Crude Oil Price Forecast – Crude Oil Markets Continue To Fall Apart

WTI Crude Oil

The West Texas Intermediate Crude Oil market has broken down rather significantly during the trading session on Thursday, as we continue to see a lot of markets worry about the spreading of the coronavirus and its impact on the demand for crude oil. As we have sliced down so drastically, it looks as if we will test the $45 level in the rallies should continue to be selling opportunities going forward. With that, I believe that the $50 level now offers a significant amount of resistance that will come into play and therefore shorting signs of exhaustion will more than likely continue to reap benefits for those who are patient enough to wait for them.

Crude Oil Video 28.02.20

Brent

Brent markets also have broken down significantly during the trading session on Thursday to press the $50 level. The $50 level underneath is a large, round, psychologically significant figure the people will be paying attention to, and the fact that we bounce from there suggests that at least the technical analysis standpoint of that level is still significant. That being said, it does look like any rally at this point should be a selling opportunity, especially near the $53 level. The $55 level above is the top of that resistance barrier, and if we can break above there then the market may have an argument towards the $60 level. All things being equal, this is a market that continues to suffer at the hands of the virus outbreak, and the slowing global demand, not only in Asia, but possibly in the European Union as well.

Natural Gas Price Forecast – Natural Gas Markets Plumbing Again as Inventory Number Disappoints

The natural gas markets continue to show signs of resistance to any move higher as the market shows a large amount of oversupply is still a major problem. The market continues to see a lot of negativity every time it tries to rally, and therefore it’s likely that we could go much lower. The $1.60 level underneath is a major level of support from a longer-term standpoint, so that might be where we are heading.

NATGAS Video 28.02.20

The inventory figure during the trading session on Thursday was very disappointing, as it was -143 billion instead of the expected -158 billion. In other words, we are not burning through the supply quick enough and then to add more fear is the fact that the coronavirus may slow down a lot of industrial use for natural gas, just as temperatures will be warming up in the northern hemisphere. In other words, there is nothing to think that this market is going to be able to rally for a significant amount of time, with perhaps the exception of the occasional spike higher due to the inevitable cold snaps that we get at the end of the wintertime. That’s a short-term opportunity for buyers, but quite frankly sets up a nice selling opportunity for those who are a little smarter about it.

Eventually, we will have the bankruptcies necessary to bring down the supply, but we aren’t there yet. Low natural gas prices continue to decimate the profits of any of the companies that are involved in this market, and things continue to look extraordinarily bleak. Selling rallies continues to be how I trade this market.

Gold Price Forecast – Gold Markets Continue to Attract Inflows

Gold markets rallied a bit during the trading session on Thursday as we continue to see a lot of selling pressure out there. Quite frankly, the market will continue to struggle with the idea of safety, and of course gold is one of the first places people look. With the US dollar kitten hit yet again, that also puts more upward pressure on precious metals in general. That being said though, I do think that even if the US dollar started to strengthen, it could very well be a safety thing, so therefore the gold market may completely ignore that as it had a couple of weeks ago.

Gold Price Predictions Video 28.02.20

Looking at this chart, I think the most obvious target is $1700 above, but quite frankly I think we break above there given enough time. Once we do, then the market is likely to continue going even further, perhaps reaching towards the $1750 level. Pullbacks at this point should continue to find plenty of value, especially with the $1600 level being an obvious area where we had previously seen resistance. The idea of “market memory” does make sense in this area, and it’s likely that the technical trading community will be paying close attention. I have no interest in shorting, and now it’s just a matter of finding some type of supportive area or little bit of a bounce in order to get involved. Value hunting is the best way going forward, as it allows you to buy an asset “on sale.” That’s cannot be any different here.

Silver Daily Forecast – Silver Slide Resumes, is $17.00 Next?

Silver has lost ground on Thursday. Currently, silver is trading at $17.83, down $0.15 or 0.92% the day. 

Silver Falls on Demand Fears

Silver continues to show sharp swings. After gaining 4.3% last week, silver has slumped this week, surrendering most of these gains. The metal has benefited from its status as a safe-haven asset, but it is also used as an industrial metal. This means that the economic chaos caused by the coronavirus has fueled concerns that weaker growth will reduce the demand for silver. For example, one industrial use of silver is in photovoltaic (PV), which is a key component in the manufacture of solar panels. China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. The virus has also spread to South Korea, another industrial hub for silver.

