Commodities Technical And Fundamental Analysis For July 7, 2011

Oil Technical Analysis for July 7, 2011

Light Sweet Crude

The CL contract found itself fairly flat for the day on Wednesday, as it ran into serious resistance at the $97.50 level. However, it should be noted that the day started out bearish, and we had a bounced in the later hours. Because of this, it appears that the pressure is still to the long side. Buying on dips seems to be the correct route at the moment.


Brent markets fell, but then bounced in the later hours of trading on Wednesday. This suggests that the hammer candle forming at the end of the day is showing us that this market wants to go up from there. Buying on dips or a break of the Wednesday high would both be sensible trades.

Oil Fundamental Analysis for July 7, 2011

Crude oil prices dropped on Wednesday amid rising pessimism in global financial markets, where Moody’s decision to downgrade Portugal’s credit rating to junk, in addition to China’s decision to raise benchmark interest rates, and the slowing ISM services in June all added to woes in markets over the outlook of major economies around the globe, which sent investors away from risky assets and increased demand for low yielding and safe assets including the U.S. dollar, which pushed crude oil prices lower .

Investors will be eyeing developments around the globe, since rising risk aversion will most likely put negative pressure on crude oil prices, noting that investors will be eyeing key fundamentals from Europe and the United States, where the ECB is expected to hike interest rates, while the ADP employment change is expected to show that job growth in the U.S. private sector remained weak in June. Moreover, the EIA report for crude oil inventories will be released after it was postponed from Wednesday due to the Independence Day holiday earlier this week in the United States.

Thursday July 07:

The main event will be the ECB rate decision, which is due at 11:45 GMT as the bank is expected to raise rates by 25 bp to 1.50% from 1.25%. Trichet’s press conference will follow at 12:30 GMT and focus will be on hints for the next move and the status of growth as the governor will surely refrain from signaling another move for August.

The signals for Friday’s report will continue with the 12:15 GMT. ADP Employment Change for June and expected to rise to 70 thousand from 38,000 reported in May.

Jobless claims follow at 12:30 GMT after last week they slightly rose by 428,000.

At 15:00 GMT, the EIA report for crude oil inventories will be released for the week ending July 1, where last week crude oil inventories decreased by 4.4 million barrels, and Thursday’s report is expected to show that crude oil inventories decreased by 2.5 million barrels.

Natural Gas Technical Analysis for July 7, 2011

The natural gas markets fell very hard on Wednesday, as traders sold off the market. The candle is long and red, but is also parked right above massive support. Because of this, although it looks very bearish, we are still very sceptical about selling this market. Tomorrow’s candle should be telling and very important. The $4.20 level we sit at now has held like a rock, and we wouldn’t be surprised to see that happen again.

Natural Gas Fundamental Analysis for July 7, 2011

Natural gas dropped on Wednesday, despite expectations of warm weather conditions over the coming period, which usually push natural gas prices higher on expectations of higher demand for power-plant fuel, however, natural gas prices fell ahead of the EIA report for natural gas inventories, which is due on Thursday and expected to show stockpiles continued to rise.Natural gas prices will move according to the EIA report, which will be released on Thursday, where expectations show that natural gas inventories rose by 81 billion cubic feet last week.

Thursday July 07:

At 14:30 GMT, The EIA will release the weekly natural gas storage change for the week ending July 01, where the prior report showed that natural gas inventories increased by 78 billion cubic feet, and Thursday’s report is expected to show that natural gas stockpiles increased by 81 BCF .

Gold Technical Analysis for July 7, 2011

The gold market rose again on Wednesday, and looks set to attempt a push towards the $1,550 area again. The issues in Europe certainly helps the idea of owning gold when there are potential sovereign defaults in the future. The $1,550 looks formidable, so we think that buying is the right way to go, but be ready to take profits on signs of weakness at that level.

Gold Fundamental Analysis for July 7, 2011

Gold extended the rally on Wednesday in a strong faceoff with the dollar on rising haven demand and intensifying risk aversion that brought back gold’s glory days.

The uncertainty remained dominant in the market and renewed debt woes and China’s unexpected move on rates all fuelled the demand on Gold on Wednesday.

We already started the weak with a softer note on Greece with S&P warning that the French proposal for the private sector participation will still account as default, and now the market was battered by another move from Moody’s that slashed Portugal’s rating to junk.

Jitters and fears are evident and the dollar regained the upper hand on risk aversion and rising debt woes. Also, the metal was further supported after the PBoC raised rates for the third time this year igniting fears of inflation and also fears of slowing growth on rapid monetary tightening and rising problems for banks that are hammered with high bad loans.

The haven demand is evident and expected to keep the upside support for the metal for the rest of the week with still focus on Thursday on the rate decisions in Europe and on the jobs report on Friday.

With the BoE and ECB announcing their decisions on Thursday the metal will still find upside support especially as the ECB is to raise rates, assuring inflation pressures, while the BoE will not move amid raging inflation which is even more supportive for gold.

The market will also keep an eye on the debt crisis and comments from Trichet to ease the tension as he is expected to say how the bank will deal with default and with the falling collateral status for member states that will surely intensify the pressure on the banking sector. Thursday will be another volatile day for gold, yet the general bullishness remains intact!

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