The oil market finally decided to join the commodity rally after spending most of the week on the sideline. The power of the Fed cannot be ignored forever as the threat of stimulus is always lurking around the corner. With most other commodities putting in strong performances, oil and the products followed but only reluctantly. Some say the durable goods number was the catalyst or strong data from Germany yet more than anything was the rising tide of all commodities that floated the oil market boat. Natural gas is collapsing as the weight of oversupply begins to take its toll.
With Gulf storms seemingly not a threat to supply and the fact that a falling dollar really does not matter that much to this market, gas could start to fall even harder. The trade likes to play crude off of the gas market and that should lead to further downside pressure. Do you remember when OPEC seemed to matter? Dow Jones reports that the Organization of Petroleum Exporting Countries is unlikely to change production quotas at its next meeting in Vienna, scheduled for Oct. 14, as current oil prices are "comfortable," Kuwait's Oil Minister said Monday. Sheikh Ahmad Abdullah Al-Sabah added that he isn't concerned about global crude oil demand but is worried about.....Read the entire article.
Crude oil was steady to slightly higher overnight as it extends last Friday's rally above the 20 day moving average. Stochastics and the RSI are turning neutral to bullish signaling that sideways to higher prices are possible near term.
If November extends the rally off last week's low, the reaction high crossing at 78.86 is the next upside target. Closes below last Thursday's low crossing at 73.58 would renew the decline off this month's low.
First resistance is the overnight high crossing at 76.89
Second resistance is the reaction high crossing at 78.86
Crude oil pivot point for Monday morning is 75.94
First support is last Thursday's low crossing at 73.58
Second support is the reaction low crossing at 73.08
After a fierce equities rally on Friday, which I figured would happen, just not that strong; I have to wonder if there is some event or major decision in the works we don’t know about?
Friday’s rally could be something simpler like window dressing by the funds. This is when the funds buy up all the top performing stocks for month end reporting. They do this so that their investors think they are on the ball and know what they are doing. Window dressing will end Monday and from there we could see some profit taking (selling) start. But for all we know Obama could be extending the tax cuts for everyone or cutting payroll taxes etc…
It would only take one of these events to trigger a sharp up move in the market and that could be what Friday’s move was anticipating. That being said volume has remained light and during low volume session the market has a tendency to move higher. Sell offs in the market require strong volume to pull the market down, so until volume picks up there could still be higher prices just around the corner.
Let’s take a look at some charts…
SPY – SP500 60 Minute Intraday Chart
Last week we saw the market reverse to the down side with a strong end of say sell off. That set the tone for some follow through selling and for any bounces to be sold into. That being said, the market always has a way of surprising traders and it did just that on Friday gapping above Thursday’s reversal high causing shorts to cover and the typical end of week light volume drift to help hold prices up.
NYSE Market Internals – 15 Minute Chart
I like to follow some market internals to help understand if investors are becoming fearful or greedy. It also helps me gauge if the market is over bought or oversold on any given day.
These three charts below show some interesting data. Top Chart – This indicator shows me if the majority of shares traded are bought or sold. When the red line spikes up and trades above 5 then I know the majority of traders are buying over covering their shorts. I call this panic buying because traders are buying in fear that the market will continue higher and they will miss the train. When everyone is buying you know a pullback is most likely to occur.
Middle Chart – This is the NYSE advance/decline line. When this indicator is below -1500 then the market is over sold and bottom pickers/value buyers will step in and nibble at stocks. But when this indicator is trading over 1500 then you know the market is overbought and there should be some profit taking starting any time soon.
Bottom Chart – This is the put/call ratio and this tells us how many people are buying calls vs put options. When this indicator is below 0.80 level more traders are bullish and buying leverage. My theory is if they are buying leverage for higher prices, then they have already bought all their stocks and now want to add some leverage for more profits. When I see the majority of traders bullish then I an sure to tighten my stops (if long) as top my be forming.
Putting the charts together – When each of these charts are trading in the red zone know I must be cautious for any long positions because the market just may be starting to top. Or a short term correction may occur.
UUP – US Dollar Daily Chart
The US dollar has been under some serious pressure with all the talk about quantitative easing (printing money). Obviously the more the Fed’s print the less value the dollar will have. The chart below shows a green gap window which I think once it is filled should put the dollar in a oversold condition for a short term swing trade bounce before heading back down. A bounce in the dollar will put pressure on equities, gold and oil.
GLD – Gold Daily Chart
Gold continues to grind its way up. This move is looking very long in the teeth and pullback will most likely be sharp.
Weekend Trading Conclusion:
In short, equities and gold continue to grind their way higher while the US dollar continues its grind lower. When I say the market is grinding I am implying the market is over extended and a reversal any day should occur.
Financial stocks like Goldman (GS) which typically leads the market has been strongly underperforming over the past week. Insiders were selling GS very strongly which is strange and makes me wonder what’s up there? With the financial stocks underperforming it sure looks like a market reversal is just around the corner.
If Friday’s rally was simply window dressing by the funds then it should end on Monday and with any luck we will see a sharp reversal to the down side early this week.
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Lukoil, Russia’s largest oil producer not controlled by the state, together with a group of investors bought almost 5 percent of Lukoil’s shares from ConocoPhillips [COP] for $2.4 billion, the Moscow based company said.
Lukoil and the investor group bought 42.5 million shares in the form of American depositary receipts at a price of $56 each. The purchase, arranged by UniCredit Bank AG, was for less than half of an 11.6 percent holding that ConocoPhillips had made available under an option that expired yesterday, Lukoil said in an emailed statement.
The deal aims at enhancing the company’s attractiveness to investors. “It allows us to support our share prices, since the transaction is funded by the group’s internal resources, without increasing the company’s total debt,” Lukoil Vice President Leonid Fedun said in the statement today.....Read the entire article.
