Crude Oil Price Slumps as Inventory Jumps

ONG Focus | Insights | Written by Oil N' Gold | Wed Oct 27 10 11:12 ET

Total crude oil and petroleum products stocks rose +0.59 mmb to 1132.78 mmb in the week ended October 22. Crude oil inventory soared +5.01mmb to 366.21 mmb as stock-builds were recorded in all 5 regions. Cushing stock, however, slipped -0.35 mmb to 33.66 mmb. Utilization rate rose for a second week to 83.7%.

Concerning oil products, both gasoline and distillate stockpiles declined during the week. Gasoline inventory fell -4.39 mmb to 214.94 mmb while that for distillate dipped -1.61 mmb to 166.84 mmb. Gasoline demand jumped +5.25% to 9.36M bpd but was partly offset by increases in production (+1.86%) and imports (+28.24%). Similarly, +2.78% surge in distillate demand but was partly offset by increases in production (+3.25%) and imports (+35.71%).

WTI crude oil price tumbled to as low as 80.52 after the report. Commodity prices are weighed down by USD's rebounded ahead of the FOMC meeting. Stronger-than-expected durable goods orders and new home sales triggered speculations that the Fed may introduce a mild QE program next week.

Weekly change in inventory as of 22/10/10

Comparison between API and EIA reports: Forecast (using API's inventory level)

API collects stockpile information on a voluntary basis from operators of refineries, 76% of the time, using data in the past 4 years.

Source: Bloomberg, API, EIA

 

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Crude Modestly Higher ahead of FOMC Meeting

ONG Focus | Insights | Written by Oil N' Gold | Sun Oct 31 10 23:05 ET

Crude oil price climbed higher in Asian session on Monday as USD's decline ahead of the FOMC meeting raised appeal for commodities. Data showing strong manufacturing activities in China also boosted oil prices. Gold kept hovering around 1360. We believe either upside or downside surprise from Fed's QE should benefit positive for gold in the long-term. However, a milder than expected dose of QE may trigger selloff in the metal in the near-term.

Economic data released last Friday were mixed. US GPD grew by an annualized pace of +2% (consensus: +2.2%) in 3Q10, from +1.7% a quarter ago. University of Michigan consumer confidence was revised down -0.2 points to 67.7 in October. While the ‘economic conditions' index rose +3.6 points to 76.6, the ‘expectations index' fell -2.7 points to 61.9.Chicago PMI, however, beat market expectations and improved to 60.6 in October. We believe the set of data should not alter the Fed's decision to announce new QE measure at the meeting this week.

The dollar fell against major currencies with the exception of Japanese yen. The market forecast the size of Fed's new bond-buying program would be $1-2 trillion but it may begin by announcing $500B over several months or $100B per month. Apart from purchasing Treasury securities, the Fed may modify its language used in the accompanying statement. At the Boston Fed conference, Chairman Ben Bernanke said that 'clear communication about the longer-run objectives of monetary policy is beneficial at all times but is particularly important in a time of low inflation and uncertain economic prospects such as the present' and the FOMC will continue to 'actively review its communications strategy with the goal of providing as much clarity as possible about its outlook, policy objectives, and policy strategies'.

China's PMI expanded to 54.7 in October from 53.8 a month ago. This is the fastest growth pace in 6 months and signaled the country's economy can sustain through the government's tightening measures. This is also positive news for the oil market as, according to IEA, China has overtaken the US as the world's largest oil user.

With the exception of gasoline, speculators were bullish on oil sector in the week ended October 26. Net length for crude oil surged +24 441 to 125 271 contracts, the highest level since January 2010. QE anticipations and rise in European oil demand due to strikes in France have helped attracting capitals. Net length for heating oil added +963 to 29 605 contracts but that for gasoline fell -4 404 to 57 683 contracts. Net shorts for natural gas dropped for a second consecutive week, by -8 130, to 165 744 contracts, the lowest level in 8 weeks.

