Gold Price Forecast – Gold markets fall again as US dollar strengthens

Gold markets broke down a bit during the trading session on Monday as traders came back from the weekend. There is a lot of concern with Turkey, and of course this scent the US dollar higher. This has put a lot of negativity in the precious metals sector, and of course Gold isn’t privy to any type of protection. Breaking the $1200 level is significant, and at this point I think the next support level is the $1140 level, and then a much more significant support level at the $1000 level. I would be more than willing to buy an absolute massive amount of gold down at the $1000 level, and I think if you are patient enough, you may get that opportunity. However, if we turn around and break above the $1205 level, that could send value hunters back into the market.

I believe that the market is getting a bit oversold though, so I would anticipate some type of bounce. As bouncer should be sold unless we break significantly above the $1200 level, and I think that’s how most of the market will probably be paying attention. Obviously, this is headlight driven but we have been in a pretty negative market for gold for some time, and this is simply more of the same. Over the course of the next couple of days, I suspect that we will have several different opportunities to short this market as it has been so volatile.

Gold Price Video 14.08.18

Natural Gas Price Prediction – Prices Consolidate Following Last Weeks Breakout

Natural gas prices continued to consolidate trading sideways for the second straight trading session after breaking through trend line resistance last week. The warmer weather pattern appears to be changing with a cool front making its way into the middle of the United States. The coasts will be warmer than normal but the cooling in the mid-west should offset the heavy cooling demand allow inventories to grow at normal rates.

Technicals

Prices continue to trade sideways above the 50-day moving average which is seen as support near 2.87. the 20-day moving average has crossed above the 50-day moving average which shows that a medium term up trend is now in place. Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram has a declining trajectory which points to consolidation. The RSI is also turning over and pointing down which reflects decelerating positive momentum.

The EIA reported that working gas stocks are below the five-year range for the second week. The average rate of net injections into storage is 18% lower than the five-year average so far in the 2018 refill season. The EIA also states that for gas inventories to reach the five-year average rate of injections of 10.0 Bcf per day  for the remainder of the refill season, they will need to total 3,243 Bcf on October 31, which is 317 Bcf lower than the five-year low of 3,560 Bcf.

The EIA reports that in the Lower 48 states, total working gas stocks are currently 16 Bcf and 58 Bcf lower than the five-year range in the East and Midwest regions, respectively. The South Central region posted working gas stocks that are 46 Bcf higher than the bottom of the five-year range, with the nonsalt facilities 46 Bcf higher than its lower bound. Total working gas stocks in the Lower 48 states are now 57 Bcf below the five-year range. The Price differences between the spot price and the futures prices at the Nymex indicate limited economic incentives for net injections into working gas.

Gold Price Prediction – Gold Breaks Down and Prices Should Test Lower Levels

Gold prices took it on the chin on Monday, moving lower as concern about Turkey’s currency crisis is buoying the dollar and weighing on gold.  The Yuan, the Chinese currency continues to also decline which appears to be correlated to the decline in gold. The dollar has turned into the safe haven, as higher yields are buoy the attractiveness of the greenback.  Turkey refuses to increase interest rates, just as Argentina increased their rates Monday to 45% from 40% to defend the Argentinian Peso.

Technicals

Gold prices crashed through support which is now resistance near 1,204, which coincides with the August lows and the July 2017 lows. The next level of target support is seen near the January 2017 lows at 1,180. A break of that level would lead to a test of the December 2016 lows at 1,120. Momentum on gold prices has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. The fast stochastic also generated a crossover sell signal. This also reflects accelerating negative momentum. The proximity to oversold territory show that prices appear to be quickly moving toward an oversold buy signal.

Economic data released this week will show that spotlight on U.S. retail sales.  The result will be quickly incorporated into the GDP now model which currently predicts Q3 GDP near 4.3%.  Inflation is ticking up as reflected by last weeks core CPI report in the US which showed a 10-year high in core inflation.  The Fed will remain on track and increase rates in September which will allow trader’s to focus on the December meeting.

Gold Price Futures (GC) Technical Analysis – August 13, 2018 Forecast

A stronger U.S. Dollar helped drive December Comex gold futures to a multi-year low earlier in the session. There is no major support until $1162.00 so unless this market posts a dramatic reversal to the upside today, we could be headed in that direction. Furthermore, hedge fund and money managers don’t seem to be too shy about selling weakness at current price levels despite building a record net short position.

Comex Gold
Daily December Comex Gold

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out the previous main bottom at $1212.50. This old bottom is new resistance.

