Phil Flynn: Fundamentally Flawed

Another failed upside breakout as the global oil market continues to wallow in this endless trading range. As the bull and bear frustrations continue to mount, I have heard traders on both sides of the market that tell me that somehow the markets are wrong and that the fundamentals do not justify the current price. In other words that the market is somehow fundamentally flawed and that the price is out of whack with either your bullish or perhaps bearish reality. Oil bulls are frustrated with the lack of investment that they see in the oil industry and feel we are over estimating the drop in demand.

They point to China and its explosive growth and its growing appetite for oil. They say that the market is not correctly accessing event risk especially with the type of talk coming out of Iran and Israel in recent days especially in the aftermath of European sanctions. The oil bulls say that despite the drop in demand that as the economy continues to recover oil supplies will tighten faster than you think. The latest to express that frustration was noted oil bulls Goldman Sachs who just recently exclaimed that crude oil prices are “significantly” below the level warranted by fundamentals.....Read the entire article.

What do Super Traders have in common?

Share

Overbought Conditions in Crude Oil Giving Bears the Advantage....Here's Wednesday's Numbers

Crude oil was lower overnight as it extends Tuesday's decline. Stochastics and the RSI are overbought and are turning bearish signaling that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 76.45 would confirm that a short term top has been posted. If September extends this month's rally, the reaction high crossing at 79.97 is the next upside target.

First resistance is Tuesday's high crossing at 79.69
Second resistance is the reaction high crossing at 79.97

Crude oil's pivot point for Wednesday morning is 77.99

First support is Tuesday's low crossing at 76.79
Second support is the 20 day moving average crossing at 76.45

Back and Better than Ever....MarketClub 2 Week Free Trial

Natural gas 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.

Closes above last Thursday's high crossing at 4.669 are needed to confirm that a short term low has been posted while opening the door for a larger degree rally into early August. Closes below the reaction low crossing at 4.452 would temper the near term friendly outlook.

First resistance is last Thursday's high crossing at 4.669
Second resistance is the reaction high crossing at 4.945

Natural gas pivot point for Wednesday morning is 4.630

First support is the reaction low crossing at 4.452
Second support is this month's low crossing at 4.290

New Video: How To Use Fibonacci Retracements

Share

Conoco's 2nd Quarter Profit Soars, Plans To Sell Entire Lukoil Stake

ConocoPhillips' (COP) second quarter earnings more than quadrupled on higher commodities prices and as its refining business returned to profitability, with results topping expectations. The company also reached an agreement to sell about 40% of its stake in Russian oil giant OAO Lukoil Holdings (LUKOY, LKOH.RS) and unveiled plans to sell all of it by the end of next year, instead of prior plans to just halve it. Conoco agreed to sell the initial part of its 20% stake in Lukoil for $3.44 billion. The deal is set to close in the current quarter. The rest will be sold to either Lukoil or on the open market.

Conoco, the third largest U.S. oil company by market value after Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), is in the midst of a major restructuring program that includes plans for $10 billion in divestitures in an effort to repay debt, a shift from a debt fueled acquisition spree when commodities prices were soaring. It reported a profit of $4.16 billion, or $2.77 a share, up from $900 million, or 57 cents a share, a year earlier. The latest quarter included a net $1.10 a share in gains. Analysts polled by Thomson Reuters forecast earnings of $1.56 a share. Conoco didn't provide revenue figures.

Exploration and production, which accounts for most of the company's profits, saw earnings soar on higher prices, though, as average daily oil and gas production fell 7.5% amid normal field declines and planned maintenance. Conoco's refining business profit also soared as margins strengthened and utilization rates improved. Refiners have benefited as demand for gasoline and diesel began to improve this year, though the sustainability is highly uncertain. Shares closed Tuesday at $54.44 and were inactive premarket. The stock is up 6.6% this year.

From the.....Dow Jones Newswire.

Share

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

Crude oil closed lower due to profit taking on Tuesday as it consolidated some of this month's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought and are turning neutral hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 76.41 would temper the near term friendly outlook. If September extends the rally off this month's low, June's high crossing at 80.82 is the next upside target. First resistance is today's high crossing at 79.69. Second resistance is June's high crossing at 80.82. First support is the 20 day moving average crossing at 76.41. Second support is the reaction low crossing at 74.40.