Speculators trimmed long positions in gold and silver but staying positive for PGMs. Net long for gold fell -10 666 to 239 086 contracts while that for silver slipped -2 788 to 26 743 contracts. Prices, however, were a tad higher. Net length for platinum climbed +1 181 to a record of 26 743 contracts while that for palladium gained +851 to 16 134 contracts, only slightly below a record high of 16 185 contracts made in May 2010. Recovery in the auto sector and new emission standard in the US have been buoyant for PGMs as they are mainly used as autocatalytic converters.

 

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Crude Oil Climbs but Remains Below 82 ahead of Inventory Data

Crude oil's recovery was capped below 82 as investors remained cautious about risk-taking. Sovereign crisis in peripheral European economies remains a big concerns, S&P's downgrade of Ireland's ratings indicates a bailout may not be able to solve the country's underlying problems. Meanwhile, the risks of contagion intensified with Portugal the next country expected to seek rescues. Gold price remained firm with the benchmark Comex futures hovering around 1380. Tensions on the Korean Peninsula have remained an overhang in the near-term.

Market sentiment has been dominated by macroeconomic and geopolitical tensions, overshadowing economic data which were rather encouraging. Yesterday, the US government upgraded GDP growth for 3Q10 to an annual rate of +2.5%, beating consensus of +2.4% and initial estimate of +2%. In European session today, IFO reported that Germany's business climate index rose to a record high of 109.3 in November from 107.7 a month ago. 'Current assessment' index and 'expectations' index also improved to 112.3 and 103.3 from 110.2 and 105.2 respectively.

The FOMC minutes for November were published yesterday. Few surprises were delivered so market reactions were not strong. The Fed released latest projections with GDP estimated to rise at 3-3.6% in 2011 versus prior forecast of 3.5-4.2% released in June. Unemployment is projected to be at around 9% by end of 2011, higher than prior projection of 8.5%. Inflation is expected to stay below the informal target of 2% through 2013. Policymakers had diverse opinions on the $600B asset-buying program despite the 10-1 vote. While most members expected the program to 'help promote a somewhat stronger recovery in output and employment while also helping return inflation, over time, to levels consistent with' Fed's mandate, 'some participants noted concerns that additional expansion of the Federal Reserve's balance sheet could put unwanted downward pressure on the dollar's value in foreign exchange markets'. These comments probably supported the dollar's strength.

As investors await the weekly inventory report from the US Energy Department, the industry-sponsored American Petroleum Institute estimated crude oil inventory rose +5.19 mmb to 357.73 mmb in the week ended November 19.Both gasoline and distillate stockpiles fell -0.50 mmb and -0.31 mmb respectively. The market forecasts the official data today will show drops in crude oil, gasoline and distillate inventories.

Weekly change in inventory as of 19/11/10

Comparison between API and EIA reports: Forecast (using API's inventory level)

API collects stockpile information on a voluntary basis from operators of refineries, 76% of the time, using data in the past 4 years.

Source: Bloomberg, API, EIA

View the original article here

Crude Oil Daily Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Wed Oct 20 10 07:09 ET

Crude oil's choppy fall from 84.43 is still in progress and breached 80 psychological level. With 78.04 support intact, there is no confirmation of reversal yet. But still, even in case of another rise to above 84.43, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and deeper decline should be seen to retest this support level first.

In the bigger picture, after all, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Recovery from 64.23 is treated as a correction and should be near to completion, if not finished. Even in case of another rise, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.

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Crude Oil Weekly Technical Outlook

Crude oil dropped to as low as 80.06 last week before forming a temporary low there and turned sideway. Initial bias remains neutral this week and some consolidations would be seen first. However, note that another fall remains in favor as long as 84.52 minor resistance holds. Below 80.06 will target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. Though, above 84.52 will flip intraday bias back to the upside for retesting 88.63 high.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

In the long term picture, rebound from 33.2 is not finished yet. But overall view remains unchanged. Crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave from there unfolding. Current development suggests that a breach of 61.8% retracement at 103.70 is likely. But we'll then start to focus on reversal signal again above 103.70.

