Crude Oil & Natural Gas Archives - Page 19 of 23

July 9, 2014

Commodities weak except for crude

Chinese stocks test long-term support
Commodities weaken
Crude oil remains high

China’s Shanghai Composite Index continues to test long-term support. 13-Week Twiggs Momentum holding below zero suggests continuation of the primary down-trend.

Shanghai Composite Index

Commodity prices are weakening, with Dow Jones-UBS Commodity Index breaking support at 133 to warn of another test of long-term support at 122/124. Reversal of 13-week Twiggs Momentum below zero would strengthen the signal.

Dow Jones UBS Commodities Index

Crude oil remains strong. The chart below plots WTI Light Crude over the consumer price index. The ratio is well above the historical average and is acting as a significant hand-brake on the post-GFC recovery.

Nymex WTI Crude

Considering the holes made in GDP (the green line) by crude oil spikes over the last 40 years, you can understand why Janet Yellen is reluctant to raise interest rates despite falling unemployment.

Nymex WTI Crude

July 3, 2014

Enough to make Gazputin grin

Chinese stocks drift lower
Crude oil rising
Other commodities weak

China’s Shanghai Composite Index continues to drift lower on the long-term, monthly chart.

Shanghai Composite Index

Apart from crude oil, commodity prices have fared little better. But crude plays such a dominant role in most commodity indices that they appear more buoyant. Dow Jones-UBS Commodity Index rallied to 140 before retracing for another test of primary support. Oscillation of 13-week Twiggs Momentum around zero, however, does not suggest a significant trend.

Dow Jones UBS Commodities Index

Crude oil is doing a lot better, heading for another test of $110/barrel on the back of supply threats from geo-political tensions. The ascending triangle is very large, but breakout would suggest a long-term target of the 2008 high at $145*.

Brent Crude and Nymex Crude

* Target calculation: 110 + ( 110 – 75 ) = 145

…Enough to make even Gazputin grin.

May 3, 2014

Crude and commodities retrace

The Dow Jones-UBS Commodity Index is again retracing to test support at 133/134, but is clearly in a primary up-trend (with breakout above 134 following earlier recovery of 13-week Twiggs Momentum above zero). Target for the advance is 144*. Reversal below 133 is unlikely, but would warn of a bull trap.

Dow Jones UBS Commodities Index

* Target calculation: 134 + ( 134 – 124 ) = 144

Crude oil, the most highly-traded commodity, is also retracing, with Nymex Light Crude headed for a test of primary support at $98/barrel*. Breach of support would signal a primary down-trend. Respect of support would indicate another test of $105. Brent crude, while declining slightly, would need to penetrate support at $104/barrel to signal a down-trend.

Brent Crude and Nymex Crude

* Target calculation: 105 + ( 105 – 98 ) = 112

April 14, 2014

Crude and commodities rising

Nymex Light Crude is headed for a test of resistance at $105/barrel*. Recovery of 13-week Momentum above zero indicates a primary up-trend. Breakout above $105 would confirm, offering a target of $112*. Brent crude, however, continues to range between $104 and $112/barrel.

Brent Crude and Nymex Crude

* Target calculation: 105 + ( 105 – 98 ) = 112

The Dow Jones-UBS Commodity Index respected its new support level at 134, confirming a primary up-trend. The signal reinforces earlier recovery of 13-week Twiggs Momentum above zero. Target for the advance is 143. Reversal below 134 is now unlikely, but would warn of a bull trap.

Dow Jones UBS Commodities Index

* Target calculation: 134 + ( 134 – 125 ) = 143

March 26, 2014

Depleting Putin’s war chest

From Quartz:

The “First Law of Petropolitics,” coined by New York Times columnist Tom Friedman… states that when oil prices are high, the leaders of petro-states can become demanding and belligerent; when they are low, they are more prone to be pussycats.

Oil prices at elevated levels explain Russian belligerence. The graph below shows Brent Crude prices adjusted by the (US) consumer price index to reflect growth in real crude prices over the last decade. To bring crude prices down to pre-2005 levels will be no small feat.

Real Crude Oil Prices

February 20, 2014

Crude and commodities signal recovery

The Dow Jones-UBS Commodity Index followed through above resistance at 128, after breaking its descending trendline, completing a double bottom reversal with a target of 134*. Breakout above 134 would confirm a primary up-trend.

Dow Jones UBS Commodities Index

* Target calculation: 128 + ( 128 – 122 ) = 134

Nymex Light Crude followed, completing a large double bottom reversal, with a target of $110/barrel*. Recovery of 13-week Momentum above zero indicates a primary up-trend. Brent crude continues to range between $106 and $112/barrel.

Brent Crude and Nymex Crude

* Target calculation: 100 + ( 100 – 90 ) = 110

Rising commodity prices suggest that the global economy is recovering, but copper (widely considered a bellwether for the global economy) has yet to follow. Bullish divergence on 13-week Twiggs Momentum favors an upward breakout. Breakout above $7500/tonne (and the descending trendline) would signal a primary up-trend.

Copper

February 11, 2014

Crude double bottom

Nymex Light Crude is testing resistance at $100/barrel. Breakout would complete a double bottom reversal, offering a target of $108/barrel*. Respect of resistance, however, would suggest another test of primary support at $92. Recovery of US stocks would lift crude prices in anticipation of increased demand. Brent crude is more directionless, affected by both UK North Sea supply concerns as well as reports of increased output from Libya.

Brent Crude and Nymex Crude

* Target calculation: 100 + ( 100 – 92 ) = 108

February 5, 2014

Crude: Nymex WTI down-trend

Nymex Light Crude is headed for another test of resistance at $100/barrel. Respect of resistance is likely, given the primary down-trend, and would suggest another test of primary support at $92/barrel. Breach of primary support would offer a target of $84/barrel*. Recovery above $100 is unlikely and another 13-week Twiggs Momentum peak below zero would strengthen the bear signal. Brent crude is headed for another test of support at $104/barrel. Breach would join Nymex crude in a primary down-trend.

Brent Crude and Nymex Crude

* Target calculation: 92 – ( 100 – 92 ) = 84

January 29, 2014

Light crude finds support

Nymex Light Crude found support at $92/barrel. Penetration of the descending trendline would suggest trend weakness, while respect would signal another test of primary support at $92/barrel. Breach of primary support would offer a target of $84/barrel*. Recovery above $100 is unlikely and another 13-week Twiggs Momentum peak below zero would indicate a strong down-trend. Brent crude continues to drift sideways, reflecting global supply constraints; breach of $104 would warn of a down-trend.

Brent Crude and Nymex Crude

* Target calculation: 92 – ( 100 – 92 ) = 84

January 22, 2014

Crude and commodities still bearish

Nymex crude continues its downward trend. Respect of the descending trendline would warn of further weakness, while breach of support at $92 would indicate a decline to $84/barrel*. Recovery above $100 is unlikely, with 13-week Twiggs Momentum declining below zero. Brent crude continues its consolidation above $105, reflecting global supply constraints. Breach of $105 would warn of a down-trend.

Brent Crude and Nymex Crude

* Target calculation: 92 – ( 100 – 92 ) = 84

Commodities also continue their primary down-trend, encouraged by a falling Shanghai Composite Index. Bullish divergence on Dow Jones-UBS Commodity Index 13-week Twiggs Momentum, however, warns that a bottom is forming. Breach of the descending trendline would strengthen the signal — as would recovery of Momentum above zero. Breakout above 128 would signal a primary up-trend: a bullish sign for resources stocks.

Dow Jones UBS Commodities Index