Oil Price Fundamental Daily Forecast – US Prepares to Slap New Sanctions on Iran

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher early Monday amid reports of a drop in Saudi crude production in July and speculation that American shale drilling may be plateauing.

At 0244 GMT, September WTI crude oil futures are trading $68.81, up $0.32 or +0.47% and October Brent crude oil is at $73.58, up $0.37 or +0.51%.

Traders are also positioning themselves ahead of an anticipated announcement from Washington due later on Monday detailing renewed U.S. sanctions against major oil exporter Iran.

According to OPEC sources, top crude exporter Saudi Arabia pumped around 10.29 million barrels per day (bpd) of crude in July, down about 200,000 bpd from a month earlier.

In other news, U.S. drillers cut two oil rigs in the week to August 3, bringing the total count down to 859, General Electric’s Baker Hughes energy services firm said on Friday.

Additionally, there are also reports that many U.S. shale oil drillers posted disappointing quarterly results in recent weeks, hit by rising operating costs, hedging losses and a drop in crude prices away from 2018 highs reached between May and July.


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Forecast

Monday’s early price action suggests investors should start preparing for another week of two-sided trading.

The OPEC news about the drop in Saudi Arabian production in July was a surprise since it had pledged in June to raise output. However, Russia, the United States and the Saudi’s are still producing 10 million to 11 million bpd of crude. This represents around a third of global oil demand.

An even bigger surprise can come from Washington later today regarding the Iranian sanctions. I’m not sure that traders know what to expect from White House officials. However, it is rumored to be new sanctions on Iran.

WTI has resistance at $69.64 to $70.42 and support at $67.00 to $66.81. Brent has resistance at $75.29 to $76.22 and support at $72.33 to $70.67.

Oil Price Fundamental Weekly Forecast – Choppy Trade, but OPEC Supply Gives It Downside Bias

U.S. West Texas Intermediate and international Brent crude oil futures settled lower last week with the selling primarily driven by worries about over supply.

September WTI crude oil futures settled at $68.49, down $0.20 or -0.29% and October Brent crude oil closed at $73.21, down $1.55 or -2.07%.

With the market posting a two-sided trade after testing 50% resistance and 50% support, the price action at times indicated a balance trade.

Helping to push prices lower earlier this week have been a combination of factors. On Wednesday, prices plunged when the U.S. Energy Information Administration reported that in the week-ending July 27, total U.S. inventories rose 3.8 million barrels, while supplies at Cushing fell 1.3 million barrels.

Throughout the week, gains were limited and prices pushed lower on concerns about oversupply. Recently, Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production to help compensate for an anticipated shortfall in Iranian crude supplies once U.S. sanctions take effect and to stabilize prices to prevent a global economic slowdown, which would lower demand.

Late in the week on Thursday, WTI and Brent rallied nearly 2 percent. The move was fueled by aggressive hedge buying tied to an industry report suggesting domestic crude stockpiles would soon decline again after a surprise rise in the latest week.

Traders said prices rallied early in the session when industry information provider Genscape reported that crude inventories at the Cushing, Oklahoma delivery hub for U.S. crude, dropped 1.1 million barrels since Friday, July 27.

The late week gains couldn’t be sustained and prices fell on Friday, turning crude oil lower for the week as fresh trade war concerns weighed on the market and fueled concerns about demand.

In other news, U.S. drillers cut rigs for the second week in three, reducing the number of oil rigs by 2 to 859.

Forecast

Last week’s price action suggested a jittery market place. This generally nervous tone is expected to continue this week as long as there is Iranian sanction uncertainty and tariff uncertainty.

Technical factors also contributed to the price action. WTI crude found resistance inside at retracement zone at $69.64 to $70.42 and support at $67.99 to $66.81. The longer the market remains inside this range, the greater the breakout potential.

As far as Brent is concerned, the main range is $60.24 to $79.37. With the main trend down, selling momentum could easily drive prices into its 50% to 61.8% zone at $69.80 to $67.55.

Bullish factors this week will include low U.S. stockpiles. Currently, U.S. crude inventories are below the 5-year average of around 420 million barrels. Additionally, there is the possibility that Iran stirs tensions in the Gulf region with the start of aggressive war games.

Bearish factors include renewed Canadian production and an escalation of the trade dispute between the US and China. Late last week, fears that Chinese demand could taper after state oil major Sinopec cut its purchase of U.S. crude. China’s Unipec, the trading arm of Sinopec, suspended crude oil imports from the US due to the growing trade spat between Washington and Beijing.

Furthermore, sentiment is growing bearish with the OPEC supply numbers. Prices show that the spread structure is back in contango, which suggests the market is well supplied so there’s a mismatch in timing with OPEC now raising output.

We’re looking for a choppy, trade with a downside bias.

Natural Gas Price Fundamental Weekly Forecast – Heat Could Return, but Production Will Remain New Record

Natural gas futures finished higher last week following the release of a bullish weekly government storage report. Natural gas futures prices jumped Thursday after a government report showed a smaller-than-expected storage build, setting the tone for a strong finish for the week.

For the week, September natural gas futures settled at $2.853, up $0.071 or +2.55%.