Today’s session begins with the market down 14 days from the last main top at $1244.70. This puts it inside the window of time for a closing price reversal bottom. We’ve seen this chart pattern form on July 31 and August 3, but it was never confirmed with follow-through buying. Most of the time it fuels a 2 to 3 day counter-trend rally, but sometimes it just indicates the buying is temporarily greater than the selling.

Daily Technical Forecast

Based on the early price action, the direction of the December Comex gold futures contract the rest of the session is likely to be determined by trader reaction to the short-term downtrending Gann angle at $1214.70.

A sustained move under $1214.70 will indicate the presence of sellers. This Gann angle, moving down at a rate of $2.00 per day since the $1244.70 main top, has been guiding the market lower for 15 sessions or since July 23. Overtaking it may indicate a shift in investor sentiment.

If the selling pressure continues today through $1202.00 then don’t be surprised by an acceleration to the downside since the next major target is $1162.00.

Crossing to the strong side of the angle at $1214.70 will signal the presence of buyers. Overtaking $1219.00 will turn gold higher for the session. This will indicate the short-covering is getting stronger. This could lead to a move into a pair of downtrending Gann angles at $1228.20 and $1229.70.

Natural Gas Price Fundamental Daily Forecast – Winter Strip Weakness Indicates Potential Shift in Sentiment

Natural gas futures are trading lower early Monday, continuing the price slide which began last Thursday, following the release of the U.S. government’s weekly storage report.

At 0855 GMT, October natural gas futures are trading $2.927, down $0.022 or -0.75%.

Natural Gas
Daily October Natural Gas

Traders are paying close attention to the supply/demand situation as we approach the end of the summer cooling season. An increase in production and a drop in demand will be the worst scenario for bullish natural gas futures traders.

According to S&P Global Platts Analytics data, U.S. demand fell 3.1 Bcf/d to 70.8 Bcf/d as demand reached its lowest levels in five days. Most of the decline was due to the decrease in power burn totals, as the power burn fell 2.7 Bcf/d to 36.8 Bcf/d on Friday.

Adding to the bearish sentiment was the continuing strong U.S. dry gas production, which remained above 80 Bcf/d for the seventh consecutive day as production fell 600 MMcf/d to 80.6 Bcf/d on Friday, according to Platts Analytics data.

To recap last week’s U.S. Energy Information Administration’s weekly storage report, domestic supplies of natural-gas stockpiles rose by 46 billion cubic feet for the week-ended August 3. Traders were looking for a storage build of 43 to 45 Bcf.

Total stocks now stand at 2.354 trillion cubic feet, down 671 billion cubic feet from a year ago and 572 billion below the five-year average, the government said.

Forecast

Today, investors will react to fresh weather and production reports. If the weather forecasts continue to call for cooler temperatures over the next 10-14 days and production holds near the 80 Bcf/d level then prices are likely to fall.

Any drop in demand will lead to profit-taking and fresh hedging pressure, which will likely signal the return of the same bearish sentiment that drove prices lower this summer.

In what could be another sign that the October futures contract may have topped last week, the NYMEX winter strip, or the November to March futures contracts retreated late last week, which indicates investors are starting to believe that producers will be able to shrink the supply deficit.

Additionally, the early estimate for Thursday’s EIA report calls for a 29 Bcf build for the week-ending August 10, well below the five-year average of a 56 Bcf increase for the same week.

Technically, if daily chart indicates that if the selling pressure continues, the October natural gas futures market is likely to break into $2.857 to $2.832 before buyers are likely to return.

Gold Falls Further As Turkish Crisis Spiked Demand for USD

Gold prices extended declines into a third session on Monday, as the U.S. dollar climbed to a 13-month high against major peers amid the financial crisis in Turkey. Spot gold XAU= had dropped 0.47% to $1,205.74 as of writing this article, hovering not far from a 17-month low of $1,204 hit earlier in August. U.S. gold futures GCcv1 were down 0.52% at $1,212.60 an ounce.

Gold today is seeing the continued downward movement as the USD-CNH and USD-CNY continued to advance. The U.S. dollar rose against China’s Yuan CNH= CNY= on Monday and held steady after hitting a 13-month high against a basket of six major currencies. But Gold seems to have found some floor as equity market suffers from Turkish crisis which has affected greater part of European markets. Asian shares fell on Monday and the euro hit one-year lows against the dollar as a renewed rout in the Turkish lira drove demand for safe havens assets, including the U.S. dollar, Swiss franc, and yen.

