Crude Oil and Natural Gas Daily Technical Outlook

Nymex Crude Oil (CL)

Crude oil turns sideway after reaching 82 level and met 100% projection of 58.32 to 75 from 65.05 at 81.72. Upside momentum is diminishing a bit but after all, further rise is still expected with 77.61 remains intact. Sustained trading above 81.72 will pave the way to next medium term fibonacci level at 50% retracement of 147.27 to 33.2 at 90.24, which is close to 90 psychological level. On the downside, though, below 77.61 will indicate that a short term top is likely in place, possibly with bearish divergence conditions in 4 hours MACD and RSI. Deeper decline should then be seen to 75 resistance turned support and below.

In the bigger picture, the strong break of 75.0 resistance confirms that medium term rebound from 33.2 has resumed and further rally should be seen. Note that crude oil is now in an important resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2). As we're expecting rise from 33.2 to conclude in this zone, we'll look for sign of loss of momentum in the current rise, as well as reversal sign. Nevertheless, note that break of 65.05 is needed to indicate that crude oil has topped out. Otherwise, further rise is still in favor.....here is the charts.

Nymex Natural Gas (NG)

Natural gas' retreat from 5.318 is still in progress and intraday bias remains neutral for the moment. Nevertheless, further rally is still in favor as long as 4.35 support holds and break of 5.318 will target 38.2% retracement of 13.64 to 2.409 at 6.7 next. However, considering bearish divergence conditions in 4 hours MACD, break of 4.35 will indicate that a short term top is formed and deeper pull back should then be seen 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 4.119 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.....here is the charts.

Phil Flynn: Economic Smack Down

I am trying to figure out who is getting beat up worse, the refiners or the dollar. The smack down on refiners and the dollar send oil on another bullish adventure as commodity price inflation starts to show its adverse economic effects. Refiners for the second week in a row kept refinery runs at historically low levels causing another large drop in gasoline supply which drove RBOB gasoline futures to a seven week high.

The Energy Information Agency reported that refinery use rates rose 0.2 percentage point to 81.1 well below average for this time of year with finished gasoline production at a paltry 8.46 million barrels a day. According to Bloomberg News that was the second week in a row that production fell below 8.5 million barrels and the lowest production was since the week of February 6. The EIA reported that gas supplies fell 2.3 million barrels in the latest week which followed a 5 million barrel plus drop in supply from the week before. Gasoline supply which were almost 7% above the five year average a few weeks ago are now just 3.3% above the five year average. Refiners might as well be on strike as they cannot continue to produce a product that people are buying less of as input prices like crude go up and the dollar weakens. The EIA reported that gasoline demand 3.3 percent from the prior week to an average 8.95 million barrels a day which was the lowest in four weeks.

Add to that another dollar drubbing which helped send oil soaring to another new high. The euro gained strength on speculation that rates in the “zone” could be rising and broke through the $150 level versus the U.S. dollar for the first time in 14 months. Overnight China 8.9% GDP growth was stimulating but is raising questions how long the Chinese government can fuel the growth. Car sales in China were impressive but came on the back of government tax breaks. Fed chairman Ben Bernanke wants the Chinese to spend more but also let the yuan re-adjust so the trade deficit between the US and China can narrow. Early on commodity prices are not that impressed with the Chinese GDP.

Now as oil prices go above $80 OPEC is worried what may happen to demand. Dow Jones is reporting that, “The Organization of Petroleum Exporting Countries will increase its output quota in December, if inventories fall and oil prices and the economy keep recovering", the group's secretary general said Thursday. "If this price continues, if we see the stocks go back to the normal level" and the global economy continues to recover, "I am sure our member countries will take the decision to increase production," Abdalla Salem el-Badri told reporters. He subsequently added another condition to increase output would be "an end to floating storage." OPEC is due to meet next on Dec. 22 in Luanda, Angola. “OPEC is watching what is happening to US refiners and is aware that prices are now at a level that will start a new round of demand destruction and probably will start trying to jawbone the market down. They may be forced to start cheating on production to get prices under control. This would really be a shame because you know how these guys hate to cheat.

