Crude Oil Rises on Weaker Dollar, Iranian Military Exercise

Crude oil rose as a weaker dollar heightened the appeal of commodities to investors and an Iranian military exercise bolstered concern that Middle Eastern supplies may be disrupted. Oil climbed as much as 3.2 percent and gold reached a record as the greenback dropped on speculation the Federal Reserve will keep its stimulus measures in place and ensure interest rates remain at virtually zero. Iran is testing an air defense system this week, in a military exercise to assess the vulnerability of its nuclear plants.

“The primary reason for today’s move is that the dollar is in steady retreat,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The drumbeat from Iran seems to also be giving prices a boost.” Crude oil for January delivery rose $1.64, or 2.1 percent, to $79.11 a barrel at 11:43 a.m. on the New York Mercantile Exchange. Prices are up 77 percent this year. The December contract expired on Nov. 20 at $76.72 a barrel. Oil traded between $74.79 and $82 the past five weeks after surging in early October.....Read the entire article.

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ETF Update - Gold, Silver and Oil Out Perform their Equities?

Since the market crash in late 2008 we have seen investors favor quality stocks that pay dividends and have steady earnings. Fast growth companies and equities with physical resources like commodities have also done well.

Let’s examine the monthly charts of gold, silver, oil and natural gas, and observe how they have traded in comparison to their mining equities

Gold – Monthly Chart
Looking at the monthly chart as far back as 2004, we see that gold has formed the same patterns repeatedly. This has created a stair step pattern and allows us to calculate measured moves and a time frame for this to take place.

As we can see gold has broken its 2008 high and is starting another rally which we have seen several times before. I figure we could see gold rally for another 3-5 months and possibly reach the $1500 -$1600 level before forming a multi month or year consolidation.

Investors around the world are buying gold because it is a physical product which has been proven to hold its value.


Silver & Precious Metal Stocks – Monthly Chart
Silver and PM stocks have been trading in tandem since 2004 and we can see this by looking at a price performance chart of both silver and the HUI index. The interesting part is that the physical commodity silver has held its value better than the stocks during corrections.
Apparently investors prefer tangible investments over stock certificates of mining companies in periods of increased volitility. Lower risk is in the commodity.


Oil – Monthly Chart
Crude oil has held its value over energy stocks for the majority of the time since 2003. And currently, investors are more comfortable holding oil as a safe investment over energy stocks.


Natural Gas – Monthly Chart
Natural gas is the energy sector’s underdog in my eyes. The world has found so much natural gas in the ground and discovered cost effective ways to collect gas that it will continue to see investors move away until inventory start to deplete.


Commodity Trading Conclusion:
Investors around the world continue to put money into gold which is a universal hedge against inflation. The broad market appears to be trading at a major resistance level. Tops in the market generally take a much longer than to reverse directions than market bottoms. We will not knot for sure if we are entering a top for a couple months as the charts unfold. Now that commodities are trading back at reasonable levels I think they will hold up better than equities if the market starts to correct.

We continue to enter low risk setups and trade with this strong up trend but are aware that we must be protected and focus on the lower risk plays.

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New Video: A Look at the Dollar Index

The markets are always interesting, but they are particularly interesting right now.

Today we’re looking at the dollar index and some important elements that we see building in this market and want to bring to your attention. In this short video we outline the key areas to watch for and one important component that you may not have seen. We think this factor could, in fact, be a short term game changer for this market.

Just click here to watch the video and as always our MarketClub videos are free to watch and there is no need to register. Please take a moment to let our readers know where you think the U.S. Dollar is headed.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

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New Video: Crude Oil Market Update

In our new video on crude oil we update some of the thoughts we have recently published, but also some important elements that are still in play and could push this market significantly higher.

In this new video we outline the key support zone that we see and also highlight some other technical elements could come into play to push this market higher.

Just click here to watch the video, and as always our videos are free to watch and there is no need to register. Please take a moment to leave a comment and let our readers where you think oil is headed.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

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Crude Oil Falls a Second Day as Dollar Gains, Equities Drop

Crude oil fell for a second day as the dollar strengthened against the euro and global equity markets declined. Oil slipped as much as 1.6 percent as the U.S. currency advanced for the third time in four days. Stocks and equity futures retreated after European Central Bank President Jean-Claude Trichet said policy makers will withdraw emergency cash gradually to avoid fueling inflation, and Dell Inc.’s earnings trailed analysts’ estimates.

“We will take oil prices down another notch because of the strengthening dollar,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consultant. “Things are bearish everywhere you look.” Crude oil for December delivery fell $1.20, or 1.6 percent, to $76.26 a barrel at 9:11 a.m. on the New York Mercantile Exchange. Prices are little changed this week and 71 percent higher this year. The December contract expires today. The more actively traded January contract fell $1.09, or 1.4 percent, to $76.96 a barrel. Oil dropped 2.7 percent yesterday as the greenback gained and on concern the rally in commodities and equities has outpaced the prospects for economic growth.....Read the entire article.

