Light Sweet Crude
The CL market rose during the Thursday session, slamming into the $100 mark. The level seems to be a large barrier, and a place we have been watching for a while now. If we can break the level on a daily – close, this would be a massively bullish sign. The market looks strong as a whole, and we like buying dips, and hanging onto the contract if we get to close over $100.
The Brent market fell slightly on Thursday, but still hangs just below the $120 level. The market looks like it is trying to form a base at the $115, and it looks like that will be the floor for the time being. We buy dips, and hang onto the market if it stays above $120.
Oil Fundamental Analysis for July 22, 2011
Crude oil prices extended the rise on Thursday , as optimism spread across markets after a draft for the EU summit released by Reuters eased concerns among traders, as it signaled the EU is preparing an expanded measure to help Greece, Portugal, and Ireland overcome their debt problems, which overshadowed worse than expected manufacturing data from China. Moreover, better than expected data from the United States also boosted confidence in markets and eased fears over the outlook of the recovery in the world’s largest economy, which pushed crude oil prices to trade near $100 a barrel on Thursday.
Traders will be focused on the latest developments in the United States regarding the debt ceiling deal, since the economic calendar lacks any major fundamentals from the United States, however, rising confidence in markets should continue to provide crude oil prices with bullish momentum.
Friday July 22:
No important releases are scheduled from the United States.
Natural Gas Technical Analysis for July 22, 2011
The natural gas markets fell hard on Thursday as traders reacted to the announcement that drawdown from reserves in America came in line. This is also a reaction to the fact that the heat wave should be ending in the next few days. Because of this, a pullback is certainly valid, but it should be noted that the $4.40 level did hold during the session. We believe there is a box of support between $4.40 and $4.20 in which the market gets bullish again. We will wait for that signal and buy it.
Natural Gas Fundamental Analysis for July 22, 2011
Natural gas prices dropped on Thursday after the EIA report for natural gas inventories showed stockpiles increased last week by 60 billion cubic feet in line with expectations and down from an increase of 84 billion cubic feet in the prior week, and below the 5-year average rise of 67 billion cubic feet.
Expectations of milder weather conditions next week should continue to put negative pressure on natural gas prices on Friday, since it will lead to speculations of lower demand for power-plant fuel.
Gold Technical Analysis for July 22, 2011
The gold markets fell on Thursday as the markets began to think that the debt crisis and debt ceiling issues on both sides of the Atlantic might begin to be solved, or at least gotten under wraps. The truth is that the market is much overbought at these levels, and a pullback is quite welcome. We want to buy dips, and would absolutely love to do so the closer we get to $1,550, but would also consider as high as $1,575 if the right candle comes along. We do not sell gold at all.
Gold Fundamental Analysis for July 22, 2011
Gold seemingly exhausted the upside momentum as choppy trading on Thursday was the signal that a deal in the euro area summit and a near deal on raising the debt ceiling might pressure the metal to unwinding the gains on haven demand.
Heavy fluctuations and choppy tight range trading prevailed on Thursday where news of a deal for Greece and more support for euro fiscal strapped nations uplifted the sentiment and supported gains across the board which slowed gold’s gains, though news that Greek default will still be accepted and a weak dollar kept the metal steady and prevented strong losses.
The market turned started to turn higher and pressured gold to the downside on the stronger optimism after Reuters released a draft of the summit decision which included some expansion of the EFSF role that was strong to ensure stability and sources suggested Greece will find aid and the ECB is to accept temporary default under the new bailout as the nation gets assistance.
Friday will all be about the final decision and the actual communiqué from the summit, the draft suggested the expansion of the EFSF to help nations precautionary and not under EU/IMF assistance, it also suggested the recapitalization of banks under loans to governments and also allowing intervention into the bond mark with will surely allow the ECB to access the secondary market and means to ease the Greek debt burden which is why the news suggested the ECB is accepting the status of default as far as Greece is on bond buybacks program.
The range also expands to extending the maturity on the rescue loans to 15 years from 7.5 at this time and lowering the interest to 3.5% from current levels between 4.5% and 5.8%.
Final details of the new EFSF role and the next step for Greece whether default or no default will be the focus for Friday. So far the market is reacting positively to the expectations for strong decisions which is surely good as investors and that might be the first pressure on gold to start the correction, yet with the debt debate in the United States ongoing and the dollar weak that will delay a strong the strong correction for gold.
We see that positive news from the euro area leaders and a deal on the debt ceiling will pressure gold lower for the coming period, yet the upside support remains with slowing global growth, weak dollar and possible default status on Greece which will keep the metal’s upside outlook intact.
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