The weak dollar is having an impact on everything. How do you protect yourself in a weak dollar environment? Buying precious metals may be one way. If you think that you cannot afford to get in well maybe you are wrong. What if I told you could get into precious metals for as low as $50! Find out how! Just call me at 800-935-6487 or email me. Check me out every day on the Fox Business Network! And if you want a brokerage firm that does things right, you need to be with PFGBest! Whatever you're trading needs we can handle it: cash, grains metals, gold coins, bars and even stocks. If your broker is not doing enough for you call me at 800-935-6487 or email me at pflynn@pfgbest.com. Our platforms are great and the service beyond compare!

Buy December crude at 7427 - stop 7300.
Buy December RBOB at 18000 - stop 17800.
Buy December heating oil at 19500 - stop 19300.
Buy December natural gas at 510 - stop 470.

Phil Flynn @ PFGBEST Research Team
800.462.4691
pflynn@pfgbest.com

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.

Crude Oil Trades Lower as Dollar Bears Fail to Defend $75

Crude oil closed lower due to profit taking on Thursday as it consolidated some of Wednesday's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. The high range close sets the stage for a steady to higher opening on Friday.

If December extends this month's rally, the 38% retracement level of the 2008-2009 decline crossing at 84.64 is the next upside target. Closes below the 20 day moving average crossing at 73.59 would confirm that a short term top has been posted.

First resistance is Wednesday's high crossing at 82.00
Second resistance is the 38% retracement level at 84.64

First support is the 10 day moving average crossing at 77.50
Second support is the 20 day moving average crossing at 73.59

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Natural gas closed lower on Thursday and the low range close sets the stage for a steady to lower opening on Friday. Despite today's decline, stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.

If December extends the rally off September's low, June's high crossing at 6.170 is the next upside target. Closes below the reaction low crossing at 5.280 are needed to confirm that a short term top has been posted.

First resistance is Wednesday's high crossing at 5.989
Second resistance is June's high crossing at 6.170

First support is today's low crossing at 5.580
Second support is the reaction low crossing at 5.280

Today’s Stock Market Club Trading Triangles

The U.S. Dollar closed higher due to short covering on Thursday as it consolidated some of this month's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If December extends this year's decline, monthly support crossing at 73.39 is the next downside target. Closes above the 20 day moving average crossing at 76.36 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 75.79
Second resistance is the 20 day moving average crossing at 76.36

First support is Wednesday's low crossing at 75.09
Second resistance is monthly support crossing at 73.39

Weekly EIA Natural Gas Storage Report

Working gas in storage was 3,734 Bcf as of Friday, October 16, 2009, according to EIA estimates. This represents a net increase of 18 Bcf from the previous week. Stocks were 397 Bcf higher than last year at this time and 432 Bcf above the 5 year average of 3,302 Bcf. In the East Region, stocks were 114 Bcf above the 5 year average following net injections of 11 Bcf. Stocks in the Producing Region were 252 Bcf above the 5 year average of 935 Bcf after a net injection of 5 Bcf. Stocks in the West Region were 65 Bcf above the 5 year average after a net addition of 2 Bcf. At 3,734 Bcf, total working gas is above the 5 year historical range.



Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2004 through 2008.

Mid Week Oil and Natural Gas Trading Report

Commodities so far this week have not changed much. But I can point out a few things for us to watch Thursday and Friday.

Energy – Oil USO Fund – Energy Stocks XLE Fund
We are seeing a similar pattern in the energy sector. Oil had a nice move higher today while energy stocks sold off. Stocks are starting to fall out of favor.



Natural Gas – UNG Fund
Natural gas is still in a bear market and trading under a major resistance trend line. This commodity could go either way so I am going to wait for the odds to be more on my side before jumping on board with a long or a short trade.