Meanwhile, gold prices continue to move higher, as the safe-haven asset has attracted investors who are becoming increasingly alarmed as the coronavirus has now spread to Europe and the first confirmed case has been reported in the United States. Earlier in the week, gold touched $1689, its highest level since January 2013. It appears that the metal is poised to break above the lofty $1700 level.

 

Silver Technical Analysis

Silver continues to lose ground this week. The key line of 18.00 has switched to a resistance role, but it is a weak line. Above, we have resistance at 18.60, followed by 19.20.

On the downside, the 50-day EMA is situated at 17.81 and is touching the candlesticks. The next support line is at 17.50. The 200-EMA is at 17.10, followed immediately by the round number of 17.00.

Natural Gas Price Fundamental Daily Forecast – Prices Plunge on Huge Shift Toward Milder Temperature Trends

Natural gas futures are plunging on Thursday, shortly before the release of the U.S. Energy information Administration’s weekly storage report. The move came as a surprise to some who were banking on the return of cold weather over the short-term and firmer cash prices to provide support. The steep drop is also likely to offset a bullish EIA report because it shouldn’t really matter much to traders what happened last week.

At 15:17 GMT, April natural gas is trading $1.752, down $0.084 or -4.63%.

Natural Gas Intelligence (NGI) said early Thursday that a large milder shift in one of the major weather models overnight is responsible for sending natural gas prices tumbling on Thursday.

NGI further reported that the European model underwent “big milder trends” overnight, shedding 17 heating degree days (HDD) compared to its Wednesday afternoon run and 27 HDD versus 24 hours prior, according to NatGasWeather.

The model showed “not nearly as much cold air into the northern U.S. March 5-8 by seeing a weather system over Southern Canada only providing a minor glancing blow,” the forecaster said. Based on the warmer shift overnight, “the natural gas markets are going to view weather patterns as being warm/bearish after the current cold shot sweeping across the northern and eastern U.S. exits Saturday.

U.S. Energy Information Administration Weekly Storage report

On Thursday, the EIA reported that domestic supplies of natural gas fell by 143 for the week-ending February 21. Total stocks now stand at 2,200 trillion cubic feet, up 637 billion cubic feet from a year ago, and 179 billion cubic feet above the five-year average, the government said.

Going into the report, traders were looking for a larger-than-average withdrawal for the week-ending February 21.

A Bloomberg survey predicted withdrawals ranging from 145 Bcf to 165 Bcf, with a median of 156 Bcf. Polls by the Wall Street Journal and Reuters produced similar results, while NGI’s model projected a pull of 152 Bcf.

The EIA recorded a 167 Bcf draw for the similar week last year, while the five-year average withdrawal stands at 122 Bcf.

Daily Forecast

Traders pressed prices lower following the EIA’s weekly storage report since it came in below the estimates. Furthermore, given the bearish shift in the forecast, it would’ve taken a huge draw to trigger any kind of a short-covering rally.

Price of Gold Fundamental Daily Forecast – Fed Rate Cut May Be Fully Priced In for April

Gold prices are trading higher on Thursday after a late pick-up in demand the previous session following the test of a one-week low. After a surge to its highest level in seven years on Monday, prices have drifted mostly sideways to lower. The move isn’t reflecting a change in the bullish fundamentals, but rather the thought that prices are relatively too expensive.

At 15:44 GMT, April Comex gold is trading $1651.10, up $8.00 or +0.50%.

There is no doubt that gold has been a tricky market to analyze and trade this week because it only makes sense that prices should be moving sharply higher in response to a steep plunge in U.S. equity markets and a drop in 10-year U.S. Treasury yields to a record low on Thursday. The price action suggests that gold buyers may have been well ahead of the rest of the markets when it made its recent surge while U.S. stocks were hitting record highs.

Lower Interest Rates Reduce Opportunity Cost of Holding Non-Yielding Gold

Growing expectations that central banks will certainly need to take action if coronavirus continues to spread, particularly outside China, is helping to prop up prices.

Investors have increased bets for a rate cut by the U.S. Federal Reserve to ease the impact on the economy, according to an analysis of Fed funds futures compiled by the CME Group. Money markets have also priced in cuts by the European Central Bank and Bank of England.

“Markets are already pricing in some decent cuts to rates across the globe so that’s the clear driver of (gold) prices and demand,” ANZ’s Hynes said.

Money markets are now fully pricing in one 25 basis point cut in the Fed’s rate by April and three by March 2021. Expectations for a European Central Bank (ECB) rate cut have also risen; money markets now price in more than 80% chance of a 10 basis point rate cut in July.

