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

Gold Price Forecast – Gold markets very choppy on Friday session

Gold markets were very noisy during the day on Friday, as we continue to bounce around the $1210 level. I believe that the $1200 level underneath is a major barrier, not only structurally, but possibly from a psychological standpoint as well. I think that the buyers will return the closer we get to that level, and you could even point out a smaller range of trading using the $1215 level the top and the $1205 level and the bottom. You have to be a little bit more artistic with your trendlines, but at this point it would be close enough to point out what we’ve been looking at over the last couple of days.

The US dollar strengthened a bit during trading on Friday, which of course has put bearish pressure on gold by the end of the day. However, I think that the market is showing its natural proclivity to hang about this area and wait to see if we get some type of larger catalyst. After all, $1200 is crucial on the longer-term charts. The closer we get to $1200, the more willing I am to buy a bit of gold and see if it can take off to the upside. Otherwise, if we close down below there on a daily chart I would look for a move down to the $1140 level next, as it is the next major support barrier on the longer-term charts. Either way, I think we should get a large move soon.

Gold Outlook Video 13.08.18

Natural Gas Price Prediction – Prices are Poised to Rise as Inventories are Low

Natural gas prices moved lower on Friday, but only by 0.58%, and rebounded from session lows. Prices have been buoyed by declining relative inventories during the heart of the injection season.  Inventories are below the 5-year average range, but prices remain below the 5-year average which is 3.14 per mmbtu.  Demand picked up according to the EIA and supply was flat.

Technicals

Natural gas prices traded sideways testing lower levels before rebounding near the close.  Prices broke out this week above trend line resistance and is poised to test target resistance near the June highs at 3.05. Support is seen near the 50-day moving average at 2.87. the 20-day moving average is poised to cross above the 50-day moving average which would show that a medium term up trend is in place. Momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Supply remains flat

The EIA repors that the average total supply of natural gas remained the same as in the previous report week, averaging 87.1 Bcf per day. Dry natural gas production remained constant week over week; however, the average dry natural gas production during the report week, 81.4 Bcf per day, is 11% higher than last year’s level at this time. Average net imports from Canada increased by 1% from last week.

Demand Rises

The EIA reports that total U.S. consumption of natural gas rose by 1% compared with the previous report week. Natural gas consumed for power generation climbed by 6% week over week as temperatures generally warmed across the United States. Industrial sector consumption stayed constant, averaging 19.8 Bcf per day. In the residential and commercial sectors, consumption declined by 14% but remains a relatively minor contribution to total demand during the summer months. Natural gas exports to Mexico increased 3%.

Gold Price Prediction – Gold Forms Doji Day Despite Risk Off Environment

Gold prices have held up remarkably well in the face of a dollar rally that has been spurred on by geopolitical risks. The Turkish Lira lost 13% against the greenback on Friday as investors turned tail. President Eurogon, has been outspoken and refused to let his central bank raise interest rates which need to occur to stabilize the currency.  In line inflation was released in the U.S. on Friday, but it was the large increase in year over year core CPI seen in the past decade. Wage inflation has yet to seep into CPI

Technicals

Gold prices whipsawed initially moving higher as a potential contagion in Europe generated a risk off trade. Stock prices tumbled but the rally in the dollar capped any upside movement in the yellow metal. Resistance remains near the 10-day moving average at 1,213. Support is seen near the August lows at 1,206. Additional support is seen near the July 2017 lows at 1,204.  Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic continues to rise from oversold territory which also does not point to a further selloff.  Prices generated a doji day where the close and open were at the same level. This suggests indecision.

Core Inflation Hits Decade High

The U.S. CPI was released on Friday by the Labor Department showing that consumer inflation rose 0.2% m/m and 0.2% m/m  ex-food and energy.  Annualized CPI increased by 2.9% in line with expectations. The ex-food and energy component hit a decade high rising 2.4% y/y. This comes on the heels of a weaker than expected PPI which was released by the BLS on Thursday.  Energy dragged on producer inflation while CPI was buoyed by used vehicle sales. Wage inflation remains stable and has yet to seep into CPI.

Price of Gold Fundamental Daily Forecast – Traders Await U.S. CPI Data, Showing Little Reaction to Turkish Lira Collapse

Gold futures are trading lower shortly before the U.S. opening. All week, the precious metal has been trading inside last Friday’s range with a downside bias towards a multi-year low at $1212.50. The market is also in a position to post its fifth weekly decline. Furthermore, we expect to see this week’s U.S. Commodity Futures Trading Commission report to show hedge fund and money managers increased their net short positions.

At 1002 GMT, December Comex gold is trading $1217.70, down $2.20 or -0.19%.

The strong dollar has been the primary influence on gold prices this week. Despite heightened geopolitical tensions, gold short-sellers are still in control and thwarting any attempts from speculative counter-trend bulls to drive prices higher.

