Oil price discussion and analysis

[sinner]

Re: OIL AGAIN!

Hi guys, as promised I have included a screenshot showing the state of a fixed capital oil contract (the current one, to be precise). To specify again, the contract spread approaches 100 if the statement is expected to be true and 0 if expected to be false.

Less than an hour before NYSE open, the market is moderately bullish on light crude finishing >3741 tonight.

Current contract for light crude at a bid/ask of 3554/3567, up 2.84% from yesterday close.

 

[nulla nulla]

Re: OIL AGAIN!

Closed this morning our time at US$39.48.

 

[seasprite]

Re: OIL AGAIN!

at $39.02 now , fair bit of buying on futures so far.

 

[Page]

Re: OIL AGAIN!

Oil prices have covered little bit and is moving towards its uptrend.

 

[sinner]

Re: OIL AGAIN!

Hi guys,

If it is ok with everyone I will post another small market wrap for the week. I have included both weekly (first) and daily (second) charts to highlight some interesting features.

The pressure on oil for the last two days of the week was up and with good volume, after strong downward pressure earlier in the week. However traders were confident oil would not finish upwards of 4012, as the fixed capital contract for Friday was very bearish from open.

The weekly contract for USO has ended giving us a nice Doji on high volume.

For those not familiar with candlestick patterns, I recommend a quick look here. http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:candlestick_pattern

If you place any faith in these patterns we could be setting up for a Morning-Star Doji on the weekly. I am cautiously optimistic at this point as this weeks Doji is almost an exact opposite (upward pointing) of the ones produced in the last two weeks of April which began this trend. We will need to see strong and consistent buying pressure all next week for this to eventuate.

The MACD continues to trend up (-13.767 > -13.977) offering a buy signal but Relative Strength has actually declined from last week (25.59 < 26.22).

However, when we turn our attention to the daily chart I am not so sure about a bullish outlook. For the first time since the financial crisis, the USO daily MACD has not bounced off the trigger line like it managed to the previous four times and has generated a sell signal (-2.2 < -1.944) despite strong volume and buying pressure in the last two days of trading.
This is very worrying to me (based on my trading rules) and the best I am willing to offer in terms of direction guess would be a small move up to fill the chart gap then who knows. I know Chris V (thegoldandoilguy.com) is looking for a setup to short USO if this week does not provide bullish action.

I have given up on support/resistance lines for oil as the chart has become too technically damaged and relying solely on dynamic indicators for the moment.

So, I hope that has been helpful to someone. Tomorrow before the London market opens I will post the numbers for the fixed capital contract to see how the market outlook is for the weeks start.

Chris V has included a WTI crude chart showing a descending wedge contained by the 40MA and some bearish divergences in his latest article, I have included it here for posterity:

From: http://www.safehaven.com/article-12639.htm

I think watching for WTI crude to break the 40MA could be a good indicator.

 

[J.B.Nimble]

Re: OIL AGAIN!

This article paints an interesting picture
http://seekingalpha.com/article/119034-big-oil-dark-skies-ahead

If the oil majors are struggling with negative cash flow at 35 USD/bbl, what does it say about the sustainability of supply at these prices, and therefore what conclusion would you draw about where oil prices will go...? Must be a lot of investment being written off in biofuels, tar sands, deep water oil, exploration, etc, etc. Only a matter of time before the chart turns...

 

[numbercruncher]

Re: OIL AGAIN!

I see Mitsibishi is intending to launch a 100pc electric car here next year ..... this is happening all over the globe, should help push these pesky oil prices down a little

 

[jonojpsg]

Re: OIL AGAIN!

I see Mitsibishi is intending to launch a 100pc electric car here next year ..... this is happening all over the globe, should help push these pesky oil prices down a little

Hmm, yeah i reckon a few electric cars will make a big difference - NOT. The world fleet is what, 1 billion and growing at 5% conservatively. Of the existing fleet, only 3% operate on non-oil based fuels including electric. Even if ALL of the new cars made each year were electric, it would still take a long time until all the oil-based cars were gone, and besides, the car fleet (inclusive of trucks etc.) only accounts for 28% of world oil use.


http://www.serendipity.li/fe/car_fact_sheet.htm

So IMO the only way the POO is going medium-long term (>12 months) is UP UP and AWAY!

 

[numbercruncher]

Re: OIL AGAIN!

1 billion and growing at 5% conservatively

Ahhhh so thats the reason for the mega discounts and bail outs of auto manufactorers ?




There will probably be supply shocks in the distant future because of lack of investment now, but as always people ability to pay will cap the price .... no more world wide debt fueled binges pumping prices for a few decades atleast ....

 

[Wysiwyg]

Re: OIL AGAIN!