Precious Metals Lack Demand As Investors Flock To USD, Swiss Franc, and Japanese Yen

The Turkish currency had plunged to a new record low on worries over President Tayyip Erdogan’s influence over the economy and worsening relations with the United States. However, the market waits for more details on economic action plan from Turkey which Finance Minister Berat Albayrak said will be implemented starting today. But so far no news has hit market regarding the economic action plan.

China’s central bank on Friday said it would maintain its prudent and neutral monetary policy to ensure ample liquidity and keep the Yuan largely stable after the currency earlier this month hit a 14-month low versus the dollar amid ongoing Sino-U.S. trade tensions. U.S. dollar, in which precious metals are priced has benefited from recent global political and trade tensions, while the bullion market has not despite being widely seen as a safe-haven asset. Spot silver market continues to face bearish influence and as of writing this article spot silver XAGUSD is trading at $15.25 an ounce down 0.36% on the day.

Oil prices inched up on Monday as U.S. sanctions against Iran pointed towards a tighter market, although concerns over slowing economic growth amid global trade tensions kept a lid on gains. The United States has started implementing new sanctions against Iran, which from November will also target the country’s petroleum sector.

With U.S. sanctions on Iran back in place … all eyes have been on the impact on crude oil exports from that country. While maintaining global supply might be very challenging, the U.S. is doing its bit to increase production, with data showing drilling activity is continuing to rise. U.S. energy companies last week added the most oil rigs since May, adding 10 rigs to bring the total count to 869, according to the Baker Hughes energy services firm. That was the highest level of drilling activity since March 2015. Also potentially weighing on oil markets are signs of slowing economic growth and fuel demand growth, especially in Asia’s large emerging markets. As of writing this article, WTIUSD is trading at $67.83/b down 0.59% on the day.

Price of Gold Fundamental Daily Forecast – Turkish Effort to Support Lira Not Enough to Stop Dollar Strength, Gold Weakness

Gold futures posted a new low for the year early Monday after safe-haven buying pushed the U.S. Dollar to a 13-month high against a basket of major currencies amid financial turmoil in Turkey.

At 0813 GMT, December Comex gold futures are trading $1211.50, down $7.50 or -0.61%.

Money continued to flow into the dollar as Asian shares fell and U.S. equity futures contracts drifted lower. The dollar was also helped by a weaker Euro which hit a one-year low.

The catalyst behind today’s early price action was the financial crisis in Turkey. As the currency markets opened on Monday, the Turkish Lira plunged to a new record low on worries over President Tayyip Erdogan’s influence over the economy and worsening relations with the United States.

According to reports, Turkey has drafted an economic action plan and will start implementing it today to ease investor concerns, Finance Minister Berat Albayrak said.

At this time, the focus is on geopolitical events and less on economic data and Fed activity.

China’s central bank on Friday said it would maintain its prudent and neutral monetary policy to ensure ample liquidity and keep the Yuan largely unstable, after the currency earlier this month hit a 14-month low versus the dollar amid ongoing Sino-U.S. trade tensions.

In other news, gold sold last week at a discount in India for the first time in six weeks on subdued demand as buyers bet that prices could fall still further after hitting near seven-month lows last week.

Additionally, gold speculators added 22,195 contracts to their net short position in the week to August 7, bringing it to 63,282 contracts, the largest since records became publicly available in 2006, U.S. Commodity Futures Trading Commission data showed.

Forecast

Last week’s moves by gold speculators showed they aren’t afraid to short weakness even at multi-year lows. They could be forced to cover if the U.S. Dollar makes a dramatic top and reversal. However, this is not likely to occur unless a relative calm falls over Turkey.

Gold traders are watching the developments in Turkey especially after the Turkish central bank moved to improve liquidity during the Asia afternoon trade. Among the move announced Monday were a slashing of Lira required reserves held by banks by 250 basis points for all maturities, Reuters said.

Based on the price action by the dollar and gold, it doesn’t look like the Turkish government has done enough to convince traders that it’s making the right moves. And with money managers willing to press gold lower even at multi-year lows, it looks as if the bears will continue to exert their power today.

Even if there is an intraday short-covering rally, it will probably be fueled by technical factors which means gold bears will be waiting to re-short at more favorable price levels if the fundamentals don’t improve.

Oil Price Fundamental Daily Forecast – Demand Drop Means Slow Grind Lower, Supply Disruption Means Spike Higher

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower early Monday. There has been no follow-through to the upside following Friday’s dramatic reversal to the upside. The markets are currently trading inside Friday’s range which suggests investor indecision and impending volatility.

At 0708 GMT, October WTI crude oil futures are trading $66.70, down $0.25 or -0.36% and October Brent crude oil is trading $72.56, down $0.25 or -0.34%.