Early Friday, the U.S. Dollar is extending gains to hit a 13-month high against a basket of major currencies. This is helping to pressure dollar-denominated gold futures. Additionally, the dollar is getting added support from a falling Russia rouble in response to fresh U.S. sanctions and a plunging Turkish Lira, which touched a record low in the wake of a diplomatic rift with the United States.

Finally, expectations for higher interest rates in the United States is also helping to make the U.S. Dollar a more attractive investment. The U.S. economy is performing “very well” with continued growth clearing the way for one or two more Fed rate hikes later this year.

Forecast

Today, gold investors will get the opportunity to react to the latest U.S. consumer inflation data with the release of the July Consumer Inflation (CPI) report at 1230 GMT. It is expected to show a 0.2% increase, up from 0.1%. Core CPI is also expected to post a 0.2% gain, matching June’s increase.

The Federal Budget Balance is expected to come in at -76.5 Billion, up from -74.9 Billion. This report measures the difference in value between the federal government’s income and spending during the previous month. A negative number indicates a budget deficit.

So far today, gold traders are showing almost no reaction to geopolitical turmoil in Turkey, primarily because it’s making the U.S. Dollar stronger. The Turkish Lira collapsed to an all-time record low against the dollar, but the country’s leader brushed aside concerns, telling Turks “we have our God.”

The latest bout of selling comes after a Turkish delegation returned from the United States with apparently no progress on the detention of a U.S. pastor. President Trump said in July that the U.S. would place “large sanctions” on the country for the pastor’s detention.

 

Oil Price Fundamental Daily Forecast – IEA Report May Be Sounding Bullish Alarm

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading slightly lower shortly before the regular session opening while posting a two-side trade during the pre-market session.

At 0903 GMT, September WTI crude oil futures are trading $66.64, down $0.19 or -0.28% and October Brent crude oil is at $71.85, down $0.22 or -0.31%.

The markets traded mixed earlier in the session on worries that renewed U.S. sanctions against Iran will tighten supplies, while the escalating trade dispute between the United States and China raised issues about demand.

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.

In addition to the Iranian sanctions, investors are also expressing bearish fears of reduced demand from China, partially due to the effects of the trade wars between China and the United States. Demand could also be pressured by a weaker Chinese economy and a stronger U.S. Dollar which makes dollar-denominated crude oil more expensive for foreigners.

Forecast

Besides the Iranian sanctions, which affect supply and the potential for lower demand, traders on Friday are also reacting to the latest monthly report from the International Energy Agency (IEA).

The IEA report said earlier today 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.

The direction of the September WTI crude oil futures contract on Friday will be determined by trader reaction to $66.81. The direction of the October Brent futures contract will be determined by trader reaction to $72.33.

Natural Gas Price Fundamental Daily Forecast – Cooler Forecast Could Trigger Start of Steep Break Under $2.930

Natural gas futures are trading lower shortly before the regular session opening on Friday after posting a potentially bearish technical closing price reversal top the previous session. Yesterday’s early rally took the market to its highest level since June 28 before sellers stepped in as it neared a pair of main tops at $2.992 and $3.018.

At 0826 GMT, September Natural Gas is trading $2.944, down $0.011 or -0.37%.

Natural Gas
Daily September Natural Gas

The catalyst behind the price action is yesterday’s government storage report. On Thursday, the U.S. Energy Information Administration 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

The early price action suggests that investors continue to wrestle with the storage deficit, rising demand and increased production. It also indicates that production seems to be meeting demand, thereby, having a limited effect on attempts to shrink the supply deficit.

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 and drive down into the Midwest and pull cooling demand back toward average.

Technically, the first sign of weakness will be a trade through $2.930. If this move is accompanied by rising selling volume, we could see a minimum break over the short-run into at least $2.885, followed by $2.844.

Gold Dips As USD Hits 13-Month High Amid Global Political Tensions

Gold prices dipped in Asia on Friday, languishing near a one- year low, weighed down by a rally in the U.S. dollar amid heightened global political tensions. The strong dollar is affecting the price of gold. Despite heightened geopolitical tensions, gold bears are still in control of the price and pushing the bulls out of their boundary. The U.S. dollar, in which gold is priced, on Friday extended gains to hit a 13-month high against a basket of peers as European currencies such as the pound and euro continued to lose traction. Spot Gold XAUUSD is currently trading at $1208.42 down 0.32% on the day.  US Gold futures GCcv1 were down 0.5% at $1,213.4 an ounce. US Greenback denominated gold is currently on track to post its fifth weekly decline. Also adding pressure on gold were expectations for higher interest rates in the United States, where the Federal Reserve is expected to raise benchmark lending rates next month for the third time this year.

