The front month NYMEX crude oil contract has closed in a very tight range of $99 to 101 for the last five weeks. With all the flopping around during the week this has really impressed me. Even with all the noise from OPEC last week the price of oil has stabilized in this tight range.
If not for the Saudi announcement to pump more oil, the July contract would have closed above $102/bbl, indicating the beginning of a move higher. What the Saudis say and what they do may be two different things. Plus, the heavy crude they can bring to the markets may not have buyers.
Here is the daily chart of the July futures contract:
http://www.cmegroup.com/popup/mdq2.html ... Oil&type=p
What jumps out is strong support at $99/bbl and VERY STRONG support at $96/bbl.
IMO this coming week is very important. If the price of oil holds above these support levels, I believe it is setting up to move higher, along the trend line that is clearly visible on the weekly chart. The upward trend began last September and was broken when the price of oil spiked on the NATO bomping of Libya.
The weekly chart also clearly shows a wedge the last five weeks. Prices tend to break one way or the other out of a wedge.
Comments please.
Oil Prices - This is an important week
Oil Prices - This is an important week
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices - This is an important week
This is from a commodity report I get every Sunday night:
Energies: OPEC. SPRs. The Wedge. Let me explain. OPEC’s meeting resulted in rare form. For the first time in 20 years there was no common consensus on production quotas. The Saudi’s along with Kuwait, Qatar and UAE wanted to increase production by 1.5 million barrels per day (mbd) to adequately supply projected demand and aide in the economic recovery. Iran led six other countries in strong opposition to the output increase. The disagreement between the two underscores the tensions faced in the MENA region. Longer term, this is worth watching carefully as the struggle between Shiite and Sunni sects intensifies. In light of the divide, President Obama is considering use of the nation’s special petroleum reserves. If the thought is carried out, and other nations follow suit, oil’s price may be pressured. With election campaigns in the not too distant future, this would not surprise me in the least bit. Looking at the technicals, crude has likely completed the wedge consolidation that has been forming since the $20 drop on May 2. In my opinion, the likely outcome is for price to continue out of the wedge in the direction of the previous trend. If that trend continues down, the initial target lies at 89.95. This is the uptrend line drawn from Feb ’09 low and the 61.8% extension.
Again, what happens this week is very important.
Energies: OPEC. SPRs. The Wedge. Let me explain. OPEC’s meeting resulted in rare form. For the first time in 20 years there was no common consensus on production quotas. The Saudi’s along with Kuwait, Qatar and UAE wanted to increase production by 1.5 million barrels per day (mbd) to adequately supply projected demand and aide in the economic recovery. Iran led six other countries in strong opposition to the output increase. The disagreement between the two underscores the tensions faced in the MENA region. Longer term, this is worth watching carefully as the struggle between Shiite and Sunni sects intensifies. In light of the divide, President Obama is considering use of the nation’s special petroleum reserves. If the thought is carried out, and other nations follow suit, oil’s price may be pressured. With election campaigns in the not too distant future, this would not surprise me in the least bit. Looking at the technicals, crude has likely completed the wedge consolidation that has been forming since the $20 drop on May 2. In my opinion, the likely outcome is for price to continue out of the wedge in the direction of the previous trend. If that trend continues down, the initial target lies at 89.95. This is the uptrend line drawn from Feb ’09 low and the 61.8% extension.
Again, what happens this week is very important.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices - This is an important week
Monday: The front month NYMEX contract (July) got down to $96.13/bbl then bounced back to close around $97. I believe it is very significant if the $96/bbl support level can hold this week.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices - This is an important week
"The Energy Information Administration (EIA) has increased their 2011 crude oil demand forecast by 300,000 bbls per day to an increase of 1.7 million BOPD over 2010. The EIA now believes the world will consume over 88.43 million bbls of oil per day this year. They have increased their 2012 forecast to 90.02 million bbls per day."
The EIA had reduced their annual demand forecast just a few weeks ago but new information shows increasing demand from China, Brazel and the Middle East.
The EIA had reduced their annual demand forecast just a few weeks ago but new information shows increasing demand from China, Brazel and the Middle East.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices - This is an important week
Tuesday, June 14:
Since May 5, the price of oil has dipped near $96/bbl five times. Each time it has quickly reverted back to the very tight $99 to $101 range.
Oil closed at $99.14/bbl today after dipping to $96.13 yesterday morning.