Concern over falling fuel demand especially in Asia is behind the selling pressure although the market is being somewhat supported by tighter supply due to the U.S. sanctions against Iran.

Depending on the order flow, it’s difficult to choose a direction because of the conflicting supply/demand fundamentals. Prior to last week’s steep sell-off, which was fueled by new tariffs from China, the markets were trading higher for the week and in a position to challenge the previous week’s high because of the sanctions.

The daily chart looks volatile, but the weekly chart is rangebound. With concerns about demand pressuring prices and worries over supply being fueled by the sanctions on Iran, the next major move is likely to be triggered by unexpected news. Usually this comes in the form of a supply disruption.

If we start to see evidence of a global economic slowdown or a drop in demand, then crude oil is likely to grind lower. However, if we see a supply disruption, prices could spike to the upside. This is essentially what the International Energy Agency warned about in its monthly report released late last week.

In other news, hedge funds and other money managers reduced their bullish positions in U.S. crude futures and options in the week ending on August 7, data from the U.S. Commodity Futures Trading Commission showed on Friday.

The speculator group cut its combined net-long position in New York and London by 9,117 contracts to 397,885 during the week, the lowest since June 19, the data showed.

Gold Price Futures (GC) Technical Analysis – Plenty of Room to Downside, but Also Ripe for Reversal Bottom

Gold futures finished lower last week. The weakness was fueled by a stronger U.S. Dollar, which helped drive down foreign demand for the dollar-denominated gold market. The catalysts behind the selling pressure was aversion to risky assets which drove investors into the safe-haven dollar, and solid domestic inflation data which raised expectations for additional rate hikes by the Fed later this year.

Last week, December Comex gold futures settled at $1219.00, down $4.20 or -0.34%.

Comex Gold
Weekly December Comex Gold

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. The market is in no position to change the trend to up, but due to the prolonged move down in terms of price and time, gold is inside the window of time for a potentially bullish closing price reversal bottom. Since hedge fund and money managers are net short gold, some unexpected news could spark a short-covering rally.

A trade through $1212.50 will signal a resumption of the downtrend after a week of consolidation.

The minor trend is also down. A move through $1278.20 will change the minor trend to up.

Weekly Swing Chart Technical Forecast

Since December Comex gold is inside the window of time for a potentially bullish closing price reversal bottom, we’re going to use last week’s close at $1219.00 as our pivot this week.

A sustained move under $1219.00 will indicate the presence of sellers. Taking out $1212.50 will confirm the downtrend. The daily chart indicates there is plenty of room to the downside under this low so we could see the start of an acceleration to the downside with the December 15, 2016 main bottom at $1162.00 the next likely target.

A sustained move over $1219.00 will signal the presence of buyers. If this move generates enough upside momentum then look for a possible rally into the long-term downtrending Gann angle at $1244.10.

The angle at $1244.10, moving down at a rate of $8.00 per week since the main top at $1388.10, has been guiding the gold market lower for 18 weeks or since the week-ending April 13. We could see a technical bounce on the first test of this angle, but overtaking it could trigger an acceleration to the upside.

Crude Oil Price Update – Weekly Retracement Zones Controlling Price Action

U.S. West Texas Intermediate crude oil futures settled lower last week, but remained inside its six-week range. There were some fireworks to the downside mid-week after China retaliated against U.S. tariffs with sanctions of their own on U.S. petroleum products. This raised issues about demand. A slowdown in China’s economy also created concerns over demand.

For the week, October WTI crude oil futures settled at $66.94, down $0.41 or -0.61%.

Traders also had to deal with supply concerns due to sanctions against Iran. Late in the week, the International Energy Agency helped provide support by saying the calm in the market will not last because of the fragile supply situation.

WTI Crude Oil
Weekly October WTI Crude Oil

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart. However, momentum is has been sideways for six weeks, or since the possible secondary lower top at $71.29, the week-ending June 29.

A trade through $71.63 will signal a resumption of the uptrend. A move through $62.60 will change the main trend to down.

The price action is also being controlled by a pair of retracement zones. $68.25 to $68.96 is providing resistance and $66.95 to $65.92 is providing support.

The main range is $54.74 to $71.63. Its retracement zone at $63.19 to $61.19 is the major support. This zone stopped the selling at $62.60 the week-ending June 22.

WTI Crude Oil (Close-Up)
Weekly October WTI Crude Oil (Close-Up)

Weekly Swing Chart Technical Forecast

Based on last week’s close at $66.94, the direction of the October WTI crude oil futures contract this week is likely to be determined by trader reaction to the short-term 50% level at $66.95.