Mid-Week Oil and Nat Gas Conclusion:
The market is starting to look and feel top heavy with many indicators and price action patterns giving cross signals. While the market could continue to rocket higher with new money getting dumped in from average investors because of solid 3rd quarter earnings, we must be cautious by tightening our stops and take some profits off the table. Until we get a short term oversold market condition I am trading very conservatively.

Waiting for a good trade is crucial in trading. If you always want to trade and force positions when the market is choppy you end up with lower probability trades.

To receive Chris Vermeulen's free trading reports just The Gold N Oil Guy.

Record Supplies Have Not Deterred Natural Gas Bulls

The old saying 'every dog has its day' could certainly apply to the Natural Gas futures market as the December futures contract has risen to highs not seen since June, despite a record amount of natural gas in storage. It is still too early to tell to what extent the recent rally may be due to speculative short covering. The most recent Commitment of Traders report shows large non commercial traders were holding a net short position of 64,050 contracts as of October 13th. This was a decline of 1,902 contracts for the week and does not take into account the activity that occurred during the nearly 0.750 point rally since the report was released. Also adding a bit of bullish fuel to the recent rally are predictions that a weak El Nino weather pattern may result in a colder than normal winter.

If true, it may cause utilities Gas usage for heating demand to increase, helping to cut into the current burdensome supplies. Traders are also beginning to anticipate an uptick in industrial demand now that there are signs that the worst of the recession is behind us and an improvement in industrial production may not be far off. However, until we start to see fresh buying entering the market, any major rally attempts could be met with eager sellers, especially with futures trading above cash prices. Traders should monitor government data to gauge the extent of any economic recovery, as Natural Gas futures have been acting as a barometer to economic conditions here in the U.S......read the entire article and charts.

Oil Surges to One Year High on U.S. Gasoline Supply Decline

Crude oil rose above $81 a barrel in New York for the first time in a year and gasoline surged after a U.S. Energy Department report showed a greater than forecast drop in supplies of the motor fuel. Gasoline stockpiles fell 2.21 million barrels, more than twice the median of analyst forecasts, to 206.9 million barrels in the week ended Oct. 16, according to the department’s report. Oil also advanced as U.S. equities increased and the dollar slipped against the euro, bolstering the appeal of commodities.

“The gasoline number has clearly changed the landscape,” said John Kilduff, senior vice president of energy at MF Global in New York. “The industry is seen constraining fuel supply, which is underpinning the market.” Crude oil for December delivery climbed $2.52, or 3.2 percent, to $81.64 a barrel at 12:59 p.m. on the New York Mercantile Exchange. Futures touched $81.73, the highest since Oct. 14, 2008. Prices are up 82 percent this year.

Oil traded at $78.76 a barrel before the release of the report at 10:30 a.m. in Washington. Gasoline for November delivery climbed 5.78 cents, or 2.9 percent, to $2.0455 a gallon in New York. Futures touched $2.0534, the highest since Aug. 31. Prices are up for an eighth day.....Read the entire article.

Is the NASDAQ Now in Thin Air?

Of the three major indexes we track: DOW, NASDAQ and the S&P 500, only the NASDAQ is in thin air.

What do I mean by thin air? So far the NASDAQ is the only index to make it past the 50% Fibonacci retracement levels as measured from the highs seen in 2007 and the lows that were made in March of this year.

Both the Dow and the S&P 500 have rallied strongly from their March lows but have not made it over the 50% retracement level.

Many professional traders - myself included - are looking at the NASDAQ’s Fibonacci retracement as it represents a potentially key turning point for this year’s market.

While not all the pieces are in place to go short or get out of long positions, one of the first clues is being put in place today by the Japanese candlestick charts.

In our new video, we share with you the NASDAQ retracement levels, as well as one of the key components that could lead to a potential reversal to the downside.

