Musings: Iran Gaining Control of Iraq Without Firing A Shot?

In early July we wrote an article entitled “Middle East: Oil Industry’s And World’s Next Black Swan?” At that time all eyes in the oil industry and among American citizens were focused on the developments with BP’s Gulf of Mexico Macondo well, which was then spewing oil and creating one of the world’s worst environmental disasters. We suggested that maybe people should be scanning the horizon for the next industry Black Swan.

We went on to offer our best guess on what that Black Swan might be, the Middle East. We said that many people wouldn’t consider the Middle East to be a Black Swan, an unknowable and thus unanticipated event, but rather just an ignored developing trend. In that article we said: “A number of recent data points have emerged that suggest the Middle East may become a focal point of political and possibly military action before the end of the year, or maybe even earlier.”

We suggested that maybe people should be scanning the horizon for the next industry Black Swan
In July, the focus of Middle East developments was on when Iran might be able to complete building a nuclear weapon. That timetable is dependent upon the country’s ability to produce enriched uranium, which is being done in one or maybe more nuclear facilities. The buzz at that time among military and intelligence sources was that Israel was preparing an air strike to destroy Iran’s nuclear facilities as it had done a number of years earlier.

Supporting that view was Congressional testimony from Secretary of Defense Robert Gates and Central Intelligence Agency head Leon Panetta that Iran would be completing development of a nuclear weapon in one to two years time at the outside. Also revealed in Defense Secretary Gates’ testimony was that the U.S. had overhauled its NATO missile defense plans based on intelligence that Iran could fire “scores or hundreds” of missiles against Europe in salvoes rather than one or two at a time. Sec. Gates did not mention Israel in his testimony but clearly that nation is considerably closer to Iran than most of Europe......Read the entire article > Iran Gaining Control of Iraq Without Firing A Shot?



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Crude Oil Technical Outlook For Thursday Morning Oct. 28th

Crude oil was higher due to short covering overnight as it consolidates some of Wednesday's decline. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term.

Closes above the reaction high crossing at 84.80 are needed to confirm that a short term low has been posted. If December renews last week's decline, trendline support drawn off the August-September lows crossing near 78.57 is the next downside target.

First resistance is Monday's high crossing at 83.28
Second resistance is the reaction high crossing at 84.80

Crude oil pivot point for Thursday morning 81.72

First support is last Wednesday's low crossing at 79.90
Second support is the uptrend line drawn off the August-September lows crossing near 78.57


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Sharon Epperson: Where is Crude Oil and Gold Headed on Thursday

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.



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SP 500 Signals Turning Bearish, Crude Wants to Move Higher

The S&P 500 index closed lower due to profit taking on Wednesday as it consolidates some of this fall's rally. The mid range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1165.21 are needed to confirm that a short term top has been posted. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. First resistance is Monday's high crossing at 1193.00. Second resistance is April's high crossing at 1203.00. First support is today's low crossing at 1167.80. Second support is the 20 day moving average crossing at 1165.21.

Crude oil closed lower due to profit taking on Wednesday as it consolidates some of the decline off this month's high. The mid range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are turning bullish signaling that a short term low might be in or is near. Closes above the reaction high crossing at 84.80 are needed to confirm that a low has been posted. Closes below the reaction low crossing at 79.90 are needed to confirm that a short term top has been posted. First resistance is last week's high crossing at 84.80. Second resistance is this month's high crossing at 85.08. First support last week's low crossing at 79.90. Second support is the August-September uptrend line crossing near 78.43.

Natural gas closed slightly higher on Wednesday due to short covering as it consolidated some of this year's decline. Stochastics and the RSI are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.941 are needed to confirm that a short term low has been posted. If December extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 10 day moving average crossing at 3.825. Second resistance is the 20 day moving average crossing at 3.941. First support is Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed lower due to profit taking on Wednesday and remains poised to extend this month's decline. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices is possible near term. If December extends this month's decline, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. Closes above the 10 day moving average crossing at 1345.40 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1345.40. Second resistance is this month's high crossing at 1388.10. First support is last Friday's low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed higher due to short covering on Wednesday as it extends the rebound off last Friday's low. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are bullish hinting that a short term low might be in or is near. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. If December extends the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. First resistance is today's high crossing at 78.51. Second resistance is the reaction high crossing at 78.61. First support is last Friday's low crossing at 75.85. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.

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B.I.G. Drowning in Crude

This week’s inventory report from the department of Energy showed a huge increase of 5.007 million barrels of crude oil versus expectations for a build of 1 million barrels. Gasoline inventories, on the other hand were down 4.387million barrels versus expectations for a build of 625 thousand barrels. Finally, distillate inventories were down 1.613 million barrels, which was slightly more than the forecast for a draw of 1.5 million barrels.

