OPEC: No Need to Increase Supply

The Organization of Petroleum Exporting Countries said Wednesday it wouldn't need to boost its supply after cutting demand forecasts for its crude and boosting supply estimates for rival producers, despite the impact of a U.S. oil spill. In its monthly report for June, the organization also warned of likely downgrades in global consumption estimates in the second half, and slightly cut its annual forecast amid a slowing recovery.

OPEC cut 2010 demand estimates for its crude by 70,000 barrels a day and now sees a year on year decline of 175,000 barrels a day. "This would leave no room for additional crude oil supplies in the market," it said. OPEC's next meeting is not due until October. The organization, which members currently produce over a third of the oil consumed worldwide, is loosing market share to non members, which include Russia and the U.S.

It boosted non OPEC oil supply estimates by 110,000 barrels a day for 2010, making it an increase of 640,000 barrels a day. The largest upgrade came from U.S. supply, despite OPEC warning production there could be affected by an extension of a Gulf of Mexico drilling moratorium and a hurricane season expected to be worse than usual. The moratorium, which follows an explosion and a huge spill at BP's Macondo well on Apr. 20, is affecting 35 wells "which will have a heavy influence on production in 2010 and 2011," OPEC said.

The group also warned "an expected moderation in the pace of the economic recovery is likely to impact demand growth forecasts for the second half." It cut its global oil demand forecast for the year by about 10,000 barrels a day to 85.37 million barrels a day, but kept consumption growth unchanged at about 950,000 barrels. Despite the challenges they face in finding buyers for every new barrel they produce, OPEC members have been steadily increasing their output in the past twelve months.

In May, quota bound members increased production by 19,600 barrels a day to 26.83 million barrels a day, despite agreeing to 4.2 million barrels a day in cuts late 2008. Iraq, the only OPEC not subject to quotas, experienced the largest rise in the month, with 121,300 barrels a day.....Read the entire article.

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The Fibonacci Tool Fully Explained

If you are not already using the Fibonacci tool in your trading maybe you have heard of it. It is one of the most effective and simple tools to use in becoming a successful trader. And it is fully explained here in this video, it’s a technical tool that can make you rich.

You may have heard about Fibonacci, the man who discovered a set of numbers who that have a major affect on the market. So who is this Fibonacci fellow, and why are his findings so important in the market place?

The mathematical findings by this thirteenth century Italian man has yielded a useful technical analysis tool which is used in technical analysis and by scientists in a large array of fields. Born Leonardo of Piza, he is better known in the trading community as Fibonacci. Fibonacci’s best known work is Liber Abaci which is generally credited as having introduced the Arabic number system which we use today.

Fibonacci introduced a number sequence in Liber Abaci which is said to be a reflection of human nature. The series is as follows: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 and on to infinity. The series is derived by adding each number to the previous. For example, 1+1=2 , 2+1=3, 3+2=5, 5+3=8, 8+5=13, and so on.

We use the Fibonacci series mainly for retracements (see today’s video) and to show us where support and resistance might come into the market. We also use this tool to enter or add onto a position.
In this video we show you these exact retracements and how they affected the market at that time.

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Crude Oil Daily Technical Outlook Wednesday Morning

Crude oil outlook remains basically unchanged. Recovery from 64.24 should have finished at 75.72 already. Further fall should be seen to retest 64.24 low first. Break there will confirm that whole decline for 87.15 has resumed and should target next key level at 60, which is close to 50% retracement of 33.2 to 87.15 at 60.18. On the upside, above 75.72 will bring another rise, but after all, upside should be limited by 61.8% retracement of 87.15 to 64.23 at 78.39 and bring fall resumption.

In the bigger picture, prior break of 68.59/69.50 support zone affirms our view that whole medium term rebound from 33.2 has completed at 87.15 already, just ahead of 50% retracement of 147.27 to 33.2 at 90.24. Further decline should be seen to 50% retracement of 33.2 to 87.15 at 60.18 at least. Also, as rebound from 33.2 is viewed as as a correction to the whole correction that started at 2008 at 147.27, we'd anticipate a break of 33.2 low in the longer term. On the upside, break of resistance at 78 level is needed to be indicate that fall from 87.15 is completed. Otherwise, we'll stay bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Crude Oil Rises for Second Day After Industry Shows Drop in U.S. Oil Inventories

Crude oil advanced for a second day as an industry report showed a drop in U.S. crude inventories and confidence among U.S. small businesses rose, bolstering optimism that fuel demand will increase in the world’s largest user. Oil gained as much as 1 percent after the American Petroleum Institute said crude inventories dropped for a second week.