Natural gas closed higher on Tuesday as it extended last week's rally. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above last Thursday's high crossing at 4.699 are needed to confirm that a short term low has been posted. Closes below the 10 day moving average crossing at 4.543 would temper the near term friendly outlook. First resistance is last Thursday's high crossing at 4.699. Second resistance is the reaction high crossing at 4.945. First support is the 10 day moving average crossing at 4.543. Second support is the reaction low crossing at 4.290.

The U.S. Dollar closed higher due to short covering on Tuesday as it consolidates above the 50% retracement level of the November-June rally crossing at 82.15. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bearish signaling that additional weakness is possible near term. If September extends the decline off June's high, the 62% retracement level of the November-June rally crossing at 80.47 is the next downside target. Closes above the 20 day moving average crossing at 83.69 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 82.82. Second resistance is the 20 day moving average crossing at 83.69. First support is today's low crossing at 81.97. Second support is the 62% retracement level of the November-June rally crossing at 80.47.

Gold closed lower on Tuesday and tested the 50% retracement level of this year's rally crossing at 1158.30. Stochastics and the RSI are turning neutral to bearish hinting that additional weakness is possible near term. If August extends the decline off June's high, the 62% retracement level of the aforementioned decline crossing at 1132.70 is the next downside target. Closes above the 20 day moving average crossing at 1200.50 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1189.50. Second resistance is the 20 day moving average crossing at 1200.50. First support is today's low crossing at 1156.90. Second support is the 62% retracement level of the aforementioned decline crossing at 1132.70.

Back and Better than Ever....MarketClub 2 Week Free Trial

Share

Phil Flynn: All The News That Is Fit To Ignore

Gee I miss the old days when a headline or two would get the oil screaming. When the markets feared that even the loss of just one drop of oil could knock the world out of its delicate supply versus demand balance. You remember those days not to long ago when the market soared on even the most mundane headline. Instead what we have now a lack of passion and that oh so boring market stability.

Oh sure oil may try to reluctantly breakout to the upside as it follows the stock-market on its earnings fueled optimistic rally yet deep down it really does not want too. You see the oil glut the likes of which we haven’t experienced in decades is leading to a drab oil market and heavens forbid less interesting Energy Reports, Oh No! So let’s pretend if only for today that these stories that used to drive markets wild actually still matter to price. Like for example say sanctions on Iran.

Something like, oil traders ran for cover as the long awaited sanctions on a still defiant Iran took hold. (Ok well everything is true except for the running for cover part) Iran’s President Mahmoud Ahmadinejad warned that sanctions imposed by arrogant Western powers will not slow their nuclear ambitions. (Yikes!) The European Union adopted new sanctions targeting Iran's foreign trade, banking and energy sectors brought sharp criticism from.....Read the entire article.

Back and Better than Ever....MarketClub 2 Week Free Trial

Share

Crude Oil Bulls Poised to Take Clear Advantage....Here's Tuesday's Numbers

Crude oil was higher overnight and poised to extend last Thursday's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If September extends this month's rally, the reaction high crossing at 79.97 is the next upside target. Closes below the reaction low crossing at 74.70 would temper the near term friendly outlook.

First resistance is last Friday's high crossing at 79.60
Second resistance is the reaction high crossing at 79.97

Crude oil's pivot point for Tuesday morning is 78.79

First support is the 10 day moving average crossing at 77.82
Second support is the 20 day moving average crossing at 76.49

Back and Better than Ever....MarketClub 2 Week Free Trial

Natural gas was higher overnight as it consolidates above the 20 day moving average crossing at 4.556. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

Closes above last Thursday's high crossing at 4.669 are needed to confirm that a short term low has been posted while opening the door for a larger degree rally into the end of July. Closes below the reaction low crossing at 4.452 would temper the near term friendly outlook.

First resistance is last Thursday's high crossing at 4.669
Second resistance is the reaction high crossing at 4.945

Natural gas pivot point for Tuesday morning is 4.586

First support is the reaction low crossing at 4.452
Second support is this month's low crossing at 4.290

The Most Complete, Current Trading News!

Share

Crude Oil Trades Near 11 Week High on Goldman "Crude Too Cheap" Statement

Crude oil traded near an 11 week high in New York as equities rallied around the world and Goldman Sachs Group Inc. said crude prices are too cheap. Oil was at about $79 a barrel before a government report due tomorrow that may show U.S. fuel supplies increased last week. Goldman Sachs said futures prices are “significantly” below the level warranted by “fundamentals,” offering buying opportunities for this year and next.