Below we highlight the weekly stockpiles of crude oil, gasoline, and distillates so far this year and compare them to their historical average. As shown in the charts, while stockpiles have been above average all year for all three, distillates and gasoline have been following their typical seasonal patterns. Crude oil, however, is a different story. As shown, not only have inventory levels of crude been above average all year, but they haven’t been following the seasonal script either. While they should have been declining over the last several months, stockpiles have actually remained relatively unchanged. With today’s large build, crude oil stockpiles are now at their highest point of 2010, and at a higher point relative to the historical average than at any other point this year.

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Phil Flynn: Shock and Bore

Promises, promises, quantitative easing the act of printing money to add excess money supply to the banking system by central banks to create inflation to combat deflation has been the policy tool that the Federal Reserve has used to in their mind have us avoid a “Great Depression”. Of course with the economy still sputtering and jobs growth anemic the Fed wants to do it to you one more time. The talk of “Quantitative Easing 2” by your Federal Reserve has been the overriding global economic force that driven the price of just about everything on the globe whether it be commodities or equities or bonds.

The anticipation of the Fed’s awesome money printing power has had the world markets giddy with excitement as they search for clues how the Fed was going to wow this moribund economy into a vibrant job creating monster. Yet if the Wall Street Journal is right then instead of QE2 being compared to a luxury liner it appears now that the market may compare it to a dingy. The Wall Street Journal is moving markets by reporting that the Federal Reserve is likely to unveil a program of US Treasury Bond Purchases worth a few hundred billion dollars over several months. A measured approach in contrast to.....Read the entire article.


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Oil N'Gold: Risk-Off Trades Dominate, Commodities Slump as USD Strengthens

Risk appetite remained weak in European session amid concerns about 'measured QE' policies. The dollar strengthened while growth currencies and other risk assets plunged. Aussie tumbled as inflation missed expectations. Focus in the US session will be on durable goods orders, new home sales and oil inventory data. Commodities fell across the board. The front month contract for WTI crude oil slipped below 82 ahead of official oil inventory report. Precious metals and base metals also slumped on profit taking.

The Wall Street Journal said that the Fed will likely announce a bond purchase program, worth a few hundred billion dollar spanning over several months, at the FOMC next week. The amount would be significantly lower than market expectations of at least $500B over 5 months. Investors took profits from previous 'short USD' trades as the selloff was probably over extended with such a 'small' amount of QE.

Currently trading at 0.9715, Australian dollar plummeted for a second day against the dollar as CPI surprisingly eased to +2.8% y/y in 3Q10 from +3.1% a quarter ago. This may prolong RBA's pause in tightening. Other commodity currencies, New Zealand and Canadian dollars also fell. The RBNZ will leave the official cash rate......Read the entire article.


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Crude Oil Technical Outlook For Wednesday Morning Oct. 27th

Crude oil was lower overnight as it consolidates some of the rebound off last week's low. However, stochastics and the RSI are turning bullish signaling that sideways to higher prices are still possible near term.

Closes above the reaction high crossing at 84.80 are needed to confirm that a short term low has been posted. If December renews last week's decline, trendline support drawn off the August-September lows crossing near 78.38 is the next downside target.

First resistance is Monday's high crossing at 83.28
Second resistance is the reaction high crossing at 84.80

Crude oil pivot point for Wednesday morning is 82.41

First support is last Wednesday's low crossing at 79.90
Second support is the uptrend line drawn off the August-September lows crossing near 78.38




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Crude Oil Snaps Three Day Gain on Strengthening Dollar, Rising Crude Stockpiles

Crude oil declined for the first time in four days as a strengthening dollar curbed investor demand for raw materials and traders bet stockpiles in the U.S. are rising. Futures dropped as much as 0.6 percent as the dollar climbed against all but one of its 16 most traded peers. An Energy Department report today may show crude inventories increased by 1 million barrels last week, according to a Bloomberg News survey of analysts. The American Petroleum Institute said yesterday stockpiles surged 6.43 million barrels.

“Oil continues to react to dollar movements,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “With seasonal maintenance and outages at refineries, I’d expect to see some build in crude stockpiles.” The December contract fell as much as 47 cents to $82.08 in electronic trading on the New York Mercantile Exchange, and was at $82.10 at 11:18 a.m. Singapore time. Yesterday it added 3 cents to $82.55. Futures are up 3.6 percent this year.

The dollar advanced after the U.S. Conference Board said yesterday consumer confidence climbed in October from a seven month low. The greenback rose 0.3 percent versus the euro and the yen. The Energy Department report at 10:30 a.m. in Washington today may show gasoline stockpiles rose by 625,000 barrels last week, according to the Bloomberg News survey. The industry funded API reported yesterday that supplies of the motor fuel slipped 1.81 million barrels......Read the entire article.



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Sharon Epperson: Where is Crude Oil and Gold Headed on Wednesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.



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