Just Click Here to watch the video, and as always our videos are free to watch and there is no need to register.

Please feel free to leave a comment and let our readers know what you think of the video and the direction of the NASDAQ.

Weekly EIA Crude Oil Inventory Report

Summary of Weekly Petroleum Data for the Week Ending October 16, 2009

U.S. crude oil refinery inputs averaged 14.1 million barrels per day during the
week ending October 16, 27 thousand barrels per day under the previous week's
average. Refineries operated at 81.1 percent of their operable capacity last
week. Gasoline production was virtually unchanged last week, averaging 8.5
million barrels per day. Distillate fuel production increased slightly last
week, averaging 3.9 million barrels per day.

U.S. crude oil imports averaged 8.7 million barrels per day last week, down 32
thousand barrels per day from the previous week. Over the last four weeks,
crude oil imports have averaged 9.0 million barrels per day, 310 thousand
barrels per day below the same four week period last year. Total motor gasoline
imports (including both finished gasoline and gasoline blending components)
last week averaged 649 thousand barrels per day. Distillate fuel imports
averaged 120 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) increased by 1.3 million barrels from the previous week. At
339.1 million barrels, U.S. crude oil inventories are above the upper boundary
of the average range for this time of year. Total motor gasoline inventories
decreased by 2.3 million barrels last week, and are near the upper limit of the
average range. Finished gasoline inventories decreased while blending
components increased last week. Distillate fuel inventories decreased by 0.8
million barrels, and are above the upper boundary of the average range for this
time of year. Propane/propylene inventories decreased by 1.4 million barrels
last week and are at the upper limit of the average range. Total commercial
petroleum inventories decreased by 4.2 million barrels last week, and are above
the upper limit of the average range for this time of year.

Total products supplied over the last four week period has averaged 18.8
million barrels per day, down by 0.1 percent compared to the similar period
last year. Over the last four weeks, motor gasoline demand has averaged about
9.2 million barrels per day, up by 4.2 percent from the same period last year.
Distillate fuel demand has averaged 3.5 million barrels per day over the last
four weeks, down by 12.1 percent from the same period last year. Jet fuel
demand is 3.2 percent lower over the last four weeks compared to the same
four week period last year.

Crude Oil Lower on Profit Taking, Euro Weakness

Crude oil was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.

While the Euro was slightly higher overnight day traders are looking at bearish set ups in the Euro with a possibility of trading as low as 148.34 putting additional pressure on crude oil.

If December extends this rally, weekly resistance crossing at 84.83 is the next upside target. Closes below the 20 day moving average crossing at 72.69 would confirm that a short term top has been posted.

Wednesday's pivot point, our line in the sand is 79.12

First resistance is Tuesday's high crossing at 80.40
Second resistance is weekly resistance crossing at 84.83

First support is the 10 day moving average crossing at 76.27
Second support is the 20 day moving average crossing at 72.69

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Natural gas was lower due to profit taking overnight as it consolidates some of the rally off last Thursday's low. Stochastics and the RSI are diverging but remain bullish signaling that sideways to higher prices are possible near term.

If December extends this rally, June's high crossing at 6.170 then the 25% retracement level of the 2008-2009 decline crossing at 6.450 are the next upside targets. Closes below the reaction low crossing at 5.200 are needed to confirm that a short term top has been posted.

Natural gas pivot point for Wednesday is 5.077

First resistance is the overnight high crossing at 5.989
Second resistance is June's high crossing at 6.170

First support is the 20 day moving average crossing at 5.634
Second support is last Thursday's low crossing at 5.280

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The U.S. Dollar was lower overnight as it extends last week's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If December extends this year's decline, monthly support crossing at 73.39 is the next downside target. Closes above the 20 day moving average crossing at 76.47 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 75.91
Second resistance is the 20 day moving average crossing at 76.47

First support is Monday's low crossing at 75.25
Second support is monthly support crossing at 73.39

Oil Falls From a One Year High as Stocks Decline, Dollar Climbs

Crude oil fell from a one year high as U.S. equities dropped and the dollar rebounded, reducing the appeal of commodities as an alternative investment. Oil declined for the first time in nine days as a disappointing report on housing starts overshadowed better than estimated earnings at companies from Apple Inc. to Pfizer Inc. Futures traded above $80 early today as the Dollar Index, which measures the greenback against six major currencies, weakened to its lowest level since August 2008.