An Energy Information Administration report today will probably show stockpiles fell 900,000 barrels, according to a Bloomberg News survey of 15 analysts. The National Federation of Independent Business’s optimism index increased last month to the highest level since September 2008.

“There is some optimism with the macro data, especially in the U.S.,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by telephone. “The last few weeks there’s been decent draws in the oil inventories in the U.S., and so the EIA data will be important to see if that trend continues.”

Crude oil for July delivery gained as much as 71 cents to $72.70 a barrel in electronic trading on the New York Mercantile Exchange, and was at $72.52 at 2:11 p.m. Singapore time. The contract rose 55 cents, or 0.8 percent, to settle yesterday at $71.99. Oil has declined 8.9 percent this year.

Risks to the global economic outlook have “risen significantly” and policy makers have limited room to provide support to growth, International Monetary Fund Deputy Managing Director Naoyuki Shinohara said in a speech in Singapore today.....Read the entire article.

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Crude Oil, Natural Gas, Gold and Dollar Commentary For Tuesday Evening

Crude oil closed higher due to short covering on Tuesday as it consolidated some of Monday's decline. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 75.72 are needed to confirm that a short term low has been posted. If July renews the decline off May's high, last July's low crossing at 66.11 is the next downside target. First resistance is the 20 day moving average crossing at 73.39. Second resistance is the reaction high crossing at 75.72. First support is Monday's low crossing at 69.51. Second support is the reaction low crossing at 67.15.

Natural gas closed lower due to profit taking on Tuesday as it consolidates some of the rally off May's low. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If July extends this week's rally, the 50% retracement level of the November-May decline crossing at 5.151 is the next upside target. Closes below the 20 day moving average crossing at 4.389 would confirm that a short term top has been posted. First resistance is today's high crossing at 4.995. Second resistance is the 50% retracement level of the November-May decline crossing at 5.151. First support is the 10 day moving average crossing at 4.479. Second support is the 20 day moving average crossing at 4.389.

The U.S. Dollar closed lower due to profit taking on Tuesday as it consolidates some of this month's rally. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally into uncharted territory, upside targets will now be hard to project. Closes below the 20 day moving average crossing at 86.70 are needed to confirm that a short-term top has been posted. First resistance is Monday's high crossing at 88.80. Second resistance is weekly resistance crossing at 89.71. First support is the 10 day moving average crossing at 87.28. Second support is the 20 day moving average crossing at 86.70.

Gold closed lower due to profit taking on Tuesday hinting that a double top with May's high could have been posted today. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If August extends this week's rally into uncharted territory, upside targets will now be hard to project. Closes below last Friday's low crossing at 1198.10 would confirm that a short term top has been posted. First resistance is today's high crossing at 1254.50. First support is the 20 day moving average crossing at 1216.60. Second support is last Friday's low crossing at 1198.10.

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Can we Expect a Natural Gas Clampdown?

Natural gas blasts in Pennsylvania, West Virginia and Texas are being closely scrutinized as the energy market is already facing greater regulations on offshore drilling. CNBC's Sharon Epperson takes a closer look.




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Phil Flynn: Speaking Loud and Clear

The futures market is speaking loud and clear about the impact of the Gulf oil spill on oil prices but is the Obama administration listening? As I have pointed out in a previous article, the futures market is saying that when it comes to the gulf oil spill we will not have to pay today but hang onto your wallet tomorrow. The futures market is screaming that in the in the longer dated futures contracts that if we restrict offshore drilling in the Gulf or overregulated the price of oil it will go through the roof. Theses sentiments were outlined by an article in Bloomberg News.

According to Bloomberg News, "The oil market is signaling that prices have nowhere to go but up as the biggest spill in U.S. history curbs drilling and makes it more expensive to develop new fields.” Bloomberg point out something we talked about last week and that the spill in Gulf is signaling higher prices in the long run. Bloomberg says that, “Crude’s premium for delivery in eight years rose 86 percent since the April 20 explosion at the BP Plc leased Deepwater Horizon rig in the Gulf of Mexico, based on June 4 prices.

