Crude Oil Drops a Fourth Day Amid Concern Slow Recovery Will Hurt Demand

Crude oil declined for a fourth day in New York after confidence among U.S. consumers slumped, adding to concerns a recovery in fuel demand may falter in the biggest energy consuming nation. Oil dropped after the Thomson Reuters/University of Michigan preliminary consumer sentiment index for July fell to 66.5 from 76 in June, the lowest level since August. The gauge was projected to fall to 74, according to a survey of economists by Bloomberg News.

Crude oil for August delivery dropped as much as 51 cents, or 0.7 percent, to $75.50 on the New York Mercantile Exchange. It was at $75.74 at 8:27 a.m. Sydney time. The contract fell 61 cents to $76.01 on July 16. Futures have declined 8.2 percent since the start of the year. U.S. equities dropped on July 16 after the slump in consumer confidence and lower than estimated revenue at companies from Bank of America Corp. to General Electric Co. The Dow Jones Industrial Average declined 2.5 percent and the Standard & Poor’s 500 Index slipped 2.9 percent.

The Federal Reserve Bank of New York reported last week that its general economic index fell to 5.1 in July from 19.6 the prior month. The Federal Reserve Bank of Philadelphia’s general economic index declined to 5.1 this month, the lowest level since August 2009, from 8 in June. Brent crude oil for September settlement fell 72 cents, or 0.9 percent on July 16, to end the session at $75.37 on the London-based ICE Futures Europe exchange.

Reporter Mark Shenk can be reached at mshenk1@bloomberg.net Ben Sharples at bsharples@bloomberg.net


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Crude Oil Weekly Technical Outlook

Crude oil edged higher to 78.15 last week but failed to sustain gain there. With 4 hours MACD staying below signal line, initial bias is neutral this week. While another rise cannot be ruled out with 74.23 minor support intact. We'd continue to expect upside to be limited by 79.38 resistance and bring fall resumption. On the downside, below 74.23 will flip intraday bias back to the downside. Further break of 71.09 will confirm that fall from 79.38 has resumed. Also this will affirm our view that choppy recovery from 64.23 has completed at 79.38 already and should target 64.23 support next.

In the bigger picture, recovery from 64.23 is treated as a correction to fall from 87.15 and has possibly completed at 79.38 already. Break of 71.09 support will indicate that decline from 87.15 is likely resuming. This will also revive the bearish case that whole medium term rise from 33.2 is finished at 87.15, just ahead of 50% retracement of 147.27 to 33.2 at 90.24. In such case, we'd see another fall to 50% retracement of 33.2 to 87.15 at 60.18 at least.

In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall fro 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.

Nymex Crude Oil Continuous Contract 4 Hours Chart

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Phil Flynn: Capped!

Great News for the oil industry and all of America and the world! The leak in the Gulf is capped! Finally for the first time since the Deep Water Horizon exploded back in April there is no oil leaking from that deepwater well. Still BP and the government are not celebrating just yet. The company still is worried that higher pressure inside the well could cause of explosions in other parts of the pipeline and is monitoring the well by checking pressure every 6 hours. Let’s keep our fingers crossed and say a prayer.

Of course what traders really want to know if the upside in oil is capped? Over the last few days the oil market seems to have taken a leadership role in leading the stock market higher and the rest of the world lower. As of late oil traders are taking a more skeptical take on the global economic recovery because despite the slew of good feelings that permeated the marketplace to start the week in the oil patch the facts just does not back those gushy feelings up. The week of old fashion supply and demand fundamentals for the oil market does not bode well for the upside of the oil market or for the economic recovery over all.....Read the entire article.

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Crude Oil Falls for Third Day on Concern Slowing Economic Recovery to Cut Demand

Crude oil fell for a third day in New York on speculation that the U.S. economic recovery is slowing, reducing fuel demand in the world’s biggest energy consuming country. Oil slipped as much as 1.6 percent and equities tumbled after an index of preliminary consumer sentiment declined to the lowest level since 2009. Prices retreated yesterday as manufacturing in New York and Pennsylvania dropped, part of a nationwide decline in factory production of 0.4 percent in June.

“Oil should be a lot lower than it is,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “We’ve had some very bearish stuff come out about the economy this week.” Crude oil for August delivery slipped 42 cents, or 0.6 percent, to $76.20 a barrel at 10:57 a.m. on the New York Mercantile Exchange. Futures are little changed this week. Brent crude oil for September settlement fell 63 cents, or 0.8 percent, to $75.46 on the London based ICE Futures Europe exchange.

Oil in New York has traded in a range of $8.29 for the past month, from $71.09 to $79.38 a barrel. “We’re stuck in a $70 to $80 range and looking for a strong signal to exit it in either direction,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “It will take evidence that the recovery is gathering momentum to move us higher, and any signs pointing to continued sluggishness and weak demand will move us lower”.....Read the entire article.

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Crude Oil and Natural Gas Commentary For Friday Morning

Crude oil was higher overnight as it consolidates above the 20 day moving average crossing at 76.07. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If August extends this month's rally, the reaction high crossing at 79.38 is the next upside target. Closes below Tuesday's low crossing at 74.25 would temper the near term friendly outlook.

First resistance is Wednesday's high crossing at 78.15
Second resistance is the reaction high crossing at 79.38

Crude oil pivot point for Friday morning is 76.54

First support is Tuesday's low crossing at 74.25
Second support is the reaction low crossing at 71.09

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Natural gas was slightly higher overnight as it extends Thursday's rally above the 10 day moving average. 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 4.650 would confirm that a short term low has been posted. If August extends the decline off June's high, the reaction low crossing at 4.285 is the next downside target.