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Crude Oil Closes Lower Amid a Rebound in The U.S. Dollar

Crude oil closed down $1.87 at $77.71 a barrel today. Prices closed nearer the session low today amid a rebound in the U.S. dollar index and solidly lower U.S. stock index futures prices. Crude oil bulls still have the overall near term technical advantage. However, the bulls do not want to see a bearish weekly low close on Friday.

Unleaded gasoline (RBOB) closed down 381 points at $.19733 today. Prices closed nearer the session low today. Bulls still have the overall near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the October high of $2.1015.

Natural gas closed up 8.9 cents at $4.343 today. Prices closed near the session high after hitting a fresh contract low early on today. Short covering in a bear market was seen today. Serious near term chart damage has occurred recently. Bears have the solid near term technical advantage.

The U.S. dollar index closed up 14 points at 75.40 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage, amid no early clues of a market bottom being close at hand.

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EIA Natural Gas Weekly Update

Overview for the week ending Wednesday, November 18, 2009

Since Wednesday, November 11, natural gas spot prices rose at nearly all market locations in the lower 48 States, with increases of up to 55 cents per million Btu (MMBtu). Prices at the Henry Hub climbed $0.15 per MMBtu, or about 4 percent, to $3.74 per MMBtu.

At the New York Mercantile Exchange (NYMEX), the futures contract for December delivery at the Henry Hub settled yesterday, November 18, at $4.254 per MMBtu. The price of the near month contract decreased by 25 cents or about 6 percent during the report week.

Natural gas in storage was a record setting 3,833 billion cubic feet (Bcf) as of November 13, which is about 12 percent above the 5 year average (2004-2008). The implied net injection for the week was 20 Bcf.

The spot price for West Texas Intermediate (WTI) crude oil increased by $0.39 per barrel since Wednesday, November 11, to $79.55 per barrel or $13.72 per MMBtu.



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Is the S&P 500 About to Fall Out of Bed or is it Headed Higher?

In our latest video we hope to answer those questions and show you what we think could happen to this market in the near term.

There is a fascinating cycle at work that we want to share with you. If this cycle remains in effect, we could be looking at the beginning of a turn down for this index.

Just click here to watch the video and as always our MarketClub videos are free to watch and there is no need to register.

Please take a moment to leave a comment and let us know what you think about the direction of the market.

Good trading,
Ray C. Parrish
President/CEO The Crude Oil Trader

Phil Flynn: The End of Panic

Have you been worried about the dramatic drop in the dollar? Are you worried that the dollar is falling because of our ballooning deficit or the fact that this country is printing money like there is no tomorrow? Well if the Fed is not worried maybe you shouldn’t be either.

Panic time is over! The President of the Philadelphia Fed, Charles Plosser, says the drop in the dollar reflects the end of panic. In fact he even says its drop in value should not be a surprise and was even expected. Well yeah if you keep printing money and keep rates below zero. Take that Nouriel Roubini! Mr. Plosser says that there is no particular reason why you wouldn't expect the dollar to go back to where it was before the panic set in.

He says that the U.S. government has historically let the dollar fluctuate, and a weaker dollar in recent years can be understood as a market response to imbalances in the U.S. current account. The dollar as an instrument to tackle asset price bubbles, monetary policy alone isn't adequate, and that more research should be made on the issue of whether there's a connection between policy rates and such bubbles.....Read the entire article.

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Crude Oil Declines for First Time in Four Days as Dollar Gains

Crude oil fell for the first time in four days as the dollar gained against the euro, dulling the appeal of commodities as a currency hedge. Oil fell after reaching a one week high yesterday as the U.S. Department of Energy said crude stockpiles dropped unexpectedly last week. Stock markets fell today across Europe on concern that this year’s rally has outpaced the prospects for economic growth.

“When the dollar is strong and equities are lower, then the oil market goes lower too,” Frank Schallenberger, head of commodities research at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart. “It’s unusual to be stuck so long in a range” between $75 and $80. Crude oil for December delivery dropped as much as 82 cents, or 1 percent, to $78.76 a barrel in electronic trading on the New York Mercantile Exchange and traded at $79.22 a barrel at 2:05 p.m. London time. The contract expires tomorrow.....Read the entire article.

Energy ETF Trading Report - USO and UNG

So far this week has been generous with our commodity ETFs moving higher, other than natural gas which is clearly in a bear market. Each of the commodity ETF trading charts below is at a different stage and it will be interesting to see how things unfold in the coming weeks.