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Crude Oil Weekly Technical Outlook

Crude oil dropped to as low as 80.06 last week before forming a temporary low there and turned sideway. Initial bias remains neutral this week and some consolidations would be seen first. However, note that another fall remains in favor as long as 84.52 minor resistance holds. Below 80.06 will target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. Though, above 84.52 will flip intraday bias back to the upside for retesting 88.63 high.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

In the long term picture, rebound from 33.2 is not finished yet. But overall view remains unchanged. Crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave from there unfolding. Current development suggests that a breach of 61.8% retracement at 103.70 is likely. But we'll then start to focus on reversal signal again above 103.70.

Nymex Crude Oil Continuous Contract 4 Hours Chart

Nymex Crude Oil Continuous Contract Daily Chart

Nymex Crude Oil Continuous Contract Weekly Chart

Nymex Crude Oil Continuous Contract Monthly Chart

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Crude Oil Daily Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Fri Nov 26 10 07:41 ET

Crude oil jumped to as high as 84.53 but was limited by mentioned 85.42 resistance and weakens again. With 4 hours MACD crossed below signal line, intraday bias is turned neutral. As noted before, decline from 88.63 is still in favor to continue with 84.52 resistance intact. Break of 80.06 will target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. Though, above 84.53 will now flip intraday bias back to the upside for retesting 88.63 high.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

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Crude Oil Weekly Technical Outlook

Crude oil continued to engage in choppy sideway trading last week and spiraled lower. But after all, downside is still contained above 78.04 resistance and there is no confirmation of reversal yet. Recent rally might still extend one more time. But after all, even in case of another rise, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and deeper decline should be seen to retest this support level first.

In the bigger picture, after all, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Recovery from 64.23 is treated as a correction and should be near to completion, if not finished. Even in case of another rise, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.

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. Price actions from 147.27 are treated as consolidation in the larger up trend and with 90.24 fibo resistance intact, a test of 33.2 eventually is in favor. Though, decisive break of 90.24 will argue that crude oil will bring stronger rally to above 100 psychological level as a relatively powerful second wave of the consolidation continues.

Nymex Crude Oil Continuous Contract 4 Hours Chart

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Nymex Crude Oil Continuous Contract Weekly Chart

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Crude Oil Daily Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Wed Nov 24 10 07:07 ET

Crude oil is still staying in sideway trading in tight range for the moment and intraday bias remains neutral. Decline from 88.63 is still in favor to continue with 84.52 resistance intact. Break of 80.06 will target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. Though, above 84.52 will flip intraday bias back to the upside for retesting 88.63 high.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

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Crude Oil Daily Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Wed Nov 24 10 07:07 ET

Crude oil is still staying in sideway trading in tight range for the moment and intraday bias remains neutral. Decline from 88.63 is still in favor to continue with 84.52 resistance intact. Break of 80.06 will target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. Though, above 84.52 will flip intraday bias back to the upside for retesting 88.63 high.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

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Crude Oil Daily Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Wed Oct 20 10 07:09 ET

Crude oil's choppy fall from 84.43 is still in progress and breached 80 psychological level. With 78.04 support intact, there is no confirmation of reversal yet. But still, even in case of another rise to above 84.43, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and deeper decline should be seen to retest this support level first.

In the bigger picture, after all, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Recovery from 64.23 is treated as a correction and should be near to completion, if not finished. Even in case of another rise, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.

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Crude Oil Weekly Technical Outlook

Crude oil edged higher to 88.63 last week but formed a short term top there and pulled back. Initial bias remains mildly on the downside this week for deeper decline to correct whole rise from 70.76. Nevertheless, strong support should be seen at 38.2% retracement of 70.76 to 88.63 at 81.80 and bring another rise. Whole rally from 64.23 is still expected to continue to 90 psychological level and above.

In the bigger picture, rise whole medium term rebound from 33.2 is still in progress. Such rise is treated as the second wave of the consolidation pattern that started at 147.27. Further rise could still be be seen towards 50% retracement of 147.27 to 33.2 at 90.24 and possibly further to 61.8% retracement at 103.70. However, break of 70.76 support will be the first warning that crude oil has topped out. Further break of 64.23 support will confirm and turn outlook bearish to start another medium term decline.