Central Banks Still Reluctant to Call for Rate Cuts

Not all central banks are in a hurry to cut rates, however, with U.S. officials saying it’s too early to consider a rate cut, and policymakers in Australia and New Zealand feeling a rate cut from current levels may not have the same impact on the economy as a rate cut from higher levels.

Furthermore, in a surprise move, the Bank of Korea kept its benchmark policy rate unchanged. Central bank policymakers surprised the financial markets by holding its benchmark interest rate at 1.25% when analysts polled by Reuters were expecting a rate cut. That was despite a recent spike in the number of coronavirus cases in the country threatening its economy.

Aberdeen Standard Investments’ Leong Lin Jing described the Bank of Korea’s interest rate decision as “a little bit curious.”

“Bank of Korea has had a habit of being a little bit behind the curve … when acknowledging that growth is slowing down,” Leong said.

Daily Forecast

The gold market chart pattern clearly indicates a U.S. rate cut has been priced into the market. Now traders are playing the waiting game as they wait for U.S. policymakers to come aboard. Prices could sit in a range until economic data that the Fed can’t ignore clearly shows the need for a rate cut sooner than expected.

You see the drop in Treasury yields means investors want a rate cut, the rise in gold indicates traders expect a rate cut in April, but the Fed doesn’t always give the markets what they want.

Oil Price Fundamental Daily Forecast – Traders Betting on Drop in US Gasoline Demand as Virus Spreads

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Thursday shortly after the regular session opening. Brent crude only is trading below the major bottom put in at $52.78 on December 24, 2018. Meanwhile, U.S. crude oil is rapidly moving closer to its next downside target, the December 24, 2018 min bottom at $45.92.

At 13:07 GMT, April WTI crude oil is at $47.29, down 1.44 or -2.98% and April Brent crude oil is at $51.93, down $1.50 or -2.81%.

Coronavirus Continues to Cause Demand Worries

Oil prices are down for a fifth day on Thursday as a growing number of new coronavirus cases outside of China fuelled fears of a pandemic which could slow the global economy and lower crude demand.

On Wednesday, for the first time ever, the number of new coronavirus infections outside China, the source of the outbreak, exceeded the number of new Chinese cases.

Late Wednesday, Donald Trump tried to calm investor nerves by telling Americans that the risk from coronavirus remained “very low,” and placed Vice President Mike Pence in charge of the U.S. response to the looming global health crisis.

He also said the spread of the virus in the United States was not “inevitable” and then went on to say: “It probably will, it possibly will. It could be at a very small level, or it could be at a larger level. Whatever happens we’re totally prepared.”

Global Fuel Demand Limited

The coronavirus’ spread to large international economies including South Korea, Japan and Italy has caused concerns that fuel demand growth will be limited. On Wednesday, consultants Facts Global Energy forecast oil demand growth will only be 60,000 barrels per day in 2020, or practically “zero”, because of the widening outbreak.

Coronavirus Spread in US Fuels Fresh Round of Selling

Speculators, betting that coronavirus may spread in the United States, prompted a fresh round of selling on Wednesday that has carried over into Thursday’s session. If the outbreak continues to worsen in the U.S. then look for energy prices to continue to fall with the move led by gasoline. The United States is the world’s largest oil producer and consumer.

Gasoline stockpiles dropped by 2.7 million barrels in the week to February 21 to 256.4 million, the U.S. Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.

U.S. crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA report showed. This was less than the 2-million barrel rise analysts had expected.

Daily Forecast

The outlook for crude oil prices is bearish. If April Brent crude oil prices fall below $50.00 per barrel, expect OPEC and its allies to sit up and take notice. OPEC+ plans to meet in Vienna over March 5-6.

Gold Daily News: Thursday, February 27

The daily trading range reached over 30 dollars and it shows how high short-term volatility is. Investors were buying the safe-haven asset amid corona virus outbreak, economic slowdown fears recently. But gold has retraced a big chunk of that rally after bouncing off $1,700 mark.

Gold is gaining 0.7% this morning, as corona virus fears continue to dominate financial markets. What about the other precious metals? Silver lost 1.52% on Wednesday, as it got back to its Tuesday’s daily low. And the price fell below $18 mark. Silver is currently 0.9% higher. Platinum lost 1.88% on Tuesday, and right now it is trading 0.2% higher.

The metal bounced off $1,000 mark and it is getting closer to $900. Palladium was the only gainer again on Wednesday, as it advanced by 0.72%. However, it is retracing some of the short-term uptrend today, as it trades 1.2% lower.

