Deciphering Current Natural Gas Market Data

In the last six weeks natural gas futures prices have jumped from a modern day low to nearly $5 per thousand cubic foot (Mcf) as commodity traders and investors started to cover their short positions in this fuel as the days moved closer to the beginning of the winter heating season. The jump in the gas price ends what has been an extended price slide that started back in summer of 2008 when prices were in excess of $13 per Mcf and early signs of the developing global recession emerged.

The jump in the gas price ends what has been an extended price slide that started back in summer of 2008....


The traders and investors who have been covering their negative bets on natural gas prices have been motivated by signs the nascent U.S. economic recovery is gathering strength, especially among sectors such as automobiles and home construction that are large consumers of natural gas and its components as feedstocks for petrochemical materials. Additionally, there.....read the entire article.

New Video: Where is Crude Oil Headed and How Will it Effect The Market

No surprise, interest in crude oil has spiked this week. And part of that may have come from the crude oil alert that we put here on our blog on October 12.

What is interesting about crude oil is the fact that seasonally, it should be going down. However, the market appears to be doing just the opposite. We have written about this before and when something is supposed to happen and the opposite occurs, it’s time to pay attention.

What was also interesting in crude oil is the fact that all of our “Trade Triangles” are all green giving a perfect 100% Chart Analysis score. This indicates that there are some strong trends in place and the odds are that the market should go higher. However, this is not a guarantee and all trades should be managed with stops.

In our new short video, we show some levels that crude oil could potentially go to. I also indicate a key level that many professional traders are watching and if this level is broken, it will certainly be a game changer that could effect the markets.

Just Click Here to watch the new video, and as always this video is free to view and there are no registration requirements. The one request we have is that you leave a comment about your thoughts on crude oil.

Bloomberg, Jakob Says: Oil’s Rally May Halt at $78.40

Crude oil’s rise beyond the one year high reached today may be checked by a resistance level first encountered three years ago, according to technical analysis by consultants Petromatrix GmbH. Crude climbed to $75.15 a barrel in New York today, its highest price since last October. The rally may dissipate as it approaches $78.40, the highest price reached in 2006, the energy consultant said. The likelihood of crude breaking this threshold will be determined by movements in the U.S. dollar, it added.

“This stands out as the next resistance level,” Petromatrix Managing Director Olivier Jakob said in an interview from Zug, Switzerland. “It was the high in 2006, and also strong resistance in 2007. When it was broken in 2007, crude moved to the next level, which was $100.” Oil rose to a then record of $78.40 a barrel on July 14, 2006 as conflict between Israel and Hezbollah stoked concern Middle East crude exports might be disrupted. In 2007, seven months of price gains snapped after oil reached $78.77 on Aug. 1, and the commodity lost about $9 during the rest of that month before resuming its upward path.....read the entire article.

Crude Oil and Natural Gas Technical Outlook For Wednesday Morning

Nymex Crude Oil (CL)
Crude oil rises further to as high as 75.15 today and the break of 75.0 confirms that whole medium term rise has resumed. Intraday bias remains on the upside for 38.2% of 147.27 to 33.2 at 76.77 next. On the downside, below 72.84 minor support will turn intraday outlook neutral and bring consolidation first. But downside should be contained above 68.08 support and bring rise resumption.

In the bigger picture, medium term rise from 33.2 is still in progress and could extend further. Nevertheless, strong resistance should be seen in 76.77/90.24 fibo resistance zone (38.2% and 50% retracement of 147.27 to 33.2) to conclude the medium term rise finally. On the downside, in case of pull back, break of 65.05 is needed to indicate that crude oil has topped out. Otherwise, further rise is still in favor.
.....Crude oil charts.

Nymex Natural Gas (NG)
Natural gas' retreat from 5.12 is still in progress and intraday bias remains neutral for the moment. Some more consolidation could be seen but after all, short term outlook will remain bullish as long as 4.351 minor support holds. Above 5.120 will bring resumption of whole rise form 2.409 and should target 38.2% retracement of 13.64 to 2.409 at 6.7 next. However, considering bearish divergence condition in 4 hours MACD, break of 4.351 will indicate that a short term top is formed and will bring deeper pull back instead.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005. The whole consolidation might have completed at 2.409 after meeting 100% projection of 15.78 to 4.593 from 13.69 at 2.50. We'll prefer the bullish case as long 55 days EMA (now at 3.842 holds) and expect the current rise from 2.409 to extend further to 61.8% retracement of 13.64 to 2.409 at 9.38 in medium term.....Natural gas charts.

Oil Rises Fifth Day to Near $75 as OPEC Raises Demand Forecast

Crude oil rose for a fifth day, trading near $75 a barrel in New York, after OPEC increased its world energy demand forecast and the weaker dollar boosted the the appeal of commodities. Oil gained 1.2 percent yesterday as the Organization of Petroleum Exporting Countries raised its 2010 global oil consumption estimate on expansion in emerging economies. The International Energy Agency last week upgraded its demand prediction. Crude also climbed as the dollar fell to the lowest against the euro since August 2008.

