CNBC's Bertha Coombs discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.
Tuesday, September 7, 2010
Markets Close Lower, Bulls Maintain The Advantage For Wednesday Morning
Crude oil closed lower on Tuesday due to profit taking but remains above the 10 day moving average crossing at 73.66. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above the reaction high crossing at 75.58 are needed to confirm that a short term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target. First resistance is the 20 day moving average crossing at 74.85. Second resistance is the reaction high crossing at 75.58. First support is August's low crossing at 70.76. Second support is May's low crossing at 70.35.
Natural gas posted an inside day with a lower close on Tuesday but remains above the 10 day moving average crossing at 3.844. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are turning bullish hinting that a short covering rebound is possible near term. Closes above the 20 day moving average crossing at 4.048 are needed to confirm that a short term low has been posted. If October renews this year's decline, weekly support crossing at 3.225 is the next downside target. First resistance is last Friday's high crossing at 3.946. Second resistance is the 20 day moving average crossing at 4.048. First support is August's low crossing at 3.697. Second support is weekly support crossing at 3.225.
Gold closed higher on Tuesday and above the 87% retracement level of the June-July decline crossing at 1253.30 as it extends the rally off July's low. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are possible near term. If August extends the rally off July's low, June's high crossing at 1267.10 is the next upside target. Closes below the 20 day moving average crossing at 1234.40 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1260.30. Second resistance is June's high crossing at 1267.10. First support is the 10 day moving average crossing at 1245.60. Second support is the 20 day moving average crossing at 1234.40.
The U.S. Dollar gapped up and closed higher on Tuesday as it consolidated some of the decline off August's high. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends last week's decline, August's low crossing at 80.75 is the next downside target. If December renews the rally off August's low, the reaction high crossing at 84.94 is the next upside target. First resistance is today's high crossing at 83.29. Second resistance is August's high crossing at 83.96. First support is last Friday's low crossing at 82.23. Second support is August's low crossing at 80.75.
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Crude Oil Falls for Second Day as Dollar's Gain Dims Appeal of Commodities
“The euro’s broken down and the dollar’s gotten stronger,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “That’s helping to put some pressure on oil.” Crude for October delivery lost 60 cents, or 0.8 percent, to $74 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Earlier, it touched $72.63 a barrel, the biggest single day decrease since Aug. 31. Prices have dropped 6.8 percent this year.
U.S. oil markets were closed yesterday for the Labor Day holiday. Yesterday’s electronic transactions will be booked with today’s trades for settlement purposes. The euro fell 1.3 percent against the dollar to $1.2707 from $1.2876 yesterday, curbing the appeal of commodities as an alternative investment. The euro has declined 1.5 percent since Sept. 3. The S&P 500 lost 0.8 percent to 1,096.24, snapping a four day rally. The Dow Jones Industrial Average fell 72.73 points, or 0.7 percent, to 10,375.20.
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Daryl Guppy: Crude Oil Turns Bearish, $54 May Be Downside Target
From guest blogger Daryl Guppy....
As recently as three weeks ago we remained bullish on oil. This view has now changed with a confirmation of a longer term chart pattern. Nymex oil is now showing a bearish pattern. There are still additional moves required to fully confirm the pattern but the development of bearish pressure is increasing. The behavior of oil in 2009 to 2010 has been dominated by two features. The first is the residual power of the historical support and resistance levels. The most important of these are between $78 and $88. The three recent tests near resistance at $88 created a bullish outlook with a potential to breakout and move to the next resistance level near $98.
The second feature was the development first of an up sloping trend channel. The lower edge of this channel was broken in May and a new lower parallel up trend channel developed. This lower channel has recently also been broken. It is the pattern of these breaks that point the way to a head and shoulder pattern. The rapid fall from $80.00 and the failure of the rebound is initial confirmation of the head and shoulder trend reversal pattern. If fully completed, it would put a downside target for oil near $54.
The pattern is confirmed in two ways. First when the price fails to rally above $81, which is the height of the right shoulder. This failure confirms the development of the right shoulder of the pattern. The second confirmation is a move below $65.00. This is the current projection value of the neckline in the head and shoulder pattern. Move below this level is final confirmation of the head and shoulder pattern.
Another confirmation, albiet minor, is a sustained close below historical support near $68. This has been a string support area since December 2009 and a major feature in the 2010 oil market behaviour. The development of the right shoulder has moved the NYMEX oil market out of the slightly bullish sideways consolidation band and into bearish territory. Traders use more caution in the long side of this market and are more aggressive in talking the short side.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders Guppy Traders.Com
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As recently as three weeks ago we remained bullish on oil. This view has now changed with a confirmation of a longer term chart pattern. Nymex oil is now showing a bearish pattern. There are still additional moves required to fully confirm the pattern but the development of bearish pressure is increasing. The behavior of oil in 2009 to 2010 has been dominated by two features. The first is the residual power of the historical support and resistance levels. The most important of these are between $78 and $88. The three recent tests near resistance at $88 created a bullish outlook with a potential to breakout and move to the next resistance level near $98.