A sustained move over $66.95 will indicate the presence of buyers. This could trigger a rally into $68.25 to $69.96. However, the trigger point for a breakout to the upside could be $69.19.

A sustained move under $66.95 will signal the presence of sellers. This could trigger a fast break into $65.92. The trigger point for an acceleration to the downside is the minor bottom at $65.20. The next target under this level is $63.19.

Longer-term, WTI crude oil strengthens over $69.19 and weakens under $65.20.

Natural Gas Price Fundamental Weekly Forecast – Sideways to Higher if Production Keeps Meeting Power Burn

Natural gas futures surged last week to their highest level since June 28 on weather concerns and worries about the storage deficit. The market hit a high of $2.964 before sellers came in following the release of the weekly government storage report that met expectations.

Last Week, October natural gas futures settled at $2.949, up $0.096 or +3.36%.

With the trend up on the daily chart and the market within striking distance of its June top at $3.025, it’s now up to the bears to exert their power if they truly believe record production can fill in the inventory gap before the start of winter.

Weekly Fundamentals

The catalyst behind the price action late in the week was the government storage report. On Thursday, the U.S. Energy Information Administration (EIA) reported that domestic supplies of natural-gas stockpiles rose by 46 billion cubic feet for the week-ended August 3. Traders were looking for a storage build of 43 to 45 Bcf.

Total stocks now stand at 2.354 trillion cubic feet, down 671 billion cubic feet from a year ago and 572 billion below the five-year average, the government said.

The details of the EIA report show a 23 Bcf injection in the East raised stocks to 575 Bcf, compared with 670 Bcf a year ago; a 27 Bcf build in the Midwest to lift inventories to 579 Bcf, compared with 789 Bcf a year ago; a 2 Bcf addition in the Mountain region to nudge stocks up to 148 Bcf, compared with 202 Bcf a year ago; a 5 Bcf withdrawal in the Pacific to drop inventories to 245 Bcf, compared with 290 Bcf a year ago; and a 1 Bcf pull in the South Central region to drop stocks to 807 Bcf, compared with 1.095 Tcf a year ago.

Forecast

This week will start with investors continuing to wrestle with the storage deficit, rising demand and increased production. At this time, production seems to be meeting demand, thereby, having a limited effect on attempts to shrink the supply deficit. Based on this assessment, prices could continue to linger around the $3.00 level, while taking out $3.00 will require another round of lingering hot temperatures.

The bet that bullish investors are making is that the storage deficit will remain wide at the start of heating season on November 1. This is helping to drive the deferred futures contract in December, January and February higher.

September natural gas bulls could run into trouble if production continues to remain strong, but the weather turns cooler. The current weather forecast calls for a couple of periods with cooler risks over the next two weeks where cooler weather will try to drive down into the Midwest and pull cooling demand back toward average. It’s still going to be hot in the west and the south, but we may start to see some cooling in the northern half of the U.S.

Production held above the 80 Bcf/d mark last week and the power burn was about 40 Bcf/d. The early EIA estimate is for an injection of 39 Bcf. Coming in at that figure will allow the year-on-five deficit to widen. This would be supportive for prices.

Conclusion:  Prices are likely to hover around the $3.000 level unless the weather turn markedly lower and production holds at record output. Hot weather and high production won’t do much to prices. In this case, even if prices drop because of technical factors, buyers will likely be waiting on any pullback.

Price of Gold Fundamental Weekly Forecast – Gold Investors Unfazed by Dollar Spike

Gold futures finished lower last week while posting a relatively light trading range. The market also finished inside the previous week’s range, which suggests investor indecision and impending volatility. Keeping a lid on prices was a strong U.S. Dollar. Underpinning the precious metal was a drop in U.S. Treasury yields and geopolitical turmoil in Turkey.

For the week, December Comex gold finished at $1219.00, down $4.20 or +0.34%.

The dollar rose as investors bet global trade tensions and a robust U.S. economy would continue to support the currency.

Bullish traders continued to gain the upper hand in the trade war scenario over emerging markets on the notion that tariffs may actually narrow the U.S. trade deficit. In economic news, better-than-expected data on U.S. initial jobless claims and generally rising producer prices also helped the dollar hold its gains.

Finally on Friday, the U.S. Dollar Index spiked to its highest level since May 17, 2017 after the Euro plunged against the greenback to its lowest level in more than a year as a steep drop in the Turkish Lira sparked a massive flight-to-safety exodus into the dollar.

The dollar was also underpinned after data on Friday showed that core consumer prices rose 0.2 percent in July, in line with economists’ expectations and the same gain as in May and June.

