Trade ideas, analysis and low risk set ups for commodities, Bitcoin, gold, silver, coffee, the indexes, options and your retirement. We'll help you keep your emotions out of your trading.
Just when you thought gas prices were going to go down. A pipeline leak and strong economic data out of China and relief that the Basel banking regulations did not go too far is conspiring to set a positive tone in the oil markets. Chicago gets the shaft. While according to Trilby Lundberg the national average gas price fell 0.8 cents a gallon to $268.99, Chicago and the Midwest prices soared. Enbridge Energy Partners LP shut a major oil pipeline in Romeoville right outside of Chicago that ships crude from Canada to refineries in the Midwest.
The impact was felt across the markets as refiners may be forced to reduce runs. This can also increase the demand for higher yielding crudes as well to maximize output. Thanks goodness there is plenty of supply in storage or this could have really been worse. The market seemed to like the Basel rule or maybe they just like the finality of it all. Global blinking regulators agreed on a new set of rules designed to increase banks capital buffers to better be able to withstand large market movements but at the same time gave them more than a few years to get up to those levels.....Read the entire article.
Crude oil was higher overnight as it extends the rally off August's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.
If October extends the rally off August's low, the 62% retracement level of the decline off August's high crossing at 78.58 is the next upside target. Closes below the 20 day moving average crossing at 74.43 would confirm that a short-term top has been posted.
First resistance is the overnight high crossing at 77.50
Second resistance is the 62% retracement level of August's high crossing at 78.58
First support is the 20 day moving average crossing at 74.43
Second support is the reaction low crossing at 72.63
Precious metals soar as investors flock to gold and silver. But are they looking deep enough to truly understand the current trends at hand?
When reviewing the metals sector I like to look at it from different angles to get a solid understanding of the patterns and trend forming. I follow multiple time frames along with monitoring the gold mining stocks. Gold stocks tend to lead the price of gold bullion and when its out performing the price of gold substantially by 10% or more you should be expecting a pause or pullback in both gold stocks and gold bullion prices temporarily.
Below are a few charts showing the long and short term trends for gold.
Gold Bullion Price – Weekly Trend Chart
Gold continues to be in a strong up trend. The occasional test of support at the major moving averages can provide great long term points for adding to a position. The 50 period average is one which is tested frequently.
Looking at the weekly chart does give me a red flag for the intermediate price of gold. While the trend is clearly up I can’t help but notice the rising wedge which is a bearish pattern. During an uptrend we want to see bull flags and pennants, not a grind higher forming a narrowing range. This grind higher could unfold much similar to the price action of 2005 and 2007 instead of a correction but I am leaning more towards a sharp correction because more people are bullish on gold now then they were during the June top.
For those looking at gold as a long term investment/currency can be patient and wait for a pullback to a major moving average before adding to your position then you would lower your overall risk for this position. You will understand after reviewing the following charts.
GLD – Gold Bullion ETF – Daily Chart
(This fund moves identical to spot gold price so even though I am showing you GLD fund, the spot gold chart is doing the exact same thing.) As you can see below the price of gold is trading at resistance and becoming choppy. Buying gold at resistance does not make much sense to me. There is a very good chance gold will move lower in the coming weeks providing a better price for long term investors to add to their positions. For example, if you waited for the weekly chart to pullback to the 50 period moving average that would be like buying this GLD fund at $113, which is an 8% discount.
Gold continues to hold up within its channel but this week we could see fireworks if the price breaks below the blue support channels.
Gold:Gold Stocks Comparison – Daily Chart
This chart shows the performance of gold vs gold stocks from the Feb 2010 lows. The blue line is the performance of gold stocks while the red line shows gold’s performance. It’s obvious that when everyone is bullish on gold they buy the highly leverages gold investments in order to take full advantage of the upcoming move. This is much like reading the put/call ratio for trading the SP500 and it measures the bullishness of the precious metals sector.
When gold equities are strongly out performing gold bullion you should be thinking about raising your stops, taking partial profits and or hedging your long term position until the sector stabilizes is not trading at a premium.
Precious Metals Sector Trading Conclusion:
In short, Gold is in a strong up trend and will remain inrecious Metals Sector Trading Conclusion: one for a long time. Commodities have higher percentage of going parabolic. That means there’s a small chance that gold continues to move up quicker and quicker surging hundreds of dollars in a very short period of time. That being said, it’s not very likely, and from a technical point of view those buying gold now are paying a premium in my opinion.
Being a patient trader is not easy, but waiting for low risk entry points is very rewarding on many different levels when done correctly.
