Oil Technical Analysis for the Week of July 18, 2011
Light Sweet Crude
The CL contract had a missed week, but finished positive. The fact that the market is hanging in at these levels gives more confidence to the bulls in the long run one would think. The overall trend is up, and we think that although near-tern action looks like it could be choppy, we like the idea of this moving up overall.
Brent had a positive week, and is currently pressing the resistance area at $120. The level is vital, and the market will make this decision soon. If we break above the mark, this market is going back to the highs quickly and more than likely higher. If we can’t break through it, this market falls back to $105 to retest the lows again.
Oil Fundamental Analysis for the Week of July 18, 2011
Crude oil prices rose last week amid the dollar’s weakness, while a bigger than expected drop in crude oil inventories also helped in pushing crude oil prices higher . The U.S. dollar weakened as lawmakers in the United States failed to reach an agreement to raise the debt ceiling, which prompted credit rating agencies to downgrade the outlook for U.S. debt and threaten to lower the AAA rating for the United States, which put downside pressure on the USD, pushing crude oil prices higher as a result.Meanwhile, the EIA report showed that crude oil inventories fell by 3.0 million barrels below than median estimates, which further supported crude oil prices to rise.
Traders will be focused on the latest developments on the debt ceiling negotiations in the United States, as lawmakers will continue to negotiate over the weekend in an attempt to reach an agreement to raise the debt ceiling and reduce the swelling deficit in the United States.
Highlights for this week that will probably affect the Crude Oil direction are:
Monday July 18:
The United States, the week will start at 13:00 GMT with the TIC Flows for May. The Net long-term TIC flows in April recorded $30.6 billion and the Total Net TIC Flows were at $68.2 billion.
Tuesday July 19:
The Housing Starts report is due from the United States at 12:30 GMT where starts are expected with 2.7% rise in June to 575 thousand from 560 thousand; building permits on the other hand are expected with 1.5% drop to 600 thousand from 612 thousand.
Wednesday July 20:
The United States Existing Home Sales for June are due at 14:00 GMT which are expected with 2.6% rebound top 4.94 million from 4.81 million.
At 14:30 GMT, the EIA report for crude oil inventories will be released for the week ending July 8, where last week crude oil inventories decreased by 0.9 million barrels.
Thursday July 21:
The US will start Thursday as usual at 12:30 GMT with the weekly jobless claims after they eased the previous week to 405 thousand.
At 14:00 GMT the Leading Indicators for June are due and expected to ease to 0.2% from 0.8%. At the same time the Philadelphia Fed Index for July is also due and expected with improvement to 4.5 rebounding from -7.7.
Friday July 22:
No important releases are scheduled from the United States.
Natural Gas Technical Analysis for the Week of July 18, 2011
The natural gas markets shot straight up towards the end of the week, and look set to retest the recent highs again. This market has been stuck between $5 and $4 for months now and there is no reason to think that it is going to change anytime soon. The truth is that supply far outreaches demand, and as such – we are range bound at these low levels. With America finding more and more natural gas every day, it is hard to see this basic issue resolving itself anytime soon . We like buying at $4-$4.20, and selling at $5-$4.80. We are in the middle of those ranges at this point in time, so we wait.
Natural Gas Fundamental Analysis for the Week of July 18, 2011
Natural gasprices rose last week on higher than average temperatures for this time of the year in the Midwest and East of the United States, which fuelled speculations of rising demand for power-plant fuel to meet rising cooling demand.On the other hand, the bigger than expected rise in natural gas inventories last week had little effect on prices, where the EIA report showed that natural gas stockpiles increased last week by 84 billion cubic feet, compared with median estimates of 79 BCF and the prior estimate of 95 BCF.
Based on weather forecasts for above than normal temperatures in the United States next week, we should expect natural gas prices to rise , as expectations signal that temperatures will be above than average for this time of the year, which could boost demand for power-plant fuel, and accordingly push natural gas prices higher.
Highlights for this week that will probably affect the Natural Gas direction are:
Thursday July 21:
At 14:30 GMT, The EIA will release the weekly natural gas storage change for the week ending July 15, where the prior report showed that natural gas inventories increased by 84 billion cubic feet.
Gold Technical Analysis for the Week of July 18, 2011
The gold markets managed to break out of a consolidative rectangle this past week, and the bullish run continues as a result. The measured and implied move by measuring the rectangle is a target of $1,625 – a level that we certainly can see the market going to. It has been in an uptrend for quite some time now, and there is nothing in this chart that says it will change anytime soon.
Gold Fundamental Analysis for the Week of July 18, 2011
Gold ended another bullish week with strong gains and rally to all time historical highs as the demand for the haven metal continued to increase amid the rising uncertainty.Gold was bolstered by the prevailing debt woes with Ireland rating cut to junk by Moody’s and Fitch confirmed the lowest rating in the world to Greece trailing other agencies.
The dollar also weakened as debt woes spread to the United States with the ongoing debate over raising the debt ceiling which kept the dollar weak and the sentiment shaky.
Bernanke also added to the pressure on the market after he signaled in the semi-annual testimony that the Fed is ready to add more stimuli to support the economic recovery that has been waning.
This week, the focus will remain on the key debt issues in Europe and the United States especially as investors will start a new week with reaction to the European banks stress tests results and also the decision from the Congressional leaders as they are expected to provide Obama with the decision by this weekend.
Also, investors will assess the health of the banking sector in Europe and the extent of sovereign debt holding with the results of stress tests. Eyes will also be on any developments regarding the Greek aid package with no new information about the matter.
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