Commodities Technical And Fundamental Analysis For The Week Of July 25, 2011

Light Sweet Crude

The week has been bullish for this contract, but we still see the $100 area act as a massive barrier. However, on the daily charts it is clear that every dip becomes more and more shallow. This bodes well for bulls, and suggests that the $100 mark eventually gives way, and the market goes to $105 right away.


The Brent markets are forming massive buying pressure under the $120 area, and as soon as we can get over that – we should see a bump to $125 right away, and very possibly higher than that. We like buying dips, as they are getting more and more shallow, and of course would buy a daily close over the $120 level.

Oil Fundamental Analysis for the Week of July 25, 2011

Crude oil prices extended the gains 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 EU leaders agreed a deal to help Greece with its debt crisis, which boosted demand for higher yielding assets, 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 3.7 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. Moreover, traders will turn their focus to GDP figures from the United States for the second quarter, where it’s expected that the U.S. economy remained weak during the second quarter of 2011.

Highlights for this week that will probably affect the Crude Oil direction are:

Monday July 25:

Markets will continue to focus on the U.S. debt issue and whether lawmakers have reached an agreement or not.

Tuesday July 26:

The United States will start the week at 14:00 GMT with the Consumer Confidence survey for July which is expected with a slight decline to 57.9 from 58.5.

At the same time we also have the New Home Sales for June which are expected with 0.3% rebound following 2.1% drop to 320 thousand from 319 thousand.

Wednesday July 27:

The United States will start with the Durable Goods Orders for June at 12:30 GMT, orders are expected with 0.3% rise following 1.9% rise and excluding transportation to rise by 0.6% easing from 1.9% rise in May.

At 14:30 GMT, the EIA report for crude oil inventories will be released for the week ending July 22, where last week crude oil inventories decreased by 3.7 million barrels.

At 18:00 GMT we have the Fed’s Beige Book to detail the latest developments across the U.S. districts and prepare the markets for the coming FOMC and whether the slowing recovery will prompt the Federal Reserve to start further monetary stimulus to support growth.

Thursday July 28:

At 12:30 GMT we have the usual weekly jobless claims after they rose unexpectedly last week by 418,000.

At 14:00 GMT the Pending Home Sales for June are due and expected with 2.0% drop following 8.2% surge in May.

Friday July 29:

Friday will about the United States and the state of the economy. The advanced second quarter GDP will be the focus for investors this week at 12:30 GMT with the expectations growth slowed into the second quarter with 1.7% expansion following 1.9% in the first quarter. Personal consumption is expected to have slowed to 1.0% following 2.2% the previous quarter and Core PCE expected with a rise on the quarter by 2.2% following 1.6%.

At 12:30 GMT, Canada will release the Gross Domestic Product for the month of May, where the Canadian economy is expected to expand by 0.1% in May, following the prior flat estimate back in April, and compared with a year earlier, GDP expanded in April by 2.8%.

U.S. data will continue at 13:45 GMT with the Chicago PMI for July and expected slightly lower at 60.0 from 61.1. Following will be the University of Michigan Consumer Confidence final estimate for July at 13:55 GMT and expected to be revised higher to 64.0 from 63.8.

Natural Gas Technical Analysis for the Week of July 25, 2011

The natural gas markets have looked very range bound over the last several months, and is appears that we are going to continue to trade within the greater range of $4 to $5. The market has several intermediate levels, but from a larger point of view, you can simply buy at the bottom, and sell at the top. The market seems to be very comfortable in this range, and as such – you should take advantage of it.

Natural Gas Fundamental Analysis for July 25, 2011

Natural gas prices dropped last week on speculations of milder weather conditions during this upcoming week in the Midwest and East of the United States, which led to speculations of falling demand for power-plant fuel.

On the other hand, the rise in natural gas inventories last week came in line with expectations and slightly contributed to the drop in natural gas prices, where the EIA report showed that natural gas stockpiles increased last week by 60 billion cubic feet, in line with median estimates and down from the prior estimate of 84 BCF.

Based on weather forecasts for moderating weather conditions in the United States early next week, we should expect natural gas prices to drop, nonetheless, temperatures are expected to rise back towards the end of the week and that could lead natural gas prices to rise back, since it could boost demand for power-plant fuel, and accordingly push natural gas prices higher. Overall, we expect another week full of fluctuations.

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 22, where the prior report showed that natural gas inventories increased by 60 billion cubic feet.

Gold Technical Analysis for the Week of July 25, 2011

The gold markets have found a lot of support recently, mainly because of various debt issues on both sides of the Atlantic. The reality is that the market is somewhat held hostage by the wheeling and dealing coming out of D.C., and when the debt limit deal is finally agreed upon there will more than likely be a selloff in this commodity. It has sold off every time there is even a hint of an agreement, and rebounded every time there has been a denial of the agreement. Because of that, the market has already shown its hand. We are waiting to have the agreement announced, and then will be buying the selloff.

Gold Fundamental Analysis for the Week of July 25, 2011

It was a very volatile week for gold and the metal continued to hold hear the new historic high around $1,600 per ounce and the metal is still supported by the prevailing uncertainty in Europe, the U.S. and over the global recovery.

This week, the metal’s outlook will still be determined by the ongoing debate in the market over the capability of the euro area leaders’ decisions to stem the crisis and whether the U.S. will finally reach the needed decision to raise the debt ceiling.

The euro area leaders finally announced a new bailout for Greece around 159 billion euros alongside extending the maturity on the EFSF loans to 15 years and cutting the interest to 3.5%. Also, the leaders expanded the scope of EFSF providing credit lines to states preemptively before they are forced to ask for assistance, also allow loans to governments to recapitalize banks and above all allow the ECB to intervene in the bond market if deemed necessary.

We saw the initial reaction positive on the market with the minimal invasive involvement of the private sector, yet they will still amount for nearly 50 billion of the bailout for Greece as the rest 109 billion will be covered by the euro area and the IMF.

This week will be about the assessment of the banks involvement as they write-down Greek debt as part of the bond buyback program. Fitch said that Greece will be under interim default and will soon return to a low investment-grade rating.

Also, from the United States the focus will be on the debt ceiling debate as the August 02 deadline approaches. Some signs of progress were sensed and that might be the reason for gold to surrender the remaining upside support.

Growth data from the United Kingdom and the United States for the second quarter will also be a signal to watch for the outlook for the global recovery, where the expansion in both nations is expected to have slowed in the three months through June and that will surely offset the bearishness from dominating the metal.

Some unwinding of pessimism is expected in the week with the euro leaders’ decisions and rising expectations the U.S. will take the decision to raise the debt limit. This might pressure gold into volatility for most of the week and downside pressures, yet the overall bullishness for the metal is surely intact with interim default status on Greece, slowing growth and high inflation across major economies, and rising speculation for further stimulus support from the Federal Reserve as the recovery wanes.

Read about crude oil and the oil price at


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