Get Chris Vermeulen'a detailed ANALYSYS and TRADES for Oil, US dollar, Treasury notes, the broad market, and Sectors. Be sure to join his ETF Trading Service at The Gold and Oil Guy.Com
Crude oil rose for a second day in New York amid optimism demand for fuel will strengthen because of improved prospects for an economic recovery in the U.S., the world’s biggest crude consumer. Futures rose amid forecasts that retail sales probably gained in the U.S. during August for a second month, according to a Bloomberg News survey of economists before the Commerce Department’s Sept. 14 report. Prices increased the most in six weeks on Sept. 10 as China increased imports of crude and after a pipeline that carries Canadian oil to refineries in the U.S. Midwest was closed because of a leak.
“It’s that optimism in the market,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “The data out of China was quite supportive. The whole world is looking for a means to create confidence. As result of that being created you’ll see more demand, or an expectation for more consumption of oil.” The October contract rose as much as 47 cents, or 0.6 percent, to $76.92 a barrel in electronic trading on the New York Mercantile Exchange, and was at $76.80 at 9:32 a.m. Sydney time. It gained $2.20, or 3 percent, to $76.45 on Sept. 10. Prices have fallen 3.2 percent this year.
Enbridge Energy Partners LP on Sept. 9 shut its Line 6A, part of a system that can transport 670,000 barrels a day from Canada. The country is the largest source of U.S. imports, sending 2.2 million barrels a day in June, according to the Energy Department. Brent crude oil for October settlement added as much as 31 cents, or 0.4 percent, to $78.47 a barrel on the London-based ICE Futures Europe exchange. The contract rose 69 cents, or 0.9 percent, to $78.16 on Sept. 10.
Bloomberg reporter Ben Sharples can be reached at bsharples@bloomberg.net
Korea National Oil Corp. plans to sell as much as $1 billion of debt to fund takeovers, Yonhap News Agency reported yesterday, the latest sign Asia’s biggest economies are competing to secure global energy resources. State owned Korea National, engaged in a $2.6 billion hostile takeover battle for Dana Petroleum Plc, plans to raise between $500 million and $1 billion selling bonds, Yonhap said. Calls to the company’s media department yesterday twice went unanswered.
China, second to the U.S. as a global energy consumer, and South Korea, the world’s biggest importer of liquefied natural gas, are being joined by Japan and India in seeking to buy stakes in the resources needed to boost their economies. State and private companies in the four nations have bid for more than $56 billion worth of energy resources worldwide this year, according to data compiled by Bloomberg.
China Petrochemical Corp. in April paid $4.65 billion, about 20 percent more than analysts expected, for a 9 percent stake in oil sands producer Syncrude Canada Ltd. Together with Cnooc Ltd., the Chinese oil company may offer at least $7 billion for Brazil oil assets and a stake in OGX Petroleo & Gas Participacoes SA, two people with knowledge of the matter said on Sept. 10.....Read the entire article.
While market sentiment was dominated by renewed concerns over the stability of the European banking system earlier in the week, better than expected bond auctions in Portugal and Poland eased the worries. Confidence was further boosted by the weekly drop in US jobless claims and China's trade data which suggested the country's demand for foreign goods remained strong.
Oil started the week moving within a narrow range with a soft tone but strength in stock markets drove price higher. Prices were further lifted after reports of shutdowns of production facilities. Gold jumped earlier in the week as sovereign risks in the Eurozone spurred demand for safe havens. However, failure to breach the record high triggered selloff.
Crude Oil
Oil price jumped on Friday as better-than-expected data from the US and China boosted optimism of the demand outlook. The front-month WTI contract jumped to a 4-week high of 76.73 before settling at 76.45, up +2.48% on weekly basis. Fuel prices also soared with heating oil and gasoline futures gaining more than +2%. Brent crude also rose but the increase was milder than WTI crude.
Movement of WTI-Brent spread was dramatic last week. The front-month WTI contract had widened to a $3.65 discount to ICE Brent on Tuesday (Sep 7) before narrowing to $1.71 on Friday. The change was mainly driven by shutdown of the largest pipeline operated by Enbridge Energy Partners due to a leak. According to the company, the pipeline can carry 670K bpd of oil from Canada to refineries in the US Midwest. The direction of the WTI-Brent spread in the near-term depends on when the pipeline can resume operations. Indeed, Enbridge closed another line, which transports oil from Indiana to Ontario, 6 weeks ago after a spill in Michigan. Repair of the line has been finished but US regulators has not yet permitted it to resume operations.