The financial markets went risk-off since last Friday, as corona virus fears came back again. The economic data releases seem less important than the mentioned virus scare recently. Yesterday’s New Home Sales number was better than expected but it didn’t improve investors’ sentiment that much. Today we will have the Durable Goods Orders along with Preliminary GDP number release at 8:30 a.m. Then at 10:00 the Pending Home Sales data will be released. Take a look at our Monday’s Market News Report to find out more!

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Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care


Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Crude Daily Forecast – Crude Slips Below $48 on Demand Concerns

Crude prices have fallen for a fifth straight day.  Currently, U.S. crude oil is trading at $47.40, down $1.03 or 2.1% on the day. Brent crude oil is trading at $52.14, down $1.22 or 2.27%.

Crude Sags as Coronavirus Spreads

It has been a dismal week for crude, which has plummeted 10.8 percent. Investor risk apprehension continues to rise as the coronavirus outbreak has spread to Western Europe. Italy has reported 11 fatalities, while France confirmed its second victim on Wednesday. Spain, Austria and Switzerland have also reported coronavirus cases. It appears to be only a case of time before the virus reaches the United States.

The coronavirus is taking a toll on the global economy, with the disruption to supply chains and the plunge in the global tourism industry. The drop in economic activity has also weighed on the demand for crude, dragging prices lower. Crude fell to a daily low of 47.35 on Thursday, its lowest level since January 2018. With analysts warning that things could worsen before they improve, oil prices will likely remain under downward pressure.

EIA Shows Unexpectedly Small Surplus

The U.S. Department of Energy crude inventory report indicated a small surplus of 0.5 million barrels. This was well below the forecast of 2.3 million barrels. This reading was almost a repeat of the gain of 0.4 million a week earlier. Although the surplus was smaller than expected, the reading failed to stem crude’s slide.

Technical Analysis

WTI/USD continues to fall and break below support levels this week. The pair tested 47.50 earlier on Thursday and this line remains fluid. Below, there is support at 45.50. On the upside, there is resistance at 49.50, followed by resistance at 52.50.

WTI/USD 1-Day Chart

WHO, The Markets New Grim Reaper

Markets

After an up and down session with trader vacillating on the economic impact, the coronavirus will have on global growth, S&P500 was more or less flat heading into the close, having spent most of the session in slightly positive territory. Most European bourses saw very modest gains, though Asia was weaker. US fixed income rallied further, however, US10Y yields down a further 3bps to 1.33%. Oil down another 2.4%.

But for risk concerns, the bearer of the truth was WHO reporting that 427 new cases of the virus were confirmed Tuesday outside China, compared with 411 in mainland China: the first time that new case numbers outside China were higher than those from within. Of course, the spread beyond China borders has been at the core of the market’s worries since the weekend news flow pointed to a potential supper spreader around the globe and saw risk U-turn lower.

Previous crisis playbooks have all revolved around buying the dip in equities, so I wonder just how much further the fire sale will go before the market at least starts to scale in again. We saw an attempt at a bounce in the New York session before the markets new Grim Reaper, the WHO, raised its ugly head again.

But based on last night’s price action, it does appear that any bounce in stocks is likely to be short-lived. And eventually, the markets could fall deeper as investors start to think what’s the point of trying to pick the bottom in the short term.

Looking further down the line in 2020, the market continues to price in more significant haircuts to large parts of the global economy. At the same time, the idea of a v-shaped recovery seems to be the new castle in the sky. Admittedly things can pivot quickly, but if you believed in the narrative, that easy monetary policy was mainly fuelling the risk rally. Then arguably, you are going to want to see definitive signs of a Fed pivot, primarily as the fundamentals are pointing the other way before feeling confident about buying equities. But on that front, the Fed messaging continues to signal “still too soon.”

On the G-20 coordinated stimulus front and for those looking for shock and awe fiscal delivery from Europe was always likely to be disappointed. News about Germany intending to pause its debt brake sparked a recovery in stocks and a sell-off in Bunds, but it was short-lived. Still, ultimately, the cumulative effect of similarly measured responses around the world might be enough to grease the wheels of the global economy.

Oil Markets 

Traders remain hyper skittish, and oil rallies short-lived as self first ask questions later will be the theme if there is still even the slightest concern over the virus outbreak becoming a pandemic. There has been another big hit to oil on renewed super spreader coronavirus fears.