Since May 5, the price of oil has dipped near $96/bbl five times. Each time it has quickly reverted back to the very tight $99 to $101 range.
Oil closed at $99.14/bbl today after dipping to $96.13 yesterday morning.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices - This is an important week
Wednesday, June 15: The daily flip flopping continues! The price of the front month (July) contract did break support at $96/bbl so we need to watch it carefully. The oil price got down to $94.81/bbl at around 2:30 ET then it stabilized and began to drift higher. As I write this it is up 60 cents.
Analysts blamed today's drop on a strengthening U.S. dollar. What really happened is that the dollar declined less than the euro. Greece is a mess but didn't we already know that?
If Greece defaults on its debt it could cause investors to dump the bonds of other weak European nations like Portugal, Spain and Ireland, raising borrowing costs for those countries. It could also cause the dollar to further strengthen against the euro, making U.S. products more expensive abroad. That acts as a drag on corporate profits. Earlier in the year a declining dollar played a key role in boosting corporate earnings and sending stocks higher.
Crude oil stil trades in U.S. dollars so when the dollar strengthens against other currencies the price of oil goes down.
Analysts blamed today's drop on a strengthening U.S. dollar. What really happened is that the dollar declined less than the euro. Greece is a mess but didn't we already know that?
If Greece defaults on its debt it could cause investors to dump the bonds of other weak European nations like Portugal, Spain and Ireland, raising borrowing costs for those countries. It could also cause the dollar to further strengthen against the euro, making U.S. products more expensive abroad. That acts as a drag on corporate profits. Earlier in the year a declining dollar played a key role in boosting corporate earnings and sending stocks higher.
Crude oil stil trades in U.S. dollars so when the dollar strengthens against other currencies the price of oil goes down.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices - This is an important week
NEW YORK (AP) -- The dollar is continuing its rise against the euro as Greece's debt crisis worsens.
A European Union economic official says that a second bailout for Greece will be delayed until July as finance ministers from the European countries that share the euro nail down details of how the new aid package would work. Meanwhile, Greek Prime Minister George Papandreou is preparing to reshuffle his administration to get austerity measures through Parliament.
Investors and analysts say another bailout out is necessary because Greece could run out of money next year.
The euro fell to $1.4128 in morning trading Thursday from $1.4169 late Wednesday. The British pound fell to $1.6123 from $1.6175.
But the dollar fell to 80.80 Japanese yen from 80.97 yen and to 0.8491 Swiss franc from 0.8534 Swiss franc.
So, the U.S. dollar looks good compared to a euro but is falling against more stable currencies. - Dan
A European Union economic official says that a second bailout for Greece will be delayed until July as finance ministers from the European countries that share the euro nail down details of how the new aid package would work. Meanwhile, Greek Prime Minister George Papandreou is preparing to reshuffle his administration to get austerity measures through Parliament.
Investors and analysts say another bailout out is necessary because Greece could run out of money next year.
The euro fell to $1.4128 in morning trading Thursday from $1.4169 late Wednesday. The British pound fell to $1.6123 from $1.6175.
But the dollar fell to 80.80 Japanese yen from 80.97 yen and to 0.8491 Swiss franc from 0.8534 Swiss franc.
So, the U.S. dollar looks good compared to a euro but is falling against more stable currencies. - Dan
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices - This is an important week
June 17: On Friday the July contract settled at $93.01/bbl. The decline over the last few days due to the drop in value of the euro and relative gain in strength of the U.S. dollar.
If not for the problems in Greece, I believe the $96/bbl support level would have held.
The August contract becomes the front month on NYMEX next week. This should add $1/bbl to the price.
All of the long-term supply/demand reports that I get point to OPEC (Saudi Arabia) running out of spare capacity within twelve months.
IMO western governments are doing all they can to get oil prices down. They should. It will be interesting to watch how this plays out in the commodity markets.
Serious debate over the U.S. debt limit will start soon. That is likely to weaken the dollar.
If not for the problems in Greece, I believe the $96/bbl support level would have held.
The August contract becomes the front month on NYMEX next week. This should add $1/bbl to the price.
All of the long-term supply/demand reports that I get point to OPEC (Saudi Arabia) running out of spare capacity within twelve months.
IMO western governments are doing all they can to get oil prices down. They should. It will be interesting to watch how this plays out in the commodity markets.
Serious debate over the U.S. debt limit will start soon. That is likely to weaken the dollar.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group