Trading ETFs is very rewarding when done properly and using multiple time frames for timing your entry and exit points is crucial. My main focus is on the weekly and daily charts but I use a 30 minute intraday chart when the time comes to actually pick an exact buy or sell point. Below I have provided both the weekly and daily chart so you can see how the same ETF looks completely different on the two time frames.

USO Fund Trading – Weekly & Daily Trading Charts
While gold and silver have been moving higher oil has been flagging sideways taking a breather. Both the weekly and the daily charts are aligned for a nice move higher if the trend and charts follow through on their patterns. We could get some tradable action in the next couple days.


UNG Fund Trading – Weekly & Daily Trading Charts
Natural gas is really starting to slide. Wednesday UNG dipped below the Sept low of $8.94 by a couple cents then moved up into the close. Overall it’s not bullish. This could be the start of a waterfall sell off which is a sharp heavy volume sell off that lasts 3-5 days.


Commodity ETF Trading Conclusion:
To sum everything up the gold and silver ETFs are on fire as they continue to surge higher. Being ready for a sharp reversal is important if you want to lock in gains on a portion of your position.

Crude oil is taking its time but looking ripe for a breakout higher. We continue to watch for some action.

Natural gas continues to get pushed down and it’s not looking good for higher prices anytime soon. We are waiting for a shorting opportunity or an oversold condition to play a 1-5 day bounce.

Quick Trading Tip: If you have a position which has done well and has moved up for an extended period of time be sure to draw some trend lines and tighten your stop, or set a stop, under a tight trend line. Sell some of your position (25-50%) to lock in gains and let the core position continue to mature. If you get a pullback to a support level (previous breakout level) you can buy back your other part of your position at a lower price.

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Weaker U.S. Dollar Supports Buying Interest in Crude Oil

Crude oil closed up $0.49 at $79.63 a barrel today. Prices closed near mid range again today. A weaker U.S. dollar supported buying interest in crude today. Crude oil bulls have the near term technical advantage in crude oil. The next downside price objective for the crude oil bears is to produce a close below solid technical support at last week's low of $75.57.

Natural gas closed down 26.9 cents at $4.26 today. Prices closed near the session low and hit a fresh contract low today. Serious near term chart damage has occurred recently, including more today. Bears have the solid near term technical advantage.

Unleaded gasoline (RBOB) closed up 100 points at $2.0149 today. Prices closed nearer the session low today. Bulls still have the near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at the October high of $2.1015.

The U.S. dollar index closed down 29 points at 75.17 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage, amid no early clues of a market bottom being close at hand. Bulls' next upside price objective is to close prices above solid technical resistance at 77.00.

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Trader’s Blog Holiday Giveaway

The Crude Oil Trader has teamed up with INO.com to invite you to enter the “Trader’s Blog Holiday Giveaway”. Enter for your chance to win one of twelve prizes, worth over $5,000.00 total to be given away.

INO will be selecting one winner every Monday, Wednesday, and Friday starting on November 30th through December 25th. The winner will select their choice of prize and the remainder of the prizes will be available for the next winner picked.

Just click here to read all about the prizes that are up for grabs!

Good Luck and Happy Holidays,

Ray C. Parrish
President/CEO Crude Oil Trader



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Crude Oil Falls on Speculation U.S. Supplies to Rebound on Delayed Cargoes

Oil rose above $80 a barrel after the government reported that U.S. crude and fuel supplies dropped as refineries idled units and imports declined. Oil inventories dropped 887,000 barrels to 336.8 million last week, the Energy Department said. Stockpiles were forecast to increase by 300,000 barrels, according a Bloomberg News survey of analysts. Inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, also declined.

“There were draws in crude oil, gasoline and distillates, so the initial numbers looked very bullish,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. Crude oil for December delivery rose 43 cents, or 0.5 percent, to $79.57 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures have traded between $74.79 and $82 since Oct. 15. Prices are up 78 percent this year.....Read the entire article.

Weekly EIA Petroleum Status Report

U.S. crude oil refinery inputs averaged 13.8 million barrels per day during the week ending November 13, 31 thousand barrels per day below the previous week’s average. Refineries operated at 79 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.1 million barrels per day. Distillate
fuel production decreased last week, averaging 4.0 million barrels per day. U.S. crude oil imports averaged 8.6 million barrels per day last week, down 77 thousand barrels per day from the previous week.

Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 1.5 million 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 584 thousand barrels per day. Distillate fuel imports
averaged 152 thousand barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.9 million barrels from the previous week. At 336.8 million barrels, U.S. crude oil
inventories are slightly above the upper limit of the average range for this time of year.

Total motor gasoline inventories decreased by 1.7 million barrels last week, and are above the upper limit of the average range. Finished gasoline inventories increased while blending components decreased last week. Distillate fuel inventories decreased by 0.3 million barrels, and are above the upper boundary of the average range for this time of year.....Read the entire report.