And as expected, the EIA inventory data which under normal conditions would have been bullish for oil price fell through the cracks as uncertainty over coronavirus will take its toll on oil demand sentiment until its impact can be adequately quantified.

Next week’s OPEC+ meeting should be a positive catalyst, but the fear here is that the outcome might be consigned to oblivion with the market singular focused on virus spread, which has unceremoniously shown up on the doorsteps of the US market. Still, OPEC + has enough weight, and with a hefty production cut at a minimum, it should offer a backstop, and with a problem G-20 concerted stimulus effort surely the bottom can’t be too far from here. In addition, with WTI below $ 48 it could also trigger the self-correcting US supply mechanism as more shale wells go offline due to breakeven concerns.

The Straw that could break the Oil market back?

The biggest concern and the straw that could possibly break the oil markets back is the susceptibility of the US market to this insidious virus, which from a risk perspective needs to rank beyond all other. If the virus spread rapidly in the US, you can’t unscramble that egg.

The most glaring problem is that the US has only tested 426 people, while South Korea has tested 35,000. The US guidelines were only to check those who displayed respiratory symptoms and had recently traveled to China or had close contact with an infected person. The problem is that coronavirus is asymptomatic — it is contagious before the symptoms show.

China had come in for some criticism over the handling of the outbreak. However, as the virus spreads global, those “harsh” measures appear to have been the right thing to do and arguably its Europe and US efforts that could be too complacent and porous. And not surprisingly, any excuse to sell still feels like the sentiment in the market right now.

Gold Markets

It’s too early to cap gold prices as we are not in business as usual market conditions. But of course, there is no denying gold’s safe-haven credentials have been questioned in light of a gold decline as Treasury yields also fell precipitously this week, which should have been extremely positive for gold.

But since we’re only into day three of demand depletion and given the position build of late, this week’s washout still fits into the “healthy correction” category although we might revise that view on a break of $1600.

However, as profit-taking and selling to cover margin calls in the equity markets is decreasing, so the chances of gold rebounding increase propelled by ongoing COVID-19 concerns amid volatile financial conditions.

Beyond the constant stream of buying the dip analysts banter and for investors that have sizable gold positions. there are some concerns

Government spending commitments to contain the virus and e might push bond yields higher and weigh on gold appeal, especially from the fiscal side of the equation. While the Fed advocating for patience doesn’t provide a significant impulse to push gold through $1700. But with yields so low suggesting gold downside should be limited a delayed policy market response could funnel more buying of gold as the longer the Fed sits on their hand, the worse stock market conditions could get

Currency Markets 

The US Dollar

The US dollar has lost its safe-haven status with the coronavirus arriving on the US doorstep. With Fed rate cut probabilities on the rise US bond yields sliding ,fortunately for the global risk markets, the US dollar has started to weaken as reverse Yankee mania sets in.

Asia FX

Outside of the KRW and THB, which remains high beta to further jumps on coronavirus cases withing ASEAN proxies. Asia FX has remained fairly rangebound despite all the coronavirus upheaval around the globe. To no small degree, much of the sell-off Asia FX were priced into the curve ahead of the global equity market meltdown, and at the same time, the Yuan has remained tethered to the PBoC policy anchor by maintaining a stable policy fixing.

The Ringgit

Foreign investors sidestepped Fitch warning (seldom have lasting legs) and have resumed their demand for Malaysia bonds as the BNM rate cut expectations get to move forward. Its a small but positive move in these politically charged times, which continues to weigh on the Ringgit despite the succession scrim looking a bit less messy than at the start of the week. But when it comes to Malaysia politics, all bets are off.

Organic Corn Prices Break Below the $8 Level; Poised to Test 2016 Lows

Organic corn prices mid-west picked up at the farm have dropped below $8 per bushel level. Prices for spot loads are trading near $7.75, as farmers are clearing out their bins ahead of the planting season. There appears to be a concerted effort in the mid-west to purge spot organic corn, and consumers are lower their bids.

Merchandisers have quoted prices in the South-Central PA region at $10.65 per bushel for Q4, and with approximately a $2.5 freight and loading charge to reach the mid-west, Q4 prices should be trading near $8.15 for the Q4. Organic corn prices are poised to test support near the 2016 lows at $7.40.

There is a combination of issues that are dragging on prices. First, most consumers are covered for the balance of Q1 and Q2 fo 2020. There is plenty of corn around, in bins, looking for a home. Additionally, a decent quantity of the organic corn this year has a test weigh below 54. While some merchandisers will accept organic feed corn #2 at a 52-test weight with a discount (of approximately 5 cents per pound), others are rejecting the corn which is creating additional headwinds for prices.