“Oil is mainly taking its cue from what’s happening in the financial markets,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consultant. “This shouldn’t be too much of a surprise after the good run we’ve had to the upside.” Crude oil for November delivery fell 81 cents, or 1 percent, to $78.80 a barrel at 10:39 a.m. on the New York Mercantile Exchange. Earlier, prices rose as much as 0.6 percent to $80.05 a barrel, the first time the front-month contract has traded above $80 since Oct. 14, 2008. Futures are heading for the biggest drop since Oct. 7. The November contract expires today. More active December futures declined 84 cents.....Read the entire article.

Bloomberg Analysis: Oil Breaks Resistance, May Climb to $90

Crude oil has breached a key resistance level of $76.28 a barrel, giving it the “capacity” to rise to just under $90 based on Fibonacci retracements, Australia & New Zealand Banking Group Ltd. said. Oil, which is trading near a one year high in New York, is “taking a pause” to consolidate before moving up toward $89.85 a barrel, said Geoff Clear, the Singapore based head of Asian commodities at ANZ.

“We saw a break above $76.28 a barrel, that was the big ‘break up’ level,” Clear said. “We’re in a new range.” Crude prices have surged 83 percent since March 5 while the Dollar Index, which tracks the currency against those of six major U.S. trading partners, has fallen 16 percent since then. The sliding U.S. dollar and a recovery in equity markets prompted investors to buy commodities as an inflation hedge.

Crude may encounter its next resistance level at $83.60, according to Clear. “If we start to get close to the $83.60 level, it’s the next targeted Fibonacci retracement that I can see in the market,” Clear said. “Prices will do a bit of work below $83.60 initially, and then we’ll go on from there”.....Read the entire article.

ALERT: Daily Trade Triangle Buy Signal For Spot Gold

The MarketClub "Trade Triangle" technology has flashed a buy signal on Spot Gold this evening at $1,065.53.

To learn more about Trade Triangle alerts just visit the MarketClub.

Are You Laughing or Crying About The Markets?

There’s no question about it, the markets can be very difficult at times. On the other hand, you can laugh all the way to the bank if you approach the markets in a systematic way.

I was looking once again at the S&P 500 and many people have said the market has gone up, not on the fundamentals, but on the perception that things are going to be better. Perception is one of the most powerful elements of the market. I would say that perception trumps both the fundamental and technical.

So what’s going to happen to the S&P 500? Is it going to continue going higher for the rest of the year, or are we close to a turning point?

In our new short video, we outline several key areas that this market is fast approaching. These levels could be the Achilles heel for this market and potentially set the direction for the rest of the year.

Just Click Here to watch the video and as always, the videos are free to watch and there is no need to register.

Please take a minute to leave a comment and let us know what you think of the video and the direction of the SP 500.

Phil Flynn's Energy Report: Dollars Deficits and Oil

A breakout in oil and what do you get, another day older and deeper in debt, like about 1.42 trillion dollars deep. Now it does not get much deeper than that. The US Budget deficit screams while politicians fight over ways to spend more money and the dollar loses ground and respect. 1.42 trillion dollars and the oil bulls continues to breathe easy up in this new atmosphere as a breakout to the upside has the bulls firmly in control.