We do not expect WTI crude oil to return parity or even at premium to Brent crude in the short term as total crude oil inventory remains at record high and Cushing stock is abundant......Read the entire Oil N' Gold Focus Report
India may raise as much as 190 billion rupees ($4.1 billion) selling shares in Oil & Natural Gas Corp., the country’s biggest energy explorer, and Indian Oil Corp., to help cut its budget deficit. Indian Oil, the nation’s second biggest refiner, may raise a further 100 billion rupees by selling fresh equity to help it fund a new crude oil processing plant it is building, Oil Secretary S. Sundareshan told reporters in Mumbai today.
“The plan is to complete the disinvestments before the end of the fiscal year,” Sundareshan said. “It will be Indian Oil followed by ONGC. In the last quarter, hopefully.”
Prime Minister Manmohan Singh wants to raise 400 billion rupees from asset sales in the year ending March 31 to help fund the construction of roads, ports, hospitals and schools. The government said in January it can sell shares in as many as 68 companies as it seeks to shrink its budget deficit to 5.5 percent of gross domestic product this fiscal year from an estimated 6.9 percent last year.
Indian Oil is building a refinery in Orissa state with an annual processing capacity of 15 million tons. The refiner plans to spend 145 billion rupees in the financial year ending March compared with 135 billion rupees last year to increase capacity, Serangulam V. Narasimhan, finance director, said Jan. 6.
ONGC will complete the valuation on BP Plc’s assets in Vietnam in a few weeks as it seeks to buy them in partnership with Vietnam Oil & Gas Group, Sundareshan also said.
State owned ONGC is considering all options for buying partner BP’s stake in a Vietnam gas field, Chairman R.S. Sharma said July 22. The London based company, which is raising funds to pay for the Gulf of Mexico oil spill, agreed July 20 to sell fields in the U.S., Canada and Egypt to Houston based Apache Corp. for $7 billion and plans to dispose of assets in Pakistan and Vietnam.
Bloomberg reporter Natalie Obiko Pearson can be reached at npearson7@bloomberg.net.
After staying in range for most of the week, crude oil's rebound form 70.76 resumed on Friday and jumped to as high as 76.73. Initial bias will remain mildly on the upside this week for further rebound. Though, we'd continue to expect upside to be limited by 61.8% retracement of 82.97 to 70.76 at 78.31 and bring resumption of fall from 82.97. Below 73.88 will flip intraday bias back to the downside. Also, Sustained trading below 70.76/71.09 support zone will confirm our bearish view that whole rebound from 64.23 is finished at 82.97 already and target another low below 64.23.
In the bigger picture, choppy rebound from 64.23 is treated as a correction to fall from 87.15 only and has possibly finished at 82.97 already. Decisive break of 71.09 will confirm this bearish case and also indicate that whole fall from 87.15 is resuming for 60 psychological level, (50% retracement of 33.2 to 87.15 at 60.18, 100% projection of 87.15 to 64.23 from 82.97 at 60.05). Decisive break there will indicate that fall from 87.15 is developing into a powerful impulsive wave and would target 33.2 low. On the upside, break of 82.97 resistance is needed to invalidate this view. Otherwise, we'll stay bearish in crude oil.
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 from 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.
The S&P 500 index closed higher on Friday as it extended the rally off August's low. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional gains are possible near term. If December extends the aforementioned rally, August's high crossing at 1120.90 is the next upside target. Closes below the 20 day moving average crossing at 1070.98 would confirm that a short term top has been posted. First resistance is Thursday's high crossing at 1106.50. Second resistance is August's high crossing at 1120.90. First support is the 10 day moving average crossing at 1078.40. Second support is the 20 day moving average crossing at 1070.98.
Crude oil closed higher on Friday and has renewed the rally off August's low. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If October extends the rally off August's low, the reaction high crossing at 81.51 is the next upside target. Closes below the reaction low crossing at 72.63 would temper the near term friendly outlook. First resistance is today's high crossing at 76.59. Second resistance is August's high crossing at 81.51. First support the reaction low crossing at 72.63. Second support is August's low crossing at 70.76.
Natural gas closed higher due to short covering on Friday while extending the trading range of the past two weeks. The mid range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral to bullish hinting that a short covering rebound is possible near term. Closes above the 20 day moving average crossing at 3.973 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 3.973. First support is August's low crossing at 3.697. Second support is weekly support crossing at 3.225.