Any piece of steel that comes in contact with another piece of steel needs lubrication (a barrier).Grease, mineral oil or synthetic oil.
The industrial age has become cleverer in regards to bulky - energy wasteful - inefficient machinery but with more people will come more demand and the reliance on crude oil for the industrial age will go on beyond our lifetime and x amount of lifetimes after that.Synthetic oil anyone.

 

[Agentm]

Re: OIL AGAIN!

http://business.watoday.com.au/business/markets/oil-jumps-to-1month-high-20090227-8jfs.html?page=2


Oil jumps to 1-month high
February 27, 2009 - 5:35AM

Page 1 of 2 Single page view

Crude oil rose to the highest level in a month and gasoline surged 11% after US stockpiles of the motor fuel dropped.

Declining US pump prices have spurred demand and cut inventories. Gasoline supplies fell 3.32 million barrels last week, the biggest reduction since September, an Energy Department report showed yesterday. Crude-oil imports dropped as OPEC members cut production in an effort to increase prices.

``The most import factor behind this three-day rally is the improving gasoline fundamentals,'' said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan Connecticut. ``Inventories are dropping and demand is coming back at an impressive rate.''

Crude oil for April delivery increased $US2.73, or 6.4%, to $US45.23 a barrel at the close of floor trading on the New York Mercantile Exchange. Futures touched $US45.30, the highest since Jan. 27. Prices are up 8.5% this month and 1.4% this year.

Gasoline futures for March delivery increased 13.28 cents to $US1.2995 a gallon in New York. Futures are heading for the biggest increase since Dec. 31. The contract reached $US1.307, the highest since Feb. 11.

The average US pump price for regular gasoline dropped 0.9 cent to $US1.882 a gallon yesterday, AAA, the nation's largest motorist organization, said on its Web site. Prices have declined 54% from the record $US4.114 a gallon reached in July.

``Prices are very low compared to where they were six months ago, said Bill O'Grady, chief markets strategist at Confluence Investment Management in St. Louis. ``The improvement in gasoline demand is being driven more by lower prices than any economic recovery.''

Gasoline consumption

US gasoline consumption averaged 9 million barrels a day over the past four weeks, up 1.7% from a year earlier, yesterday's report showed. The department measures shipments from refineries, pipelines and terminals to calculate demand.

``This is a gasoline-led rally,'' said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant. ``There's been a lot of hoopla about the improvement in gasoline demand. There's a difference between implied demand, which is measured in the report and actual consumption.''

Crude oil supplies rose 717,000 barrels to 351.3 million barrels last week, the department said yesterday. Inventories were forecast to increase by 1.25 million barrels, according to the median of responses in a Bloomberg News survey. In January stockpiles increased by a weekly average 5.46 million barrels.

Imports dropped 0.3% to 8.77 million barrels a day, the lowest since the week ended Sept. 18, when ports were shut in the aftermath of hurricanes Gustav and Ike, the report showed.

OPEC production

OPEC agreed on Dec. 17 to reduce oil supplies starting Jan. 1 to bolster prices. The 11 members of the Organization of Petroleum Exporting Countries with quotas, all except Iraq, cut output 3.8% to 25.3 million barrels a day in February, consultant PetroLogistics Ltd. of Geneva said Feb. 23. Members have a quota of 24.845 million barrels a day.

OPEC will reduce crude-oil shipments by 1.7% in the month ending March 14, according to Oil Movements. Members will load 22.8 million barrels a day in the period, down from 23.2 million a day in the month ended Feb. 14, the Halifax, England- based based tanker tracker said in a report today.

Iran, Venezuela and Iraq said last week that OPEC is prepared to cut production again when it meets on March 15. Ecuador Oil and Mines Minister Derlis Palacios said today that no new additional reduction was needed ``US crude-oil supplies aren't building like they were and it appears that the OPEC cuts are translating into lower US import levels,'' said Tim Evans, an energy analyst with Citi Futures Perspective in New York.

Reduced shipments

Abu Dhabi National Oil Co. will reduce exports of crude oil in April. The United Arab Emirates state-owned producer will export 17% less of Upper Zakum crude oil than contracted, following a 15% reduction in March, the company said in a faxed statement today. Shipments of Umm Shaif, Lower Zakum and Murban crude will be cut by 15%.

Companies are slashing jobs and orders at a faster pace in the US, reports today showed. Orders for durable goods fell 5.2% in January, more than twice as much as forecast, Commerce Department figures showed in Washington. The Labor Department said 667,000 Americans filed initial applications for jobless benefits last week.

``I think we are seeing investors desperately latch onto anything bullish,'' said Stephen Schork, president of Schork Group Inc. of Villanova, Pennsylvania. ``We are looking forward to more economic pain in the months ahead and that will lead to weaker demand.''

