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Yet at the same time one good auction does not solve all of Europe’s problems either. The Portugal bond auction may have eased concerns regarding a total global market meltdown but them Beige Book and dismal demand numbers from the MasterCard Spending Pulse report as well as a downward revision to the demand outlook from the Energy Information Agency has oil traders questioning about the strength of future demand growth the total oil demand growth outlook.
The first sign that things might not be so great was a report from The Energy Information Agency’s much anticipated Short Term Energy Outlook. The EIA revised lower their outlook for demand because of what they see as a slowing economy. The EIA lowered their forecasted GDP growth number from growth projections of 3.1 and 2.7 percent for 2010 and 2011, respectively down to growth of 2.8 percent in 2010 and 2.3 percent in 2011.
That decrease in economic optimism caused them to lower their crude price projection to the current average of.....Read the entire article.
Crude oil rose to a three week high after the government reported an unexpected decline in U.S. stockpiles and applications for unemployment benefits fell, bolstering optimism that the economic recovery will accelerate. Supplies dropped 1.85 million barrels to 359.9 million in the week ended Sept. 3, the Energy Department said today in a weekly report. Inventories were forecast to climb by 1 million barrels, according to a Bloomberg News survey of analysts. Initial jobless claims fell by 27,000 to 451,000 in the week ended Sept. 4, Labor Department figures showed.
“The oil statistics today were bullish to neutral,” said Carl Larry, president of Oil Outlooks and Opinions LLC in Houston. “The economic numbers, in particular the jobless claims, were an encouraging sign. The main driver of the market right now is the economy.” Crude oil for October delivery rose 94 cents, or 1.3 percent, to $75.61 a barrel at 11:23 a.m. on the New York Mercantile Exchange. The contract reached $75.96, the highest level since Aug. 19.
Brent crude oil for October settlement climbed 19 cents to $78.36 a barrel on the London based ICE Futures Europe exchange. Gasoline supplies declined 243,000 barrels to 225.2 million. Stockpiles were forecast to fall 1 million barrels, according to the median of 16 responses from analysts surveyed by Bloomberg News. Initial jobless claims dropped by 27,000 to 451,000, Labor Department figures showed today in Washington. Benefits applications were projected to decrease to 470,000 from a previously reported 472,000 for the prior week, according to the median forecast of 46 economists in a Bloomberg News survey.....Read the entire article.
Crude oil was higher overnight as it extends the trading range of the past eight days. 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 75.58 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 reaction high crossing at 75.44
Second resistance is the reaction high crossing at 75.58
Crude oil pivot point for Thursday morning is 74.48
First support is the reaction low crossing at 70.76
Second support is May's low crossing at 70.35
I am going to step out on a limb in this report and cover what I think to be an intermediate top in the precious metals sector. Everyone I speak with and from the hundreds of emails I get I would say the vast majority are bullish on gold and silver. That being said, I feel we are 3-8 days away from a pop and drop in the price of gold.
Below are my explanation and charts of what I think is unfolding.
HUI – Gold Bugs Index
This chart tracks a basket of gold companies and can be used as a leading indicator for gold bullion at times. This index tends to lead the price of gold before rallies and also during declines. I have seen this lead by a few hours and even up to 7 days. I find it out perform when gold is about to rally, and under perform when gold is topping or about to start another move down.
It looks as though we are forming a triple top which also happens to be at a previous 2009 resistance level. Each time this level has been reached sellers take control and send the market sharply lower. There have been several long upper wicks formed in the past few sessions telling me that buyers are pushing the price up, but sellers hit the sell button pulling the market right back down. If this triple tops plays out, I would expect a multi month correction to take place.
UUP – US Dollar ETF
The US Dollar looks to have found support at the March/April lows and has put in a very solid rally. If the chart pattern is correct then it looks as though the dollar will breakout to the upside and run to $24.75 area. The relationship between the dollar and the precious metals sector is generally inverse, meaning if the dollar rallies both gold and stocks should fall.
GLD – Gold Bullion ETF
The chart of gold has identical patterns no matter if it’s this ETF or spot gold price. So this analysis goes for both ETF and gold bullion prices. Anyways, the past two times gold rallied for this length of time without any sizable pauses we saw the price of gold drop $70 per ounce, and $140 per ounce which is equivalent to $7-$10 drop on this GLD fund which is a decent size move.
The chart is screaming of a nasty correction to occur any day now. With gold testing the June highs I feel its only days away. What I am looking for is a pierce of the June high. That will suck in the rest of the bulls as they jump on the band, and cause all the shorts to cover their positions. This causes a pop, and once buying starts to dry up, the big money will start to sell down the price to trigger the stops and start a multi day waterfall sell off.
With the declining volume as the price grinds its way higher it tells me fewer individuals want to buy in at these high prices. Once the price starts to slide it will cause the stops to triggered. And because there have not been any substantial pullbacks along the way, there is a larger number of stops sitting in the market waiting to get hit.
Mid-Week Precious Metals Trading Report:
In short, I feel precious metals are on the verge of a sharp correction which may only last a few days, but the drop will be substantial. I still think we could see a few more up days or sideways session before this happens as the June high for gold bullion should be penetrated before the market truly reverses back down.
Anyone long gold, silver or PM stocks should be thinking of tightening their stops and for the gold bugs to mentally prepare them selves for a correction.
I hope my bi-weekly trend reports helps shed some light on the market for you. My trading alerts and frequent updates are reserved only for subscribers, so if you would like more trading analysis, updates and trades please join me at The Gold And Oil Guy.Com
The U.S. stock indexes closed firmer today and saw short covering. While the months of September and October have been historically unkind to the stock market bulls, the indexes are starting out the month of September on some decent footing. Bulls and bears in the indexes are presently on a level near term technical playing field. The first few trading days of this extra important month for the stock market are slightly favoring the stock market bulls.