“OPEC revised up its global oil consumption forecast for 2010 and that comes on the back of the IEA revising up their forecast,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. “It is further fueling the sentiment that the demand outlook is better than what a lot of people are expecting.” Crude oil for November delivery gained as much as 81 cents, or 1.1 percent, to $74.96 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $74.77 at 9:27 a.m. Singapore time. Prices last reached $75 on Aug. 25, the highest since October.....read the entire article.

Crude Oil: Is A Breakthrough or Breakdown Coming?

Over the last three months, crude oil prices have acted like a dog with a shock collar around its neck. One minute it's barreling up a hill at warp speed straight for the mailman at the top of the driveway. And then...... ZAP! It's jolted by an invisible electric fence and sent scampering right back down to the place it started. Talking numbers: the market has been range bound between $75 and $65 per barrel.

Which begs the question: Who controls the collar? According to the mainstream experts, oil prices are in a classic holding cell created when two opposing fundamentals reached a standstill. Here, the following October 9 Wall Street Journal explains: "Crude Torn... the market is unsure whether oil is a commodity that should be influenced by supply and demand, or whether it's an asset class that is determined by equities and currencies."

If the former, then energy prices should turn down: U.S. distillates stocks are at a 23 year high, while 2009 demand figures show a CONTRACTION of 1.7 million barrels a day. If the latter, energy should rise alongside a rallying stock market and falling U.S. dollar. Problem is, there's no way of knowing which "IF" applies until AFTER prices break out in a meaningful trend. And even then, the fundamental lines are a blur.....read the entire article and charts.

Phil Flynn: Freezer Frame

Has the coldest winter in a decade, as some experts predict, just begun? Can record cold really overcome record supply if refineries cut back production? Well it seemed a bit more plausible as winter worries helped an oil flurry on a light volume trading session. The cold weather fed into fears that refinery cut backs could cut into a massive oversupply situation when every trader turned on the heat. Throw in a weaker dollar and you have the perfect recipe for a holiday trade oil rally.

Barbara Powell at Bloomberg fed into traders concerns when she reported that, "Oil refiners from Valero Energy Corp. to Sunoco Inc. are cutting the most capacity since the early 1980.” The reason she says is that they fear that even, “the coldest U.S. winter in a decade won’t be enough to soak up a glut of fuel.” Powell said, "returns from processing crude into heating oil for delivery in February are the lowest in six years”.....read the entire article.

UNG Mulls Investment in Interests Outside Futures

NEW YORK, Oct 13 (Reuters) - United States Natural Gas Fund (UNG.P), an exchange traded fund in the natural gas market, reiterated on Tuesday that it could invest in interests other than futures contacts to comply with accountability levels and position limits.

UNG told Reuters last month it rebalanced its portfolio to decrease positions in listed natural gas futures, while increasing the fund's holdings in over the counter natural gas swaps.

In a filing Tuesday, UNG said it may invest in other interests including cash-settled options on futures contracts, forward contracts for natural gas, cleared swap contracts and over the counter transactions based on natural gas, crude oil and other petroleum based fuels.

UNG said that despite the move futures contracts will remain its principle investment. (Reporting by Edward McAllister; Editing by Lisa Shumaker)

Crude Oil Going to Test Key Resistance as USD Tumbles

Crude oil price surges to 74.47 in European morning as USD continues to decline against major currencies except for British pound. Moreover, advance in stock markets in Asia also helps boosts demand for oil as well as other risky assets. Leading the rally in the Nymex energy complex is heating oil which adds +1.9% to 1.926. The benchmark contract has soared for 4 straight days and accumulated more than +8% gains. RBOB gasoline rises for the second day to 1.828.

As the driving season is over and the heating season approaching, investors have shifted their focus to heating oil from gasoline. Gold price strengthens and rises to a new record high of 1069.7 amid dollar's weakness. Others in the precious complex such as silver and platinum also rally with silver gaining +1% to 18 and platinum jumping +1.5% to 1370, the highest level....read the entire article.

Bloomberg Analysis: Commodities to Gain 10% If Crude Breaks $75

The S&P GSCI Index is poised to surge 10 percent by the end of the year if oil prices breach resistance above $75 a barrel this week, according to a technical analysis from Oscar Gruss & Son in New York. The GSCI has just broken out of a four month consolidation after moving above resistance at 481, and if crude oil rallies, “this index could easily move significantly higher,” said Michael Shaoul, chief executive officer at Oscar Gruss.

The index soared as much as 2.7 percent today to 485.03, the highest level since Oct. 20, 2008. The next resistance for the GSCI is at 530 points, marking a 38.2 percent retracement of the 2008 collapse, he said. The index tumbled from a high of 893.86 on July 3, 2008 to 305.59 on Feb. 19. “This target is comfortably achievable during this quarter,” Shaoul said.....read the entire article.