In other news, speculators expanded their net short position on the Comex exchange to the biggest ever recorded, helping to drive prices lower.

Forecast

Will they or won’t they? That is the question. Given the current situation unfolding in Turkey, which is having a dramatic effect on the Euro and in Russia, which saw the Rouble crumble to its lowest level in more than two years, will aggressive counter-trend buyers finally step in and start treating gold like a safe-haven asset, or will they continue to succumb to the stronger U.S. Dollar, which lowers foreign demand for dollar-denominated gold?

Last week’s tight trading range suggests these two events helped hold the market inside a tight trading range. A few weeks ago when the dollar was pressing a multi-year high, gold was touching a multi-year low. On Friday, the dollar spiked to its highest level in more than a year and gold held its ground.

It’s probably too early to say gold is diverging from its relationship with the dollar, but it’s not too early to start preparing for a short-covering rally especially since there are a record number of shorts that may have to cover.

Although the fundamentals are currently stacked against gold, it’s not going to take much to encourage short-sellers to start booking profits. Another burst to the upside by the dollar, accompanied by another flat gold session will be a sign that buyers are coming in to defend the bottom. This may be enough to fuel the first round of short-covering. A second will come on a move through $1228.60. Finally, the trend will change to up on a trade through $1244.70.

Oil Price Fundamental Weekly Forecast -Despite Mounting Demand Concerns, Market Vulnerable to Supply Disruption

U.S. West Texas Intermediate and international benchmark Brent crude oil futures went on a wild ride last week before closing lower. At one point last week, the U.S. futures contract was down about 2.40 percent before clawing back nearly half of that loss.

October WTI crude oil settled the week at $66.94, down $0.41 or -0.61% and October Brent futures finished at $72.81, down $0.40 or -0.55%.

China Retaliation Fuels Mid-Week Sell-off

Most of the week’s loss was attributed to a steep one-day sell-off on Wednesday. The move was fueled by the escalating trade dispute between the United States and China. Traders fear that additional tariffs from China will lead to lower demand. Furthermore, investors were reacting to key domestic data from China, which presented early signs of slowing demand.

Uncertainty over Iranian Sanctions Limits Losses

Helping to limit losses are worries that renewed U.S. sanctions against Iran will tighten supplies.

Bullish investors are holding out hope that the Iranian sanctions have not been fully priced into Brent, leaving room for a significant run-up in prices after November 1 when the full effect of the sanctions begin to take place.

Between now and then, the U.S. will use tactics to try to convince all nations to comply with its sanctions. With several major buyers of Iranian crude oil still not complying with the U.S. orders, there is still uncertainty as to how much oil will be removed from the market. Currently, analysts expect the drop-off in Iranian crude exports to range between 500,000 barrels per day (bpd) and 1.3 million bpd.

IEA Issues Potentially Bullish Warning

Besides the Iranian sanctions, which affect supply and the potential for lower demand from additional Chinese sanctions, traders also reacted to the latest monthly report from the International Energy Agency (IEA).

The IEA report said Friday that the U.S. plan to impose targeted crude sanctions against Iran could significantly impact global supply and exhaust the world’s spare oil capacity cushion.

“As oil sanctions against Iran effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion,” the Paris-based organization said Friday.

“Thus, the market outlook could be far less calm at that point than it is today,” the IEA added.

The IEA also issued comments on trade tensions.

“Risks introduced by trade tensions have further increased, threatening to significantly reduce growth in some exporting countries,” the IEA said Friday.

“The threat of trade disruptions could recede as fast as they are mounting, however, it is difficult at this stage to make adjustments to our base case assumptions for the economy and oil demand,” the group added.

Key Fundamental Events

To recap this week’s events, on Tuesday, the U.S. renewed sanctions against Iran that are expected to eventually remove about 1 million barrels per day of crude oil from the market. This threatens supply. On Wednesday, China said it will impose tariffs of 25 percent on a further $16 billion in U.S. imports. Among the goods affected are crude oil and other petroleum products. This affects future demand.

In other news, the U.S. Energy Information Administration reported that crude inventories fell 1.4 million barrels in the week-ended August 3, less than half the 3.3 million-barrel draw analysts had expected. Gasoline stocks rose by 2.9 million barrels, compared with an estimate for a drop of 1.7 million-barrel drop.

Other News

U.S. energy companies added the most oil rigs since last May during the week-ending August 10. The move wasn’t a complete surprise as drillers followed through on plans to spend more on exploration and production in anticipation of higher crude prices in 2018 than recent years.

Drillers added 10 oil rigs in the week to August 10, bringing the total count to 869, the highest level since March 2015, General Electric’s Baker Hughes energy services firm said in its closely followed report on Friday.