Crude oil closed up $0.63 at $74.72 a barrel today. Prices closed nearer the session high today on short covering. A weaker U.S. dollar and firmer U.S. stock indexes today help support crude. Crude oil bears still have the slight overall near term technical advantage.
Natural gas closed down 4.8 cents at $3.804 today. Prices closed near the session low today. The bears have the solid overall near term technical advantage. A 2 1/2 month old downtrend is still in place on the daily bar chart.
Gold futures closed down $1.30 at $1,258.00 today. Prices closed nearer the session low on some profit taking pressure. Early prices did hit a fresh 10 week high. Bulls still have upside near term technical momentum and have the solid technical advantage. Prices are also in a six week old uptrend on the daily bar chart.
The U.S. dollar index closed down 24 points at 82.89 today. Prices closed near mid range today. Bulls and bears are now back on a level near term technical playing field. Bulls' next upside price objective is to close prices above solid technical resistance at 84.00.
Remember the European financial crisis? Sure you do! You remember I know you do. It was when Greece looked like it hit the skids and it appeared they were headed for default!
And worries surrounded countries with the acronym PIIGS (Portugal, Italy, Ireland, Greece and Spain) were ready to go over the edge! The stock market was crashing and oil prices were plunging and it looked like we were getting ready for a major global market meltdown.
But then when all was nearly lost, the EU stepped up to the plate with a whopping 750 billion euro rescue package and instituted a series of European Bank stress tests to assure the world that gosh oh golly things were going to be ok and magically all of the problems seemed to go away.
The Euro came roaring back and the risk trade was back in vogue and oil was saved from a plunging deflationary bloodbath. I hope you remember that crisis because it may be back. We may be seeing that the European crisis is not over after all.....Read the entire article.
Crude oil traders are showing increasing confidence that U.S. economic growth will rebound next year as they take advantage of the widening gap between current prices of crude and contracts for delivery six months from now. The price advantage, or contango, to buy and hold crude more than doubled to $5.76 a barrel last month from $2.60 at the end of July, as contracts for October delivery fell 9.4 percent and March dropped 5.3 percent. ConocoPhillips hired the tanker TI Europe for storage in the Gulf of Mexico, according to data on the website of RS Platou A/S, an Oslo based shipbroker.
Crude, gasoline and heating oil inventories reached a 20 year high last month as the U.S. Commerce Department said the economy probably expanded at a 1.6 percent annual pace in the second quarter from an initially reported 2.4 percent. The gap, or curve, between the price of oil for immediate delivery and for March has increased to a three month high, making storage a profitable wager on an American rebound next year.
“Demand is going to look a lot better in 2011,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, who predicted prices will rise to $80 next year. “By then the overall numbers on things like industrial production, housing, investment and probably even consumer sentiment will be better.” October futures rose 63 cents, or 0.9 percent, to $74.72 a barrel at 10:05 a.m. on the New York Mercantile Exchange. The March contract rose 6 cents to $80.35. The spread narrowed by 7.5 percent to $5.63.....Read the entire article.
Crude oil was lower overnight as it consolidates some of the rally off August's low. 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 75.58 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 74.52
Second resistance is the reaction high crossing at 75.58
Crude oil pivot point for Wednesday morning is 73.78
First support is the reaction low crossing at 70.76
Second support is May's low crossing at 70.35
With retail traders anxious to find a bottom in natural gas prices, let's take a look at what our trading tols are telling us about natural gas ETF UNG.
"Smart Scan Chart Analysis" is showing some near term rallying power. However, this market remains in the confines of a longer term downtrend that should be traded with extremely tight money management stops.
Based on a pre defined weighted trend formula for chart analysis, UNG scored -75 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
+10....Last Hour Close Above 5 Hour Moving Avg
+15....New 3 Day High on Friday
-20....Last Price Below 20 Day Moving Avg
-25....New 3 Week Low,Week Ending Sept 4th
-30....New 3 Month Low in September -75....Total Score
The S&P 500 index closed lower due to profit taking on Tuesday as it consolidates some of last week's rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bullish signaling that additional gains are possible near term. If September extends last week's rally, August's high crossing at 1127.50 is the next upside target. Closes below the 10 day moving average crossing at 1067.21 would confirm that a short term top has been posted. First resistance is today's high crossing at 1107.10. Second resistance is August's high crossing at 1127.50. First support is the 20 day moving average crossing at 1074.61. Second support is the 10 day moving average crossing at 1067.21.
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.
Crude oil fell the most in a week as the euro tumbled against the dollar on speculation that Europe’s debt crisis may worsen. Oil dropped as much as 2.6 percent after German factory orders unexpectedly declined in July, causing the euro to weaken the most since Aug. 11. Equities declined, ending the Standard & Poor’s 500 Index’s longest winning streak since July, on concern the European situation will delay the global economic recovery.
“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.
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.
According to the Energy Information Agency heading into the Labor Day holiday weekend, U.S. retail gasoline prices fell three in a row with an average price of $2.68 per gallon which was the lowest level of the 2010 peak summer driving season and the second lowest price at this point in the past five summers.
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.
Crude oil was lower overnight as it consolidates some of the rally off August's low. 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 74.80.
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.
Our Smart Scan Chart Analysis for the crude oil ETF....USO, is showing some near term rallying power. However, this market remains in the confines of a longer term downtrend that should be traded with tight money management stops.
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
"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.
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.
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.