Brent crude oil for April settlement increased $US2.15, or 4.9%, to $US46.44 a barrel on London's ICE Futures Europe exchange. Futures reached $US46.63, the highest since Feb. 10.

 

[CFDTrading]

Crude Oil Forecast Turns Bullish On Break Higher

Thursday, 26 February 2009 21:36:28 GMT
Written by David Rodriguez, Quantitative Analyst

Short-Term Technical Forecast for Crude Oil

Crude oil prices continue to trade within an especially volatile range, and sizeable intraday moves have been thus far unable to force major breaks. Our range-trading bias would suggest that current rallies are best sold-especially within the context of an overall downtrend. Clear resistance can be found at the confluence of recent spike-highs and the 38.2 percent Fibonacci retracement of the 48.00-37.10 move at 41.00. A break of this level would negate our bearish bias, while nearest support can be found at the bottom of the contract's recent trading range at 37.10.

Short-Term Technical Forecast for Gold

Gold prices recently reached heavily overbought territory, and the COMEX contract's pullback signals that further losses are likely. Indeed, RSI on the daily chart reached its highest levels since July of last year-at which point gold prices set a significant top near the 1,000 mark. The sharp uptrend in price suggests that we may expect further gains through the medium term, but the short-term favors further losses. Subsequent support can be found at previous spike-highs at the 930 mark, while resistance is at recent spike-highs above 1,000.

Short-Term Technical Forecast for Silver

COMEX silver prices find themselves in much the same situation as gold, as the contract has reached significantly overbought territory and is at risk for a sharper retracement. The contract now trades at previous Fibonacci resistance and spike-highs at 13.80, while a break lower would signal that a move towards the psychologically significant 13.000 mark is likely. Near-term resistance can be found at recent highs of14.585.

 

[waz]

Re: OIL AGAIN!

Oil has past the $48 mark (MAY contract price). Gone up a dollar just in the last hour.
We dont normally get such a jump on a monday morning. Especially since I cant find any news on the subject of oil from the past few hours.

For the technicals out there. Do you think the long term bear trend has come to an end?

Could this be the catalyst for other commodities to start rising again?

 

[vincent191]

Re: OIL AGAIN!

Waz, at long last oil inventory has started to drop. It dropped by 2.5% last week and OPEC is looking at another cut.

However, just because you see one swallow flying past does not mean it is now Summer. We will have to wait to see a few more positive and substained signs.

I think the Baltic index has gone up i.e. more tankers moving supplies out of the oil fields, this is only based on 3rd nad info I have heard while having a swallow of beer at the local. I have not research the index myself.

 

[sinner]

Re: OIL AGAIN!

Hi guys,

It has been a while since I wrote to you here.

Looks like plenty of people have filled in place of my absented soothesaying.

I will not comment on those analysis. Worth noting that "CFDTrading.com" was bearish on gold from the 800s based on the same analysis they use in the above post. They were very quick to change their stance to be "correct". Is that we are seeing again here?

Anyway I will rely on my own analysis and let you be the judge. I have included a fair few charts and screenshots, please forgive me if this is too much.

When I last left you the two main points was a bullish upward pointing Doji on the weekly for USO and a bearish downward break on the MACD on the USO daily. I also noted some comments by Chris V that he was looking to go short.

In the end the MACD breakdown which worried me resolved itself as yet another bounce from the trigger region.
Also as we can see, the Doji did not fail to disappoint and we have had strong upwards price action since then.

Now we must look forward. The current rally in oil/gas from a fundamental perspective has been due to declining stockpiles, finally giving the market some hope that OPEC production cuts might have some affect on the supply/demand curve.

Weekly volume for USO since the Doji has been declining despite this promising price action. Last week was in fact the lowest volume for this instrument in seven weeks.

The weekly MACD for both USO and WTI crude is extremely bullish and beginning to show hopeful signs of a rally in oil. Weekly Relative Strength has also increased significantly in the past fortnight.

If you have been following my postings on these two indicators for this instrument you should be able to follow what I am saying here, no need for me to explain it all again.

USO was previously strongly constrained by the 40MA, it has broken through this (bullish) and is now constrained by the 50MA with selling pressure above this point. A break and close above 50MA would be a buy signal for me.
Unfortunately all this bullish price action has created some ugly gaps which I expect to be filled just the same as the last down-facing gap I expected got filled by an up move (in this case we would be expecting a down move to fill up-facing gaps).

We can also see that unfortunately daily volume for this rally has been very very low if you were exposed via USO instrument. I remain unsure if this is because buy-and-holders were longing on the other side of the down curve or this could be an unconvinced market.