The pattern is confirmed in two ways. First when the price fails to rally above $81, which is the height of the right shoulder. This failure confirms the development of the right shoulder of the pattern. The second confirmation is a move below $65.00. This is the current projection value of the neckline in the head and shoulder pattern. Move below this level is final confirmation of the head and shoulder pattern.
Another confirmation, albiet minor, is a sustained close below historical support near $68. This has been a string support area since December 2009 and a major feature in the 2010 oil market behaviour. The development of the right shoulder has moved the NYMEX oil market out of the slightly bullish sideways consolidation band and into bearish territory. Traders use more caution in the long side of this market and are more aggressive in talking the short side.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders Guppy Traders.Com
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Phil Flynn: Demand Jam
Still not even that may save the demand side of the equation. With storms battering up and down the East Coast, demand for gasoline was most likely impacted negatively. We are in the heart of the shoulder season and demand will continue to be very weak. We still maintain a bearish bias but still recommend playing the ranges.
The storms in the Atlantic never seem to end. There are 3 tropical waves that currently have about a 30% chance of becoming a tropical cyclone. At this time the storms do not seem to be a threat still they will bear watching.
What the bears really need to do is watch the me on the Fox Business Network and the bulls should join in too. If you don’t get it you need too!
Sign up for Phil's daily energy report and his daily buy and sell points on all of the major commodities by emailing him at pflynn@pfgbest.com.
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Crude Oil Technical Outlook For Tuesday Morning
Closes above the reaction high crossing at 75.58 are needed to confirm that a short term low has been posted. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target.
First resistance is the 20 day moving average crossing at 74.80.
Second resistance is the reaction high crossing at 75.58.
Crude oil pivot point for Tuesday morning is 74.12
First support is the reaction low crossing at 70.76.
Second support is May's low crossing at 70.35.
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Monday, September 6, 2010
Where is Crude Oil ETF USO Headed on Tuesday?
Based on a pre-defined weighted trend formula for chart analysis, USO scored -75 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10......Last Hour Close Above 5 Hour Moving Average
+15......New 3 Day High on Friday
-20......Last Price Below 20 Day Moving Average
-25......New 3 Week Low, Week Ending August 28th
-30......New 3 Month Low in May
-75......Total Score
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Stefan van Woenzel: "The Oil Trader's Word(s)"
"The Oil Trader's Word(s)" is a book with a collection of close 1,000 words which are used by Oil Traders. Oil traders buy and sell oil, take positions and must have a lot of knowledge about Oil Logistics, Oil Paper, The Market, H.S.E. , Oil Documentation and much more. Oil Traders communicate a lot with operators, contract personal, claims departments, controllers, storage people, shipping agents, oil brokers, reporters and many more. The business language is not always easy to understand and often people do not ask what all the talk mean.
When I started in the oil business many years ago, I had no clue what traders talked about. I started in operations in a storage company. I learned the busines because I always asked questions. Even though when you ask a question to a trader you might still be puzzled after getting the answer. Very often I have been looking for an Oil trading Glossary. I could not find it, because it just did not exist. Therefore I decided to make a file to collect words in the Oil Busines which are most often used by trader or should be part of a trader's competence.
The result of collecting the Oil Trading Terms is what you find in my book, "The Oil Trader's Word(s)". I am Senior Crude Oil Trader and to be a trader, you have to be a man of your word. No room for flakers.
The back side of my book contains the following text:
Physical oiltrading is a worldwide activity containing a lot of oil business terms related to the physical trade, logistics, paper trading, refined products and H.S.E. This glossary of oiltrading terms is useful for people working in oil trading organisation (front, mid and back office), oilbrokers, oil inspection companies and storage companies, so basically to all people related to the oil industry.
The book is a guide to help understanding The Oil Trader’s Word(s). Pay also attention to the "Phrases of Wisdom" and H.S.E. stories in this book. This book is not meant to be used as legal documentation related to commercial or operational decisions.
Click here to find an internet shop to order the Oil Trading Glossary
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When I started in the oil business many years ago, I had no clue what traders talked about. I started in operations in a storage company. I learned the busines because I always asked questions. Even though when you ask a question to a trader you might still be puzzled after getting the answer. Very often I have been looking for an Oil trading Glossary. I could not find it, because it just did not exist. Therefore I decided to make a file to collect words in the Oil Busines which are most often used by trader or should be part of a trader's competence.
The result of collecting the Oil Trading Terms is what you find in my book, "The Oil Trader's Word(s)". I am Senior Crude Oil Trader and to be a trader, you have to be a man of your word. No room for flakers.
The back side of my book contains the following text:
Physical oiltrading is a worldwide activity containing a lot of oil business terms related to the physical trade, logistics, paper trading, refined products and H.S.E. This glossary of oiltrading terms is useful for people working in oil trading organisation (front, mid and back office), oilbrokers, oil inspection companies and storage companies, so basically to all people related to the oil industry.