There also appears to be strong demand for organic corn with test weights that would place it at #1, which is 56 and above. The Jacobsen has heard that there is a robust premium for #1 organic corn which could be up to $1 per bushel. This would be used to mix with lower test weight corn to achieve 54 test weight.

There is also an accelerating number of farmers concerned that there could be too much precipitation again in 2020. Their concern stems from a recent report from the National Weather Service who is warning there is a high risk of flooding again this spring in the mid-west especially in areas that are still saturated. Additionally, farmers are concerned that levee fixes will not take place expeditiously, which will buoy insurance premiums for affected areas.

 

US Stock Market Overview – Stocks Close Mixed; Nasdaq Outperforms; The Russell Drops Sharply

US stocks were mixed on Wednesday after initially rising, but the Dow and S&P moved into the red and remain underwater for the latter half of the trading session. The Nasdaq broke a 4-day losing streak driven by the FANG stocks which outperform. The Russell 200 was the worst-performing average declining by 1.2%. Oil prices were under significant pressure falling 3%, as concerns over the coronavirus continued to weigh on energy. All sectors in the S&P 500 index were lower driven down by Energy, Healthcare was the worst-performing sector. US home sales surged higher rising nearly 8%, driven by rising mortgage applications. The VIX volatility index slipped slightly but still remain buoyed above 27%.

US Home Sales Rise

The commerce department reported that US single-family homes raced to a 12-year high in January. New home sales jumped 7.9% to an annual rate of 764,000 units last month, the highest level since July 2007. December’s sales pace was revised up to 708,000 units from the previously reported 694,000 units. Expectations had been for new home sales, which account for about 12.3% of housing market sales, which would advance 3.5% to a pace of 710,000 units in January. New home sales jumped 30.3% in the Midwest to their highest level since October 2007.

The gain in home sales was driven by rising mortgage application volume which rose 1.5% last week from the previous week, according to the Mortgage Bankers Association. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 3.73% from 3.77%, with points decreasing to 0.27 from 0.28. Applications to refinance a home loan fell 1% for the week but were still 152% higher than a year ago.

Energy Inventories Rose

US crude oil inventories increased by 500 thousand barrels from the previous week. At 443.3 million barrels, crude oil inventories are about 3% below the five year average for this time of year. Gasoline inventories decreased by 2.7 million barrels last week and are about 2% above the five year average for this time of year. Distillate fuel inventories decreased by 2.1 million barrels last week and are about 5% below the five year average for this time of year.

Natural Gas Price Prediction – Prices Slide Ahead of Inventory Report

Natural gas prices continued to consolidate on Wednesday ahead of Thursday inventory report from the Department of Energy. Expectations are for a reduction in stockpiles by 132 Bcf according to survey provider Estimize. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration. LNG exports have declined according to the latest data from the EIA. The spread of the coronavirus has reduced demand from China which has spilled over into US exports.

 

Technical Analysis

 

Natural gas slides 1.3% on Wednesday and are poised to test the February lows at 1.74. Resistance on natural gas is seen near the 10-day moving average at 1.87. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The MACD histogram is printing in the black with a sliding trajectory which points to consolidation.  The relative strength index moved lower and reflects accelerating negative momentum. The current reading of the RSI is 41, which is in the middle of the neutral range and reflects consolidation.

US LNG Exports Slide as Demand Declines

US LNG exports decrease week over week. Fourteen LNG vessels with a combined LNG-carrying capacity of 49 Bcf departed the United States between February 13 and February 19, according to shipping data compiled the EIA.

Gold Price Prediction – Prices Rise Forming Bull Flag Pattern

Gold prices rebounded on Wednesday as riskier assets and yields continued to whipsaw. The US 10-year yield hit a fresh all-time low at 1.294 before rebounding and closing at 1.33%. The markets remain skittish which buoyed the yellow metal as a new case of coronavirus was discovered in the US. President Trump is expected to hold a press conference this evening to describe to the American people how the US government will handle the coronavirus. US single-family home sales surged to a fresh 12-year high as mortgage rates continued to decline following treasury yields lower. Gold implied volatility, represented by the GVZ index calculated by the Chicago Board of Options Exchange, surged declined 7% after rallying 5% on Tuesday climbing 9% Monday.