I have also included a screenshot of tonights fixed capital contract. As you can see the "smart money" is extremely bullish on WTIC finishing up tonight again.

Good luck.

 

[CFDTrading]

Re: OIL AGAIN!

Crude Hits 3-Month Highs On US Market Rally, OPEC Compliance Expectations

Tuesday, 17 March 2009 21:29:04 GMT
Written by Stefan Tifigiu, CFDTrading Research
Full Article

Crude prices rose to 3-month highs today on expectations of better OPEC compliance coupled with rallies in US equity markets pushed prices higher. Gold prices continued modest declines today following strong US equity market rallies.Silver continued to fall in value following gold’s decline.

Commodities - Energy

Crude Gains On Housing Starts Data And OPEC Pledge For Compliance

Crude Oil (WTI) $48.910 +1.560 +3.29%
Crude prices rose to 3-month highs today on expectations of better OPEC compliance coupled with rallies in US equity markets. Some supply-side strength was provided by comments from Algeria’s Oil Minister Chakib Khelil in which he stated OPEC would reach 95% compliance by its next meeting in May. Given the current compliance rate of only 80%, this increase in compliance acts as some support for oil prices in lieu of production cuts. Further price strength was provided by a better-than-expected US Housing Starts release that rallied equity markets across all sectors. Price swings were extremely volatile but most of the market noise could be more attributed to traders excercising options contracts on the final day of front-month April futures contracts. Market noise aside, fundamentals are still in favor of lower crude prices for the near future. Even with supply pressures that greater compliance from OPEC will provide in the coming months, there is still significant amount of crude already in the markets. Those stockpiles will take time to be absorbed. Even with worldwide market rallies that have lasted most of the week, global crude demand will remain weak until a significant tangible economic turnaround occurs. So far there is little evidence of this. Tomorrow’s DOE numbers may be market moving as they are expected to show increases and could perhaps signal even further oversupply. If stockpiles rise more than forecasted, bearish pressures will return to the market and place pressure on prices back toward the psychologically significant $40 level.

Commodities - Metals

Gold And Silver Continue Decline On Unexpected US Equity Rallies

Gold $916.450 -6.705 -.73%
Gold prices continued modest declines today following strong US equity market rallies. The Producer Price Index in the US rose less than expected and could have offset some growing concerns of future inflation that might have provided gold with some strength. However prospects for medium to long-term growth remain fundamentally strong. Much of the market rallies that have weakened gold were fueled by leaked memos and expectations of operating profits under current conditions. Nonetheless, there is very little in the way of evidence that fortunes at financial institutions have reversed. There is evidence to the contrary in Monday’s news of increased credit-card delinquencies. Growth in delinquencies hints at the growing risks of credit-card related securities that many financial institutions hold. Losses there could derail positive sentiment and reverse market momentum. The relatively modest declines in Gold may be evidence of this. In the meantime, if global markets continue to rally, gold will likely trade flat.

Silver $12.745 -.18000 -1.39%
Silver continued to fall in value following gold’s decline. As we noted earlier, silver may be poised for a much stronger rally than gold given its historically lagging gains. There is however significant potential for upside if there are any market moving reports released that could derail positive sentiment. If that occurs, safe-haven metals will benefit.

 

[kransky]

Re: OIL AGAIN!

If oil keeps going the way it is it will point the way ahead for inflation... and a BIG rush back into commodities...

 

[cuttlefish]

Re: OIL AGAIN!

So whats the consensus - are the lows for oil behind us or are we just experiencing a correction in a long term down trend? I like what its been doing over the past month - my vote is for the former - the lows are behind us and its going to meander its way back north. The volume in the cirlced area is positive imo - and the current retraction will be an interesting test.

 

[kransky]

Re: OIL AGAIN!

right now that is the $64M question... (is the current rise in oil and commodities the real deal or just a blip in a longer road of deflation)

i hope its a false start of the great hard asset inflation escalator to the moon that will eventually happen as they keep "printing" more money.. and when that fails "printing" more... that's because i am not on this one not yet at least.

it feels too early.

some learned commentators are saying this... but if its not a false start and its the real deal then i need to pull my shorts and pump that hard earned cash sitting in the bank earning diddly into some stocks and commodities...

any comments? i would love to hear others thoughts on this very important question.

 

[sinner]

Re: OIL AGAIN!

Hi cuttlefish,

The pattern that oil is forming on the longer term charts is not unique in fact very similar to the ones we have seen developing on some forex pairs, stocks etc.

A very W type shape but unconvincing after the huge technical damage to the charts.

By my own reasoning (which has been posted earlier in this thread, DYOR) I would expect to see oil trading around $60 sooner or later. While this call might not seem so crazy now I have consistently held to this number for some months now.

I think only fundamental factors will push us up any higher than that.