First resistance is Thursday's high crossing at 4.623
Second resistance is the 20 day moving average crossing at 4.650

Natural gas pivot point for Friday morning 4.499

First support is Thursday's low crossing at 4.288
Second support is the reaction low crossing at 4.285

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New Video: Did the "Death Cross" Die, or is it Still Alive in the S&P 500?

The sharp upward rally in the S&P 500 surprised many people, myself included. However, the rally did not change the "Death Cross" which we pointed out as being a negative and significant market event that does not occur very often.

This market's rally also did not change our weekly and monthly "Trade Triangles" which are still red and indicating that the trend is headed lower.

In this short two minute video, we show you some other aspects of the S&P 500 that we think you should be watching. As always our videos are free to watch and there are no registration requirements.

We would love to hear your comments about this or any of our other market videos.

Watch Did the "Death Cross" Die, or is it Still Alive in the S&P 500?


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New Video: EUO, What is it and Where's it Headed?

Here's an ETF that you may want to take a look at....

We just finished a new short video on an ETF that's looking very interesting. The video runs a little over two minutes and gets right to the meat and potatoes of this market.

This particular ETF is leveraged and trades almost 2,000,000 shares a day, so it is nice and liquid. What makes this ETF so interesting, is that it plays such a big part on the financial world stage.

As always our videos are free to watch and there are no registration requirements.

Watch....EUO, What is it and Where's it Headed?


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Crude Oil Consolidates Above 20 Day Moving Average, Natural Gas Extends Decline

Crude oil was higher overnight as it consolidates above the 20 day moving average. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If August extends this month's rally, the reaction high crossing at 79.38 is the next upside target. Closes below Tuesday's low crossing at 74.25 would temper the near term friendly outlook.

First resistance is Wednesday's high crossing at 78.15
Second resistance is the reaction high crossing at 79.38

Crude oil pivot point for Thursday morning is 77.19

First support is Tuesday's low crossing at 74.25
Second support is the reaction low crossing at 71.09

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Natural gas 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 August extends the decline off June's high, the reaction low crossing at 4.285 is the next downside target. Closes above the 20 day moving average crossing at 4.667 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 4.494
Second resistance is the 20 day moving average crossing at 4.667

Natural gas pivot point for Thursday morning is 4.333

First support is the overnight low crossing at 4.301
Second support is the reaction low crossing at 4.285

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Crude Oil Pares Losses as U.S. Inventory Drops More Than Analysts Forecast

Crude oil fluctuated, rebounding from earlier losses, after a U.S. government report showed that inventories declined three times as much as expected last week and refineries bolstered operating rates to a two year high. Supplies fell 5.06 million barrels, or 1.4 percent, to 353.1 million, the most since September, according to the Energy Department. Stockpiles were forecast to slip 1.5 million barrels, a Bloomberg News survey showed. Refineries operated at 90.5 percent of capacity, the highest level since January 2008.

“A 5 million draw in crude oil supplies is pretty bullish any way you look at it,” said Carl Larry, president of Oil Outlooks and Opinions LLC in Houston. “The outlook for prices is still higher, unless the economy continues to just trudge along.” Crude oil for August delivery rose 2 cents to $77.17 a barrel at 11:10 a.m. on the New York Mercantile Exchange. Oil traded at $76.62 before the release of the report at 10:30 a.m. in Washington.

Brent crude for August settlement increased 23 cents, or 0.3 percent, to $76.88 a barrel on the London based ICE Futures Europe exchange. August Brent futures expire tomorrow. The more active September contract rose 10 cents to $76.83 a barrel.

Retail Sales Drop

Prices also dropped as sales at U.S. retailers fell in June for a second month, indicating the pace of economic recovery moderated heading into the second half of 2010. Purchases decreased a more than projected 0.5 percent following a 1.1 percent May drop, Commerce Department figures showed today in Washington. Retail sales were projected to fall 0.3 percent after a 1.2 percent drop previously reported for May, according to the median estimate of 75 economists in a Bloomberg News survey.

Excluding auto dealers, demand fell 0.1 percent, matching the median forecast of economists surveyed. Industrial production in the 16-member euro region increased less than forecast in May as the economy struggled to gather strength. Output climbed 0.9 percent from the previous month, when it also increased 0.9 percent, the European Union statistics office in Luxembourg said today. Economists forecast output to rise 1.2 percent, according to the median of 27 estimates in a Bloomberg News survey.

Reporter Mark Shenk can be contacted at mshenk1@bloomberg.net.

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Crude Oil and Natural Gas Technical Outlook Wednesday Morning

Crude oil was lower due to profit taking overnight as it consolidates above the 20 day moving average crossing at 76.23. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If August extends this month's rally, the reaction high crossing at 79.38 is the next upside target. Closes below Tuesday's low crossing at 74.25 would temper the near term friendly outlook.

First resistance is Tuesday's high crossing at 77.37
Second resistance is the reaction high crossing at 79.38

Crude oil pivot point for Wednesday morning is 76.26

First support is Tuesday's low crossing at 74.25
Second support is the reaction low crossing at 71.09

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Natural gas 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 August extends the decline off June's high, the reaction low crossing at 4.285 is the next downside target. Closes above the 20 day moving average crossing at 4.706 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 4.529
Second resistance is the 20 day moving average crossing at 4.706

Natural gas pivot point for Wednesday morning is 4.392

First support is Tuesday's low crossing at 4.334
Second support is the reaction low crossing at 4.285

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