The book is a guide to help understanding The Oil Trader’s Word(s). Pay also attention to the "Phrases of Wisdom" and H.S.E. stories in this book. This book is not meant to be used as legal documentation related to commercial or operational decisions.
Click here to find an internet shop to order the Oil Trading Glossary
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Crude Oil Hovers Above $74 as Traders Eye US Economy
Crude oil prices slipped to near $74 a barrel Monday in Asia as traders weighed whether growing Chinese demand can offset weak U.S. fuel consumption amid high unemployment. Benchmark oil for October delivery was down 25 cents at $74.35 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 42 cents to settle at $74.60 on Friday.
Most investors took heart after the Labor Department on Friday said private employers added 67,000 jobs in August, more than analysts expected. However, the jobless rate rose in August to 9.6 percent from 9.5 percent in July, showing that unemployment remains high despite massive stimulus spending during the last year. Oil prices have been in a holding pattern around $75 for most of the past year as developed countries rebound from last year's recession but economic growth threatens to slow in the second half.
Traders are looking to China and other emerging economies to fuel demand for commodities in coming years. If China continues to grow at its current rate of about 9 percent a year until about 2030, its oil demand would equal all of today's global crude production, HSBC chief economist Stephen King said. "So the likelihood is over the next five to ten years, we'll see significantly higher oil prices," King said. "The China story is becoming more and more important."
In other Nymex trading in October contracts, heating oil fell 0.43 cent to $2.05 a gallon and gasoline dropped 0.33 cent to $1.916 a gallon. Natural gas for October delivery skidded 3.9 cents to $3.90 per 1,000 cubic feet.
In London, Brent crude was down 6 cents at $76.61 on the ICE Futures exchange.
From The Associated Press - Singapore
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Most investors took heart after the Labor Department on Friday said private employers added 67,000 jobs in August, more than analysts expected. However, the jobless rate rose in August to 9.6 percent from 9.5 percent in July, showing that unemployment remains high despite massive stimulus spending during the last year. Oil prices have been in a holding pattern around $75 for most of the past year as developed countries rebound from last year's recession but economic growth threatens to slow in the second half.
Traders are looking to China and other emerging economies to fuel demand for commodities in coming years. If China continues to grow at its current rate of about 9 percent a year until about 2030, its oil demand would equal all of today's global crude production, HSBC chief economist Stephen King said. "So the likelihood is over the next five to ten years, we'll see significantly higher oil prices," King said. "The China story is becoming more and more important."
In other Nymex trading in October contracts, heating oil fell 0.43 cent to $2.05 a gallon and gasoline dropped 0.33 cent to $1.916 a gallon. Natural gas for October delivery skidded 3.9 cents to $3.90 per 1,000 cubic feet.
In London, Brent crude was down 6 cents at $76.61 on the ICE Futures exchange.
From The Associated Press - Singapore
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Crude Oil Falls for Second Day on Speculation Fuel Demand Will Drop
Crude oil fell for a second day in New York on speculation that fuel demand will decline as the U.S. summer peak consumption season ends and as crude and fuel inventories rose. Today’s U.S. Labor Day holiday marks the end of the peak driving season. Traders are betting more on falling gasoline prices rather than rising for the first time in almost four years.
U.S. crude inventories are about 5 percent higher than a year ago, while gasoline stockpiles are almost 10 percent more than last year. “Factors like driving season demand and the level of oil inventories have been neglected in recent months,” Roland Stenzel, a crude trader at E&T Energie Handelsgesellschaft mbH, said from Vienna. “I am beginning to think this could become more important again.”
Crude for October delivery fell as much as 58 cents, or 0.8 percent, to $74.02 a barrel in electronic trading on the New York Mercantile Exchange. It was at $74.37 at 3:14 p.m. London time. There will be no floor trading on the Nymex today because of the U.S. holiday. All electronic trades will count as part of tomorrow’s session. Brent crude for October settlement advanced 36 cents, or 0.5 percent, to $77.03 a barrel as of 3:14 p.m. on the ICE Futures Europe Exchange in London.....Read the entire article.
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U.S. crude inventories are about 5 percent higher than a year ago, while gasoline stockpiles are almost 10 percent more than last year. “Factors like driving season demand and the level of oil inventories have been neglected in recent months,” Roland Stenzel, a crude trader at E&T Energie Handelsgesellschaft mbH, said from Vienna. “I am beginning to think this could become more important again.”
Crude for October delivery fell as much as 58 cents, or 0.8 percent, to $74.02 a barrel in electronic trading on the New York Mercantile Exchange. It was at $74.37 at 3:14 p.m. London time. There will be no floor trading on the Nymex today because of the U.S. holiday. All electronic trades will count as part of tomorrow’s session. Brent crude for October settlement advanced 36 cents, or 0.5 percent, to $77.03 a barrel as of 3:14 p.m. on the ICE Futures Europe Exchange in London.....Read the entire article.
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