Gold closed lower due to profit taking on Friday and below the 10 day moving average crossing at 1247.90 signaling that a short term top might be in or is near. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that additional profit taking is possible near term. Closes below the 20 day moving average crossing at 1238.70 would confirm that a double top with June's high has been posted. If October extends the rally off July's low, June's high crossing at 1267.10 is the next upside target. First resistance is Wednesday's high crossing at 1263.20. Second resistance is June's high crossing at 1267.10. First support is the 20 day moving average crossing at 1238.70. Second support is the reaction low crossing at 1232.40.
The U.S. Dollar closed lower on Friday while extending the trading range of the past four weeks. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December renews the rally off August's low, the reaction high crossing at 84.94 is the next upside target. If December extends last week's decline, August's low crossing at 80.75 is the next downside target. First resistance is Tuesday'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.
President Truman used to have a sigh on his desk that the buck stops here. President Obama should have one that says the buck stops with the last administration. If you are going to solve the problem you have to admit you have a problem yet the entire Democratic Party is lost in this sense of what I would call arrogant denial. In fact in some cases it is downright scary. Did anyone see that interview with Harry Reid that sad that he had nothing to do with the bad economy?
The man echo has been the Senate Majority Leader since 2007 and in the senate since 1986 the tear the Bears last won a Super Bowl and yet he gives this Pontius Pilate impression that he washes his hands of the whole thing> Is this guy even in touch with reality? And what are more scary folks is that he actually believes it! And if the economy is a failure and he has been in the Senate since 1986 and he has had nothing to do with the Economy then he is a failure at being a failure.....Read the entire article.
Crude oil rose the most in six weeks after a pipeline that carries Canadian crude to refineries in the U.S. Midwest was closed because of a leak. Futures increased as much as 3.1 percent after Enbridge Energy Partners LP shut its Line 6A, part of a system that can transport 670,000 barrels a day from Canada. Chinese customs figures showed that net imports of crude climbed by 10 percent in August from the previous month.
“It’s all about Enbridge,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “It’s a big line, which supplies a bunch of refineries in the Midwest. Depending on how long it is shut, this could put a big-sized crimp on supplies in the region.” Crude oil for October delivery climbed $2.12, or 2.9 percent, to $76.37 a barrel at 11:07 a.m. on the New York Mercantile Exchange. The contract touched $76.56, the highest level since Aug. 17. Futures are up 2.4 percent this week.
Oil surged the most since Aug. 2, when prices rose above $81 a barrel for the first time since May as a global equity rally bolstered optimism the economy is strengthening Brent crude oil for October settlement climbed 74 cents, or 1 percent, to $78.21 a barrel on the London based ICE Futures Europe exchange. Brent’s premium over New York oil shrank following the pipeline leak. The London-traded contract was $1.84 higher than Nymex oil, compared with a premium of $3.65 on Sept. 7.
Crews are investigating the pipeline situation, said Glenn Herchak, an Enbridge spokesman. He declined to provide information on what the line was carrying and if it was operating at full rates.....Read the entire article.
Crude oil was higher overnight as it extends 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 and would open the door for additional gains near term. If October renews the decline off August's high, May's low crossing at 70.35 is the next downside target.
First resistance is Thursday's high crossing at 75.96
Second resistance is the reaction high crossing at 77.03
Crude oil pivot point for Friday morning is 74.70
First support is the reaction low crossing at 72.63
Second support is the reaction low crossing at 71.53
Price changes during the week were mixed, but in most areas, these changes were moderate. The Henry Hub price rose slightly from $3.73 per million Btu (MMBtu) on Wednesday, September 1, to $3.81 per MMBtu yesterday. The report week was shortened due to the Labor Day holiday.
At the New York Mercantile Exchange, the price of the October 2010 futures contract rose about 5 cents, from $3.762 per MMBtu on September 1 to $3.814 per MMBtu on September 8.
Working natural gas in storage as of Friday, September 3, was 3,164 Bcf, following an implied net injection of 58 Bcf, according to EIA’s Weekly Natural Gas Storage Report.
The West Texas Intermediate crude oil spot price rose 68 cents from $73.97 per barrel, or $12.75 per MMBtu, to $74.65 per barrel, or $12.87 per MMBtu.
The natural gas rotary rig count, according to data released by Baker Hughes Incorporated, rose by 4 to 977 as of September 3 (see “Other Market Trends”).
The US Energy Information Administration has slashed its forecast of oil producer club OPEC's oil export earnings by $21 billion this year and by $16 billion in 2011. The agency now sees OPEC earning $731 billion in 2010 compared with its previous forecast of $752 billion a month ago. For 2011, it is forecasting that OPEC will earn $805 billion compared with the $821 billion projected a month ago.