In the long term picture, rebound from 33.2 is not finished yet. But overall view remains unchanged. Crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave from there unfolding. Current development suggests that a breach of 61.8% retracement at 103.70 is likely. But we'll then start to focus on reversal signal again above 103.70.

Nymex Crude Oil Continuous Contract 4 Hours Chart

Nymex Crude Oil Continuous Contract Daily Chart

Nymex Crude Oil Continuous Contract Weekly Chart

Nymex Crude Oil Continuous Contract Monthly Chart

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Crude Oil Weekly Technical Outlook

Crude oil continued to engage in choppy sideway trading last week and spiraled lower. But after all, downside is still contained above 78.04 resistance and there is no confirmation of reversal yet. Recent rally might still extend one more time. But after all, even in case of another rise, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and deeper decline should be seen to retest this support level first.

In the bigger picture, after all, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Recovery from 64.23 is treated as a correction and should be near to completion, if not finished. Even in case of another rise, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.

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. Price actions from 147.27 are treated as consolidation in the larger up trend and with 90.24 fibo resistance intact, a test of 33.2 eventually is in favor. Though, decisive break of 90.24 will argue that crude oil will bring stronger rally to above 100 psychological level as a relatively powerful second wave of the consolidation continues.

Nymex Crude Oil Continuous Contract 4 Hours Chart

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Nymex Crude Oil Continuous Contract Weekly Chart

Nymex Crude Oil Continuous Contract Monthly Chart

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Crude Oil Daily Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Wed Nov 17 10 07:12 ET

Crude oil drops to as low as 81.18 so far and remains week. Intraday bias remains on the downside as long as 84.52 minor resistance intact and current decline from 88.63 could extend further towards 61.8% retracement of 70.76 to 88.63 at 77.59. ON the upside, above 84.52 will turn intraday bias neutral and bring recovery. But risk will remain on the downside as long as 88.63 resistance holds.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

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Crude Oil Weekly Technical Outlook

Crude oil continued to engage in choppy sideway trading last week and spiraled lower. But after all, downside is still contained above 78.04 resistance and there is no confirmation of reversal yet. Recent rally might still extend one more time. But after all, even in case of another rise, we'll continue to focus on reversal signal inside resistance zone of 82.97/87.15. On the downside, break of 78.04 support will indicate that rise from 70.76 is over and deeper decline should be seen to retest this support level first.

In the bigger picture, after all, we're still favoring the case that medium term rally from 33.2 is already completed at 87.15. Recovery from 64.23 is treated as a correction and should be near to completion, if not finished. Even in case of another rise, strong resistance should be seen as crude oil enters into resistance zone of 82.97/87.15 and bring reversal. We're still expecting another fall to 60 psychological level (50% retracement of 33.2 to 87.15 at 60.18). However, decisive break of 87.15 will put focus on long term fibo level at 50% retracement of 147.27 to 33.2 at 90.24.

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. Price actions from 147.27 are treated as consolidation in the larger up trend and with 90.24 fibo resistance intact, a test of 33.2 eventually is in favor. Though, decisive break of 90.24 will argue that crude oil will bring stronger rally to above 100 psychological level as a relatively powerful second wave of the consolidation continues.

Nymex Crude Oil Continuous Contract 4 Hours Chart

Nymex Crude Oil Continuous Contract Daily Chart

Nymex Crude Oil Continuous Contract Weekly Chart

Nymex Crude Oil Continuous Contract Monthly Chart

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Crude Oil Daily Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Wed Nov 17 10 07:12 ET

Crude oil drops to as low as 81.18 so far and remains week. Intraday bias remains on the downside as long as 84.52 minor resistance intact and current decline from 88.63 could extend further towards 61.8% retracement of 70.76 to 88.63 at 77.59. ON the upside, above 84.52 will turn intraday bias neutral and bring recovery. But risk will remain on the downside as long as 88.63 resistance holds.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

Nymex Crude Oil Continuous Contract 4 Hours Chart

Nymex Crude Oil Continuous Contract Daily Chart

 

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