Just how much is 1.42 trillion dollars? Bloomberg News reports that $1.42 trillion is more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada's, and more than $4,700 for every man, woman and child in the United States. Is it any wonder why the Canadian dollar is almost trading at par with the dollar? The Federal budget deficit for 2009, more than three times the most red ink ever amassed and the highest as a perercentage of GDP since the Second World War.....Read the entire article.

Crude Oil Rises to One Year High Above $79 as Equities Increase

Crude oil rose to a one year high as advancing global equities bolstered confidence that an economic recovery will lift fuel consumption. Oil topped $79 a barrel, extending its longest winning streak in two years, as U.S. stocks increased, contributing to an advance in equities from Shanghai to London. The dollar weakened, boosting the appeal of commodities as an alternative investment. “As long as the dollar stays down and equities stay up, that’s a good enough reason to buy crude,” said Brad Samples, a commodity analyst for Summit Energy Inc. in Louisville, Kentucky.

Crude oil for November delivery rose 28 cents, or 0.4 percent, to $78.81 a barrel at 11:45 a.m. on the New York Mercantile Exchange. Earlier, prices touched $79.05 a barrel, the highest level since Oct. 15, 2008. The November contract expires tomorrow. The more widely held December contract added 18 cents to $79.20 a barrel. The Standard & Poor’s 500 Index rose 0.9 percent to 1,097.84 and the Dow Jones Industrial Average climbed 100.67 points, or 1 percent, to 10,096.58 at 11:46 a.m. in New York.....read the entire article.

Crude Oil Rises for Eighth Day on Speculation Demand Recovering

Crude oil climbed above $79 a barrel in New York for the first time in a year, rising for an eighth day on speculation demand will increase as the global economy recovers from recession. A report today may show confidence among home builders in the U.S., the world’s largest oil consumer, is at its highest in 17 months, according to economists surveyed by Bloomberg News. There is no shortage of oil and OPEC won’t increase output to quell price gains driven by speculators, Secretary General Abdalla El-Badri told the Wall Street Journal on Oct. 16.

“The economic numbers are looking better and a lot of that seems to have already been priced in,” said Ben Westmore, energy and minerals economist at National Australia Bank Ltd. in Melbourne. “There is still a big question mark over how much of that, especially in the U.S. and China, is being driven by the stimulus packages.”
Crude oil for November delivery rose as much as 52 cents, or 0.7 percent, to $79.05 a barrel in after hours electronic trading on the New York Mercantile Exchange, the highest since Oct. 15 2008.....Read the entire article.

USO and UNG Technical Analysis with Idan Koren

From guest analyst Idan Koren....

Today we look at the USO and UNG and try to decipher where they are headed and what possible trades could be on the table. We believe that the USO is the reason why the S&P remains up while other stocks have potentially topped already.

Natural Gas: The Russians Are Coming!

The new trading desk in North America for Gazprom, the largest producer of natural gas in the world, sits halfway up the 56 story Bank of America tower in the heart of the America's energy capital. So far, the office, which started trading contracts last week for the first time, is quiet. That won't last. "Our target for volume growth is pretty strong," says John Hattenberger, president of Gazprom Marketing & Trading USA, an arm of the Russian behemoth that claims 17% of the world’s natural gas reserves. "If we could hit 5% [of the U.S. market] in the next five years, that would be about right. In 10 years, I think we could get to 10%." U.S. demand for natural gas is about 60 billion cubic feet a day.

Gazprom for years has been a dominant player in the natural gas market through the use and control of pipelines. It exports gas to more than 30 countries and meets a quarter of Europe’s needs. The U.S. market, however, the largest in the world, has been too far away for Gazprom to reach. Pricey new liquefied natural gas developments, which allow for worldwide shipping, should change all that. Global LNG demand is expected to double by 2020. "LNG is a strategic way for Gazprom to get into markets that it can’t access by pipeline," says Hattenberger. "It makes a lot of sense for the world’s largest gas company to bring gas to the world’s largest gas market and it has to be done through LNG".....Read the entire article.