“We expect an average of $92 next year, so on a longer term horizon prices are too cheap, but not far too cheap,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich AG in Vienna. “Crude faces some resistance around $80 as although fundamentals are slowly improving they’re not yet strong enough.” Crude for September delivery was at $79.28 a barrel, up 30 cents, in electronic trading on the New York Mercantile Exchange at 1:23 p.m. London time. Brent crude for September settlement traded at $77.82 a barrel, up 32 cents, on London’s ICE Futures Europe exchange. Futures rose as high as $79.60 a barrel on July 23, the highest intraday price since May 6.

European stocks rose for a sixth day as UBS AG and Deutsche Bank AG reported earnings that beat estimates and the Basel Committee on Banking Supervision softened some of its proposed capital and liquidity rules. The Stoxx Europe 600 Index gained 0.6 percent to 258.65. Goldman Sachs said in a report yesterday that the balance between supply and demand will continue to tighten in the second half of this year as global economic growth boosts demand, returning inventories to “more normal” levels.....Read the entire article.

Free Trading Video: How To Use Fibonacci Retracements


Share

Stock Market and Commodities Commentary For Monday Evening

Crude oil closed up $0.01 at $78.99 a barrel today. Prices closed nearer the session high today. Bulls have the slight near term technical advantage. The next near term upside price objective for the bulls is producing a close above major psychological resistance at $80.00 a barrel.

Natural gas closed up 2.7 cents at $4.59 today. Prices closed near the session high today and saw tepid short covering in a bear market. The bears have the overall near term technical advantage. Prices are still in a six week old downtrend on the daily bar chart.

The U.S. stock indexes closed higher and near the session high today in the wake of upbeat economic data in the form of a stronger than expected new home sales report today. The stock index bulls have gained some fresh upside near term technical momentum recently and the indexes today hit fresh multi week highs.

The U.S. dollar index closed down 44 points at 82.18 today. Prices closed near the session low today and hit a fresh three month low. Bears have the near term technical advantage. Prices are in a seven week old downtrend on the daily bar chart.

Gold closed down $4.50 at $1,187.10 today. Prices closed near mid-range today in quieter trading. A weaker U.S. dollar index today did not help the gold bulls. The gold market bulls still have the slight overall near term technical advantage as trading has turned choppy recently. Prices just last month hit a fresh all time record high. However, prices are also in a six week old downtrend on the daily bar chart.

Back and Better than Ever....MarketClub 2 Week Free Trial

Share

Phil Flynn: Bye, Bye, Bonnie

With Bonnie behind us and more economic ahead of us the oil market currently is in a state of flux. The market continues to be supported by economic earnings related optimism but at the same time it has to worry about current state of oversupply. Oil and the products remain range bound and will continue to see swings perhaps on both sides of unchanged throughout the day. When the big news of the day is whether or not Tony Heyward will step down or be pushed out of BP has to wonder whether or not the markets are focused on what it should be focused on. The Financial Times reports on another way that Shale Gas production is impacting the world.

The FT says that “International energy groups are set to miss out on billions of dollars of future sales during the next decade as China, their most voracious customer, aggressively develops its own large gas reserves and drastically cuts its imported gas requirements, a new study shows. As a result they have a limited window to export their growing new volumes of gas to China. Industry consultant Wood Mackenzie says China will need only half as much more liquefied natural gas from 2020 onwards than it will require in the next decade and it will need no additional gas transported by pipeline after 2020.....Read the entire article.

Back and Better than Ever....MarketClub 2 Week Free Trial

Share

Crude Oil and Natural Gas Market Commentary For Monday Morning

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

If September extends this month's rally, the reaction high crossing at 79.97 is the next upside target. Closes below the reaction low crossing at 74.70 would temper the near term friendly outlook.

First resistance is last Friday's high crossing at 79.60
Second resistance is the reaction high crossing at 79.97

Crude oil's pivot point for Monday morning is 78.99

First support is the 10 day moving average crossing at 77.60
Second support is the 20 day moving average crossing at 76.45

Back and Better than Ever....MarketClub 2 Week Free Trial

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

Closes above last Thursday's high crossing at 4.669 are needed to confirm that a short term low has been posted while opening the door for a larger degree rally into the end of July. Closes below the reaction low crossing at 4.452 would temper the near term friendly outlook.

First resistance is last Thursday's high crossing at 4.669
Second resistance is the reaction high crossing at 4.945

Natural gas pivot point for Monday morning is 4.599

First support is the reaction low crossing at 4.452
Second support is this month's low crossing at 4.290

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

Share