Trade gold with FXTM

 

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Technical Analysis

 

Gold prices moved higher and are forming a bull flag continuation pattern. This is a pause that refreshes higher. Target resistance on gold prices is seen near the 2012 highs at 1,792. Support is seen near the 10-day moving average at 1,615. Short term momentum has turned negative as the fast stochastic recently generated a crossover sell signal. The current reading on the fast stochastic is 67, declining from overbought territory which reflects decelerating positive momentum. The MACD histogram is printing in the black with a declining trajectory which points to lower prices.

Home Sales Surge

The commerce department reported that US single-family homes raced to a 12-year high in January. New home sales jumped 7.9% to an annual rate of 764,000 units last month, the highest level since July 2007. December’s sales pace was revised up to 708,000 units from the previously reported 694,000 units. Expectations had been for new home sales, which account for about 12.3% of housing market sales, would advance 3.5% to a pace of 710,000 units in January.

Silver Price Forecast – Silver Markets Treading Water

Silver market participants continue to be a bit stagnant during the trading session on Wednesday after the initial gapped lower. That being the case, the market looks likely to see a lot of noise in this area as we are simply sitting at the 50 day EMA. Granted, the gap lower was negative but at this point it does look like we are trying to form some type of stand. The market did fill the gap, and now the question is where we go next? It’s pretty simple for me though, if we can break above the top of the candlestick for the trading session on Wednesday, then I believe silver rally significantly and towards the $19.00 level. That being said, I think it’s only a matter of time before we get that, but if we do break down from here then I think the next major support level is somewhere around $17.50 below which has turned the market to the upside the last time we hit it.

SILVER Video 27.02.20

Underneath that, then we have the 200 day EMA which is currently trading at the $17.09 level, which keeps the entire idea of an uptrend intact. One of the main things that is working against the silver market right now is the strength of the US dollar, but I think at this point it’s only a matter of time before we get more of a run towards precious metals as they are a huge safety commodity for most traders currently. The problem with silver though is the fact that it has a bit of an industrial component to it as well, so that may make it lag a bit it comes to its correlation gold.

Crude Oil Price Forecast – Crude Oil Markets Continue to Hang On To Vital Levels

WTI Crude Oil

The West Texas Intermediate Crude Oil market has broken down to a fresh, new low but then bounced enough to form a bit of support. It looks as if somebody out there is hanging onto the $50 level desperately, perhaps OPEC is starting to get involved in the market again. At this point, the inventory number and the US states was better than anticipated, although it was still a build. There was a refinery explosion on the West Coast which may have helped as well, but at this point if we bounce from here it’s likely that we will see sellers above. Ultimately, if we break down below the bottom of the candlestick, then we are likely to go down to the $47.50 level, possibly even the $45 level.

Crude Oil Video 27.02.20

Brent

Brent markets also have broken down initially during the trading session on Wednesday, testing the lows again but then bouncing at that point. Ultimately, this is a market that is very likely to find sellers above so I like the idea of showing signs of exhaustion, so that I can start selling yet again. Ultimately, if we break down below the bottom of the candlestick for the session on Wednesday, then we should continue to go down towards the $50 level. At this point, the market is very bearish, so rallies are to be faded as the demand for crude oil will continue to suffer due to the coronavirus and a slower global economic situation anyway. Crude oil continues to get hammered not only due to demand issues, but a stronger US dollar has not helped either.

Natural Gas Price Forecast – Natural Gas Markets Continue to Meander In Same Area

Natural gas markets have shown a bit of resiliency during the trading session on Wednesday, as the $1.80 level continues offer a bit of support. I believe that we are now trying to bounce around in a roughly $0.20 range, with the $2.00 level above should continue to offer plenty of resistance. Ultimately, believe that the market is trying to figure out what to do next, as we are at extraordinarily low levels. However, we are starting to head into the warmer months of the year in both Europe in the United States, and that is not going to do much for confidence when it comes to this market.

NATGAS Video 27.02.20

If we do break down below the lows, then I think we go looking towards the $1.60 level underneath, which is a historical low. If we can break above the $2.00 level, we would also be breaking above the 50 day EMA which of course is bullish, but I also see a significant amount of resistance near the $2.20 level. Ultimately, I am bearish this market, but I recognize we are more likely to see a bit of a continuation sideways more than anything else. The market participants continue to show quite a bit of back-and-forth, and I think this market is particularly prone to day trading more than anything else, but obviously you should keep a bit of a downward bias on anything you do. Buying this market, although possible, is obviously a very difficult to deal with. I do believe at this point in time that fading rallies is by far the easiest way to trade.