The EIA, statistics arm of the Department of Energy, bases its forecasts on price and production projections from its monthly Short Term Energy Outlook. The agency forecast on Wednesday in its latest STEO that the price of US West Texas Intermediate crude would average $77.37/barrel in 2010 and $82/b in 2011. In its previous Outlook, released in August, the EIA projected an average WTI price of $79.13/b in 2010 and $83.50/b in 2011.
At the same time, the EIA lowered its forecasts of OPEC crude production in both 2010 and 2011. It sees the 12 member group producing 29.37 million b/d this year, 110,000 b/d less than previously forecast, and 29.89 million b/d in 2011, 140,000 b/d less than previously forecast.
The EIA estimated OPEC's 2009 earnings at $571 billion. OPEC's Vienna secretariat said in its annual statistical bulletin in July that the group collectively earned $575.3 billion from crude exports in 2009, down 43% from $1.002 trillion in 2008.
The S&P 500 index closed higher on Thursday as it extended the rally off August's low. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain neutral bullish signaling that additional gains are possible near term. If September extends the aforementioned rally, August's high crossing at 1120.90 is the next upside target. Closes below the 20 day moving average crossing at 1069.61 would confirm that a short term top has been posted. First resistance is today's high crossing at 1106.50. Second resistance is August's high crossing at 1120.90. First support is the 10 day moving average crossing at 1072.22. Second support is the 20 day moving average crossing at 1069.63.
Crude oil closed lower on Thursday due to profit taking as it extends the trading range of the past two weeks. The low range close sets the stage for a steady to lower opening on Friday. 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 reaction high crossing at 75.58. Second resistance is today's high crossing at 75.96. First support is August's low crossing at 70.76. Second support is May's low crossing at 70.35.
Natural gas closed lower on Thursday as it extends the trading range of the past two weeks. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are neutral to bullish hinting that a short covering rebound is possible near term. Closes above the 20 day moving average crossing at 3.996 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 lower due to profit taking on Thursday as it consolidates some of the rally off July's low. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. 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 1237.10 are needed to confirm that a double top with June's high has been posted. First resistance is Wednesday's high crossing at 1263.20. Second resistance is June's high crossing at 1267.10. First support is today's low crossing at 1242.30. Second support is the 20 day moving average crossing at 1237.10.
The U.S. Dollar closed higher on Thursday as it extends the trading range of the past four weeks. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term. If December renews the rally off August's low, the reaction high crossing at 84.94 is the next upside target. If December extends last week's decline, August's low crossing at 80.75 is the next downside target. First resistance is Tuesday'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.
After years of peak oil scare stories, could the world soon be drowning in oil? OPEC has just cut its oil demand forecast for OPEC produced oil, citing a slow down in the global economy as the supportive effects of government stimulus wear off and increased non OPEC oil supply. The organization noted that, "the impact of the slowing economic recovery on oil demand is already evident as growth in oil consumption is slowing down and has even turned negative in some parts of the world," according to Fox Business.
Their latest move highlights the twin drivers of any potential oil glut scenario: The stagnation of demand growth from major developed economies such as the U.S. and Europe The growth of non OPEC oil supply. Already, the U.S. is sitting on more oil than it has in decades.
Fortune: Despite the Iraq War and the resulting production disruptions, despite the moratorium on drilling in the Gulf, despite turmoil in Nigeria and ongoing cross border trans-shipment quarrels in Central Asia and the multiple, repeated declarations that "peak oil" has arrived and supplies will inevitably dwindle, the United States has more petroleum on hand today than it has had since at least the beginning of the first Gulf War.....
At the same time, consumers have finally responded to higher gas prices and, perhaps, concern over the environmental impacts of burning fossil fuels. Miles driven by U.S. motorists have fallen over the last couple of years for the first time since such statistics have been collected, indicating that the American love affair with the automobile could be waning. And gasoline demand in China, the world's largest automotive market, may not skyrocket after all, as the government ramps up its drive to replace internal combustion engines with electric vehicles.
Global demand forecasts are coming down as well:
"In the last 18 months we've seen this big trend emerge," says David Kirsch, research director at PFC Energy in Washington, D.C. "We spent five to 10 years in a supply-constrained market, characterized by the growth of the BRIC countries [Brazil, Russia, India and China] and concerns over the security of supplies."
Now, Kirsch remarks, because of the financial crisis and the time it will take to pare down the debt of the major OECD nations, demand growth over the next decade is likely to be lower than previously forecast.