Stronger Dollar Pressures Precious Metals into Range Bound Momentum 

The U.S. economy is performing “very well” with continued growth clearing the way for one or two more interest rate hikes in 2018, Chicago Federal Reserve Bank President Charles Evans said on Thursday in an interview in which he dismissed earlier worries about weak inflation. U.S. rates tend to boost the dollar and Treasury yields, adding pressure on greenback-denominated, non-yielding bullion.  Given the strength of US Greenback, USD denominated precious metals are expected to trade range bound in both current and near future trading sessions. Silver saw steeper slide in spot market when compared to Gold as XAGUSD is currently trading at $15.319 down 0.80% on the day.

Canadian oil producers are once again suffering from a steep discount for their oil, causing the largest spread between Canadian oil and WTI in years. Western Canada Select (WCS) recently fell below $40 per barrel, dropping to as low as $38 per barrel on Tuesday. That put it roughly $31 per barrel below WTI, the largest discount since 2013. Oil prices are trading near a seven-week low on fears the intensifying US-China trade tension will crimp global economic growth and increase financial vulnerability. The trade conflict overshadowed a decline in American crude inventories and potential supply losses from Iran. Meanwhile, some Iranian crude buyers have started looking elsewhere for supplies as renewed US sanctions aiming at curbing oil exports from the OPEC nation are set to take effect in November. There are still concerns over a possible decline in US oil sales to China as it could disrupt America’s supply balance by increasing its stockpiles and even end up creating a glut. As of writing this article, WTIUSD is trading at $67.14/b down 0.15% on the day.

Crude Oil Price Update – Daily Chart Indicates Nothng but Air Under $66.29 With $62.99 Next Major Target

U.S. West Texas Intermediate crude oil futures are trading lower early Friday. Escalating trade tensions between the United States and China are helping to keep a lid on prices while concerns that renewed U.S. sanctions against Iran will tighten supplies are underpinning the market.

At 0800 GMT, September WTI crude oil is trading $66.27, down $0.55 or -0.80%.

Prices were stable earlier in the session until the International Energy Agency said, “U.S. sanctions against Iran could make maintaining the world’s oil supply ‘very challenging’.”

WTI Crude Oil
Daily September WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier in the session when sellers took out the July 18 bottom at $66.29. The main trend will change to up on a move through $69.92.

The main range is $62.99 to $72.98. The market is currently trading on the weak side of its retracement zone at $66.81 to $67.99. These two levels are new resistance.

Daily Swing Chart Technical Forecast

Given the early price action, the direction of September WTI crude oil futures contract the rest of the session is likely to be determined by trader reaction to the main Fibonacci level at $66.81.

A sustained move under $66.81 will indicate the presence of sellers. Taking out the previous main bottom at $66.29 will signal the selling pressure is getting stronger.

The daily chart indicates there is plenty of room to the downside under $66.29 with the June 18 main bottom at $62.99 the next likely downside target.

A sustained move over $66.81 will signal the presence of buyers. If this move attracts enough buyers, we could see a spike into the main 50% level at $67.99.

Gold Price Futures (GC) Technical Analysis – Series of Inside Moves Suggest Investor Indecision, Impending Volatility

Gold futures are trading flat early Friday after closing lower the previous session. Once again, the market tried to rally but the buying dried up as it approached nearby resistance at $1228.60. Gold is currently trading inside its August 3 range at $1212.50 to $1228.50 for a fifth straight session. This screams of breakout, but traders are looking for a catalyst to trigger a short-covering rally or another new low for the year.

At 0420 GMT, December Comex gold is trading $1219.90, unchanged.

Traders continue to monitor the direction of the U.S. Dollar. The hedge funds have bet heavily on the long side of the dollar. And why not, higher interest rates and strong economic data are very supportive of the greenback at this time. Additionally, hedge funds and money managers are net short gold for the first time since 2016. This means they are looking for lower prices.

The charts indicate there is nothing but air under $1212.50 with $1162.00 the next major target.

Comex Gold
Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, the closing price reversal bottom from August 3 has temporarily halted the selling. A trade through $1212.50 will negate the chart pattern and signal a resumption of the downtrend. The main trend will change to up on a move through $1244.70.

The minor trend is also down. A move through $1237.80 will change the minor trend to up and shift momentum to the upside.

The main range is $1244.70 to $1212.50. Its retracement zone at $1228.60 to $1232.40 is resistance. Overtaking this zone will also shift momentum to the upside.

Daily Swing Chart Technical Forecast

Given the fifth straight session inside the August 3 range, the direction of the December Comex gold market today is likely to be determined by trader reaction to $1212.50 and $1228.50. You can even treat the mid-point of this range at $1220.50 as a pivot.

Additionally, if you take a longer-term point of view, $1228.60 to $1232.40 is an even more important pivot zone.

The bottom-line is without a meaningful bullish catalyst, gold has about $50 to the downside if $1212.50 is taken out with increasing selling volume.

At the same time, any rally over $1232.40 is likely to be labored because of potential resistance at $1237.80, $1244.60 and $1244.70.