Gold Price Forecast – Gold Markets Stabilize

Gold markets have gapped lower to kick off the Wednesday session, but as you can see, we have gone back and forth since then, and it looks like gold is in fact trying to stabilize a bit. Ultimately, gold is a safe haven commodity, but the US dollar strengthening in the way it has is of course working against the value of gold in the short term. Longer-term, they both will continue to go higher in my estimation, as the coronavirus and a concern about global growth continues to overhang any type of risk appetite.

Gold Price Predictions Video 27.02.20

To the downside, I see the $1600 level has been rather supportive, and I also recognize that the 50 day EMA sitting just below there should continue to offer a lot of support as well. At this point, buying the dips continues to be the best way going forward, and therefore that is exactly how I will trade as it has served me so well. It’s not that we break down below the $1550 level that I would be concerned about gold, and right now that doesn’t look very likely to happen. Having said that, if it does do that than the $1500 level will certainly be tested right along with the 200 day EMA. Longer-term, I think we are trying to build up enough pressure to break above the $1700 level but it’s going to take a lot of effort to make that happen. Buying the dips has worked, and it should continue to do so from everything that I’ve seen over the last several months.

Silver Sliding on Global Growth Fears

Silver is slightly lower on Wednesday, after plunging over 3.3% on Tuesday. Currently, silver is trading at $17.90, down $0.10 or 0.56% the day. 

Silver Falls as Industrial Use Declines

After a strong run in which silver gained over 6 percent, the metal has reversed directions and coughed up most of those gains, falling close to 4 percent. Silver benefited from its position as a safe-haven asset, but the metal is also used as an industrial metal. One key industrial use is in photovoltaic (PV, which is a key component in the manufacture of solar panels. and China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. The virus has also spread to South Korea, another industrial hub for silver.

Coronavirus Reaches Western Europe

It has been a dreadful week for crude, which has slumped 7.1 percent. Investor risk apprehension continues to rise as the coronavirus outbreak has spread to Western Europe. Italy has reported 11 fatalities, while France confirmed its second victim on Wednesday. Spain, Austria and Switzerland have also reported coronavirus cases. The European Union had considered imposing border controls but has decided that such a severe move would do little to contain the virus.

Silver Technical Analysis

Silver continues to lose ground this week. The pair tested the symbolic line of 18.00 on Tuesday and has dropped to a daily low of 17.79 in the Wednesday session. Below, the 50-day EMA is situated at 17.81 and is touching the candlesticks. The next support line is at 17.50. The 200-EMA is at 17.11, followed immediately by the round number of 17.00.

On the upside, 18.00 is an immediate resistance line. Above, we have resistance at 18.60, followed by 19.20.

Gold Price Futures (GC) Technical Analysis – Buyers Looking for Value Between $1628.10 and $1604.80

Gold futures are trading lower on Wednesday shortly after the regular session opening. Firming Treasury yields and calls for a higher opening in the U.S. stock market are encouraging long investors to book profits.

After the steep run-up this month, investors are also being cautious about buying strength.  This suggests they will be looking for value, which they may find today inside a series of retracement levels.

At 14:30 GMT, April Comex Gold is trading $1635.90, down $14.20 or -0.87%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1691.70 will signal a resumption of the uptrend. The main trend will change to down if a pair of bottoms at $1564.40 and $1551.10 fail as support.

The first main range is $1564.40 to $1691.70. Its retracement zone is $1628.10 to $1613.00.

The second main range is $1551.10 to $1691.70. Its retracement zone is $1621.40 to $1604.80.

Daily April Comex Gold

Daily Technical Forecast

Based on the early price action and the current price at $1635.90, the direction of the April Comex gold futures contract the rest of the session on Wednesday is likely to be determined by trader reaction to the steep uptrending Gann angle at $1636.40.

Bearish Scenario

A sustained move under $1636.40 will indicate the presence of sellers. This could lead to a labored break into a series of potential support levels at $1628.10, $1621.40, $1613.00 and $1604.80.

A pair of uptrending Gann angles at $1607.10 and $1600.40 are also potential support levels.

Bullish Scenario

A sustained move over $1636.40 will signal the presence of buyers. This could spike the market into another uptrending Gann angle at $1663.10. Overtaking this angle could trigger an acceleration into the current top at $1691.70.

Side Notes

The fundamentals are bullish, but traders are looking for value, which they may find between $1628.10 and $1604.80.