Forecast

The battle this week will be between those bullish traders who believe that U.S. sanctions against Iran will continue to tighten supply and those bearish traders who are banking on global trade disputes to slow economic growth and hurt demand for energy.

The rising U.S. Dollar could also be supportive for bearish investors because it tends to lead to lower foreign demand for dollar-denominated crude oil. Crude demand could also decline if gasoline demand slows going into the fall and refiners shut down for maintenance, pushing more crude into storage.

Supply is the wildcard because we don’t know how many more countries will comply with U.S. requests to boycott Iranian crude oil. And we may not know until the full impact of the sanctions on Iran kick in on November 1.

Supply could tighten further if more countries jump on board to support the U.S. We’re going to look for increased volatility in the form of a two-sided trade as the bulls and bears jockey for position ahead of the sanctions. We’re also going to side with the International Energy Agency who said on Friday that the oil market could see more turbulence later this year.

“The recent cooling down of the market, with short-term supply tensions easing, currently lower prices, and lower demand growth might not last,” the IEA said in a monthly report.

Despite posting its sixth straight weekly loss for its worst losing streak since August 2015, all it is going to take is one major supply disruption to fuel a breakout to the upside.

Silver Weekly Price Forecast – Silver markets tread water for the week

Silver markets were choppy during the week, in a relatively tight range just as all other precious metals were. This market seems to be respecting the $15.25 level for support, an area that has been touched a couple of times on the weekly chart. I think there’s even more support at the $15 level underneath, so I do lean to the upside here but I also recognize that the US dollar has been powering ahead due to concerns about global growth and now concerns with contagion in the European banking system yet again. Remember, when the Euro falls, it naturally drives up the value of the US dollar. That of course weighs upon the value of precious metals. In fact, there’s a huge correlation between the EUR/USD pair and the silver market.

At this point, I think that we need to find support between now and $15 to give any hope to the buyers, and I think we probably will find it. However, if we break down below $15, we will probably unwind to the $14 level rather quickly. I believe that if you can keep leverage low, this is a good market to start investing in. I am a buyer of dips and silver as far as physical metal is concerned and have been stacking for quite some time. Nonetheless, that’s more of an investment and less of a trade. If we can break above the $15.50 level, we could get a bit of momentum toward $16, maybe even $16.50.

SILVER Video 13.08.18

Crude Oil Weekly Price Forecast – crude oil markets show signs of life at the end of the week

WTI Crude Oil

The WTI Crude Oil market has found a bit of a reprieve after initially trying to rally, finding a ton of selling at the $70 level, and then breaking below the $67 level for the briefest of moments. Friday was bullish enough to convince me that we are going to try to contend for support here, and I believe that it is only a matter of time before we get a situation where buyers return. I think the biggest problem with the market right now as the strength of the US dollar. Beyond that, there are none of geopolitical concerns out there to drive oil higher.

Brent

Brent markets of course did the same thing, as we reached towards the $75 level, pulled back below the $72 level, only to bounce on Friday. While the market does look a little suspect, at the end of the day it’s likely that we will continue to see buyers jump into this market perhaps driving it back towards the $75 handle. I think that the marketplace continues to favor higher oil prices, but the US dollar has provided a bit of a drag on those higher oil prices. Ultimately, we still remain in a “buy on the dips” type of market. However, if we close below the $72 level on the weekly chart, then we could go looking towards the $70 level next. Overall, I would anticipate that we do go higher over the longer-term.

WTI Video 13.08.18

Natural Gas Weekly Price Forecast – natural gas gains again

Natural gas markets initially fell during the week but then turned around to rally towards the $2.95 level. We have found some resistance there, but I think the major resistance is closer to the $3.00 level above, an area that I think will bring in a lot of fresh selling. That being the case, I believe that the market participants are looking at another week of bullish pressure at best, before the oversupply of natural gas comes back into effect. Remember, fracking companies in the United States for the most part are profitable at the $3.00 level, so that has been a bit of a lid on the market.

I would zoom down to the daily chart, look for an exhaustive candle to start selling as close to the $3.00 level as possible. That resistance runs all the way to the $3.10 level above, so you need to give yourself a little bit of room for stops. In the short term though, we will probably rally a bit to go test the $3.00 level, as it will be to juicy of a target for traders to ignore.

I would expect a lot of volatility, but we are starting to head out of the hottest month in the United States, so that may drive down some demand as well. Beyond that, if there’s a global slowdown, that should be poor for energy as well, which of course includes natural gas.