Oil for December 2018 was $22 a barrel more than for next month, compared with $11 before the disaster.” They go on to say, “More regulation may add $5 to the long term contracts, according to Deutsche Bank AG. President Barack Obama extended a ban on new deepwater permits and exploration by Royal Dutch Shell Plc in the Alaskan Arctic for six months, putting off limits as much as 23.2 billion barrels of potential resources, equal to 76 percent of all reserves proven in the U.S.”

The number of rigs drilling in the Gulf of Mexico plunged 50 percent last week to the lowest level in 16 years, Baker Hughes Inc. reported June 4. “The president said stop drilling, and now we are seeing the result. Yet is the president getting the message? The Wall Street Journal reports, “The Obama administration, facing rising anger on the Gulf Coast over the loss of jobs and income from a drilling moratorium, said Monday that it would move quickly to release new safety requirements that would allow the reopening of offshore oil and gas exploration in shallow waters.”

Phil can be reached at pflynn@pfgbest.com and don't forget to watch him daily on the Fox Business Network

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Crude Oil Daily Technical Outlook For Tuesday Morning

No change in crude oil's outlook. As noted before, recovery from 64.24 should have finished at 75.72 already. Further fall should be seen to retest 64.24 low first. Break there will confirm that whole decline for 87.15 has resumed and should target next key level at 60, which is close to 50% retracement of 33.2 to 87.15 at 60.18. On the upside, above 75.72 will bring another rise, but after all, upside should be limited by 61.8% retracement of 87.15 to 64.23 at 78.39 and bring fall resumption.

In the bigger picture, prior break of 68.59/69.50 support zone affirms our view that whole medium term rebound from 33.2 has completed at 87.15 already, just ahead of 50% retracement of 147.27 to 33.2 at 90.24. Further decline should be seen to 50% retracement of 33.2 to 87.15 at 60.18 at least. Also, as rebound from 33.2 is viewed as as a correction to the whole correction that started at 2008 at 147.27, we'd anticipate a break of 33.2 low in the longer term. On the upside, break of resistance at 78 level is needed to be indicate that fall from 87.15 is completed. Otherwise, we'll stay bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

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Kevin Kiefer: Job Growth is Key to Recovery and Market

Friday's job numbers were very disappointing with private sector hiring declining significantly. What people need to understand is that there are enormous deflationary pressures in this economy and job growth is the only way to overcome those headwinds. Without strong job growth, this recovery and this stock market are both toast. The consumer and the private sector are continuing to deleverage and pay down debt....which is very deflationary but is a needed process in a system that had too much leverage. Even with the public debt soaring, total US debt (includes private and public debt) is declining.

We think this process will need to go on for many years with higher saving rates than what we have seen the past decade. Given this, the economy and the market can still do well if we have job growth to replace the aggregate demand lost due to the increase in savings. Also, after a few years of credit card debt going down, more income will be used to spend instead of interest payments which is a boost to the economy. As we have mentioned before, companies have cut to the bone and we believe that productivity can't go much higher in the short run so any increase in demand will lead to higher job growth than what we saw in May. We must watch the ISM and durable goods data to determine if demand is still increasing and if so, we expect much better private sector hiring in the months of June and July.

We are also still watching the 200 and 50 day moving averages on the S&P 500. We are well below both of these key moving averages with the 200 day at 1006 and the 50 day at 1154. It is very possible that the market may get a relief rally soon and we'll need to get a close above the 200 day moving average in order for us to put on more positions. If the economic data still points to demand increasing, then we should see the market get back above the key 200 day moving average quickly. Having said all of this, I am not selling or buying right now... and so I have no stock picks tonight. We'll need to keep a close eye on the economic data this month and on the charts and we'll let you know when it is safe to buy again or if it is time to sell all of our remaining positions.

I'm still a believer in this recovery... but if the market keeps hanging around below the 200 day and we can't get a close above it on the next leg higher, then I'll have to rethink that. Also, if the economic data starts coming in weaker than expected, then I'll also have to rethink that. We need good data this month to get the one thing we need to keep this economy and market going, JOBS.

Analyst Kevin Keifer can be reached at Kevin@tickerhouse.com

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Where is Crude Oil and Gold Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil & gold are likely headed tomorrow.




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