Some OPEC Nations Charge Ahead Despite Slow Oil Demand

Energy forecasters increasingly predict slowing growth in global oil demand in the years ahead, but some OPEC nations are heading in the opposite direction and ramping up their capacity to pump oil. Qatar, for example, is set to raise its oil production capacity early next year from an existing field known as Al Shaheen. The more than $6 billion expansion project brightens the revenue prospects of the Mideast state but highlights a bigger problem brewing for its partners in the Organization of Petroleum Exporting Countries.

After keeping a tight tether on supply in recent years by cautiously investing, the 12 nation cartel finds itself battling an untimely convergence of lackluster consumption that magnifies its own rising supply capacity, which may in turn reignite old battles between members over market share and ultimately push oil prices lower.....Read the entire article.

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Stronger Dollar Limits Buying Interest in Crude Oil

Crude oil closed up $0.21 at $79.11 a barrel today. Prices closed near mid range today. A stronger U.S. dollar limited buying interest in crude today. Bulls have the near term technical advantage in crude oil. The next downside price objective for the crude oil bears is to produce a close below solid technical support at last week's low of $75.57.

Natural gas closed down 7.3 cents at $4.541 today. Prices closed nearer the session low. Serious near term chart damage has occurred recently. Bears have the solid near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $5.00.

The U.S. dollar index closed up 47 points at 75.39 today. Prices closed near mid range today and were supported on tepid short covering in a bear market. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 77.00.

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Oil Supply Set to Grow Through 2030 with No Peak Evident

Global oil productive capacity will grow though 2030 with no evidence of a peak of supply before that time, according to a new report by IHS Cambridge Energy Research Associates based on analysis of more than 10,000 projects around the globe. The report, The Future of Global Oil Supply: Understanding the Building Blocks extends IHS CERA's global oil outlook through 2030 and expects global oil productive capacity to grow to as much as 115 million barrels per day (mbd) through that period from the current level of 92 mbd, a 25 percent increase. Post 2030 supply could struggle to meet demand but this would take the form of a decades long "undulating plateau" rather than a sharp fall, the report says.

"There is more than an adequate inventory of physical resources available to increase supply to meet anticipated levels of demand through 2030," said Peter Jackson. "It would be easy to interpret the market and oil price trends from 2003 through 2009 in isolation to support the belief that a peak in global supply has passed or is imminent. But this only illustrates that the market continues to act as the shock absorber of major volatility".....Read the entire article.

Oil Gains as Dollar Strengthens, Fuel Supplies Forecast to Drop

Crude oil rose in New York as the dollar climbed and before a report that will probably show that U.S. fuel supplies declined. Oil rebounded after slipping as much as 1 percent as the U.S. currency rose against the euro for the first time in three days. An Energy Department report tomorrow will probably show that supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, declined last week, according to a Bloomberg News survey.

“Everything we have been seeing can be pegged to what’s happening in the equities and the dollar,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Attention is now shifting to the weekly supply reports, he said.
Crude oil for December delivery rose 31 cents to $79.21 a barrel at 12:24 p.m. on the New York Mercantile Exchange after dropping as low as $78.14. Prices are up 78 percent this year.....Read the entire post.

Crude Oil Bulls Appear to Regain The Momentum

Crude oil was lower overnight as it consolidates some of Monday's rally. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 78.95 would signal that a short term low has been posted. If December renews last week's decline, the 50% retracement level of this fall's rally crossing at 73.76 is the next downside target.

Tuesday's pivot for crude oil is 78.23

First resistance is the 20 day moving average crossing at 78.95
Second resistance is this month's high crossing at 81.06

First support is last Friday's low crossing at 75.57
Second support is the 50% retracement level of this fall's rally crossing at 73.76

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Natural gas was lower due to profit taking overnight as it consolidates some of Monday's rally but remains above the 10 day moving average crossing at 4.571. Stochastics and the RSI are oversold and are turning bullish signaling that additional short covering gains are possible near term.

Closes above the 20 day moving average crossing at 4.901 are needed to confirm that a short term low has been posted. If December extends the decline off October's high, monthly support crossing at 3.996 is the next downside target.

Natural gas pivot point for Tuesday is 4.551

First resistance is Monday's high crossing at 4.656
Second resistance is the 20 day moving average crossing at 4.901

First support is last Friday's low crossing at 4.287
Second support is monthly support crossing at 3.996

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The U.S. Dollar was higher due to short covering overnight as it consolidates some of Monday's decline. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 75.75 would temper the near term bearish outlook in the market. If December extends this month's decline, monthly support crossing at 73.39 is the next downside target.

First resistance is the 10 day moving average crossing at 75.45
Second resistance is the 20 day moving average crossing at 75.75

First support is Monday's low crossing at 74.75
Second support is monthly support crossing at 73.39

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