NATGAS Video 13.08.18

Gold Weekly Price Forecast – Gold stabilizes for the week

Gold markets were relatively messy during the week, but in a tight range. This is actually good news for gold, as it had been selling off so relentlessly over the last couple of months. The question now is whether or not we can break down below the $1200 level? If we do, that of course is something to pay attention to, because it would be a major turn of events. Overall, I believe that if we can hold $1200, this might be a nice longer-term buying opportunity. That doesn’t mean that it’s going to be easy to do, but it could be the opportunity that a lot of longer-term buyers have been waiting for.

Alternately, if we break down below the $1200 level on at least a daily close, if not a weekly close, then this market could unwind rather drastically. In general, I suspect that it looks like we are oversold, so I would lean towards the upside, but there is an obvious point of support that if it gets broken, we would be looking at a potential strong selloff. I believe at this point, it’s likely that we will see a lot of short term volatility so I would jump into the market with small positions if you’re going to play it from a longer-term standpoint. Remember, there’s a lot of concern about global trade right now, which has been strengthening the dollar, it think it’s worse it could put bearish pressure on gold due to the currency headwinds.

Gold Price Video 13.08.18

Silver Price Forecast – Silver markets very noisy during the trading session on Friday

Silver markets continue to be very noisy but restrained within a well-defined consolidation area. The consolidation area has support formed at the $15.25 level, and resistance at the $15.50 level. I believe that the market will continue to be very noisy overall, but short-term traders can use these levels as a bit of a guide stick on how to trade the market. I believe that silver will of course be influenced by the strengthening dollar which has been keeping it a bit soft. Overall, I think that we will ultimately see a lot of choppiness, and short-term traders will love this environment.

However, longer-term I do believe in Silver and I think we will go higher. With that being the case, I believe that we will see potential investments, especially when we get close to the $15 level underneath which is massive support on the longer-term charts. That being the case, I am more than willing to take advantage of what the markets willing to offer me. Right now, it’s offering me a $0.25 trading range, but longer-term I willing to buy physical silver to take advantage of a longer-term investment “buy-and-hold” scenario. The US dollar continues the bounce around, and that of course will have its effect on precious metals overall, but I think at this point it’s likely that if you are levered, you have to be looking at short-term charts. If you are not, then you can pick up silver “on the cheap.”

SILVER Video 13.08.18

Crude Oil Price Forecast – crude oil breaks out to the upside

WTI Crude Oil

The WTI Crude Oil market was very noisy during the trading session on Friday, slicing through the $67 level, an area that needed to hold for the bullish case for crude oil to continue. At this point, the supply is probably a bit tighter than most people realize, and quite frankly we are just wonder to headlines away from trouble in the Middle East to send this market higher. At the same time though, the US dollar has strengthened, and that might be part with been weighing upon oil. After today’s action though, I do believe that we continue to rally from here, hanging about in the previous consolidation area between the $67 level on the bottom and the $70 level in the top.

Brent

Brent markets of course did the same thing during the trading session on Friday, breaking above the resistance from the previous session. It now looks as if we are ready to continue to grind towards the $75 level above, which has been the resistance barrier during previous consolidation. I think that the strengthening US dollar was probably the one thing to keep from exploding to the upside in general. I believe in buying dips, unless of course we break down to make a fresh, new low, then I think we would probably start heading towards the $70 level. Overall, this is a market that I think continues to be very noisy, but certainly seems to favor the upside based upon the longer-term trend lines.

Crude Oil Inventories Video 13.08.18

Natural Gas Price Forecast – natural gas markets slightly lower on Friday

Natural gas markets fell slightly during the Friday session, but quite frankly it wasn’t much of a loss. What’s even more concerning than that is the situation on the longer-term charts. The $3.00 level is a major barrier that I have been talking about for some time, and we are starting to get close to it. I suspect there’s probably a selling area between there and $3.10 just waiting to happen, and because of this I think that it is only a matter of time before the overall range bound attitude of the market takes over again. If it does, we should get a nice selling opportunity above.

My main thesis is that nothing has changed, so pricing shouldn’t change. We have been bouncing around between the $2.70 on the bottom and $3.00 level on the top. We are obviously much closer to the top than the bottom, so I think the sellers are probably coming back rather soon. The general attitude of the market has been one of back and forth malaise, and I think that will end up being what we see going forward as well. Quite frankly, I don’t see the catalyst to change things for the longer-term coming anytime soon.

Hot temperatures in the United States are soon going to be a thing of the past, and that  will drive down demand as well. That could be the excuse to rollover, but quite frankly from a technical analysis perspective, it’s just a good place to sell.

NATGAS Video 13.08.18