On Thursday, the U.S. Energy Information Administration announced a storage build of 35 Bcf in the week-ended July 27, raising U.S. inventories to 2.308 Tcf. Total stocks are 688 Bcf now below inventories one year ago and 565 Bcf under the five-year historical average.

Intermediate-Term Weather Forecast

The most recent six-to 10-day temperature forecast from the National Weather Service calls for warmer-than-average temperatures for much of the United States, but temperatures have backed off in the Pacific Northwest and Southwest compared with the intense heat the regions faced in late July.

Some bullish traders are banking on a very warm pattern returning across most of the country August 12-17 as upper high pressure restrengthens to dominate most of the country, with highs forecast to reach the mid-80s to 100s in most areas aside from the far northern United States.

Natural Gas
Weekly September Natural Gas

Forecast

For weeks, speculators had ignored the low levels of weekly injections and the relatively wide storage deficit, thinking that with production at record levels, the deficit would become a non-factor by the end of October. However, this all seemed to change last Thursday and Friday.

Last week’s rally positively affected the nearby futures contract, which reflects concerns about looming hotter temperatures, and the deferred futures contracts, which means traders are worried about having enough supply at the start of the winter heating season.

Additionally, spot gas prices hit new 30-day highs at nearly 60 pricing locations across the country.

While we support the idea of firm prices over the near-term, we’re not going to flip the switch and call this a bull market at this time. The overall fundamental picture outside of the storage deficit is not especially bullish.

We could see additional strength on storage concerns, especially if the U.S. Energy Information Administration’s weekly storage report misses to the downside again, however, weak August seasonality is likely to prevent an extended rally beyond the current retracement zone resistance.

Furthermore, output is expected to rebound this week following some minor maintenance and the typical beginning-of-month dip. Bearish traders expect to see production remain near record highs. Additionally, there are no foreseeable slowdowns expected.

Technically, the main range is $3.018 to $2.671. Its retracement zone is $2.485 to $2.885. The main trend is down so hedge fund sellers are likely to show up on a test of this zone.

Price of Gold Fundamental Weekly Forecast – Dollar’s Direction Controls Price Action

Gold futures hit a multi-year low last week, driven lower by a stronger U.S. Dollar, expectations of higher interest rates and increased demand for risky assets. Traders seemed unfazed about the threat of additional tariffs by the US on China, however, there was a little short-covering on Friday, following the release of the mixed U.S. Non-Farm Payrolls report.

For the week, December Comex Gold futures settled at $1223.20, down $9.50 or -0.77%.

One factor pressuring gold prices was the U.S. Dollar. The U.S. Dollar posted a two-sided trade last week against a basket of currencies. The greenback was driven lower Monday and early Tuesday before reversing to the upside. This created enough upside momentum to fuel a three day rally before reversing to the downside on Friday.

The dollar slipped against most major currencies on Monday and early Tuesday on position-squaring and profit-taking ahead of economic data and central bank monetary policy meetings.

A hawkish Federal Reserve helped drive the greenback higher on Wednesday after the central bank gave an upbeat assessment of the world’s biggest economy and stayed on course to gradually lift interest rates. The Fed kept interest rates unchanged as widely expected, and said U.S. economic growth has been rising strongly and the job market has continued to strengthen.

The U.S. Dollar surged on Thursday on safe-haven buying after President Donald Trump said he is considering the U.S. raise proposed tariffs on $200 billion of Chinese goods to 25 percent from the 10 percent rate his administration suggested on July 10. China then warned of retaliation if the U.S. followed through with its plan.

Finally, the U.S. Dollar suffered a slight setback on Friday against a basket of currencies after data showed U.S. job growth slowed in July. Additionally, the greenback also slipped against the Yuan after the Chinese central bank acted to stabilize the currency by stemming speculation against it.

Forecast

The direction of the U.S. Dollar is likely to continue to be the biggest influence on the price action in gold. Of particular interest for U.S. Dollar and gold investors this week will be U.S. economic data and central bank activity in China, which can influence the dollar. Basically, a weaker dollar could underpin gold, while a stronger U.S. Dollar is likely to lead to another new low for the year.

Economic data from the U.S. will be scarce until Thursday when the U.S. Producer Price Index is released at 1230 GMT. It is expected to show a 0.2% gain versus the previously reported 0.3%.

On Friday, the Consumer Price Index is expected to show growth of 0.2%, up from 0.1%. The Core CPI is also expected to come in at 0.2%, matching the previous reading.

Oil Monthly Forecast – August 2018

Crude oil market saw range bound movement for majority of month of July’18 post its decline in early trading sessions. The price action for crude oil in month of July can be divided into two half’s with first two weeks seeing steady activity above $70/b while last two weeks saw activity below $70/b. A look at daily chart shows that price action for Crude Oil in July was well inside range of $71.65 to $66.88 handles. The first week of July was extremely bullish for Crude oil owing to multiple geo-political events. Analysts predicted that Oil supply disruption in Libya could last longer while supply disruptions in Canada & Venezuela also helped Crude oil bulls gain upper hand. This situation resulted in Libya declaring force majeure on significant amount of oil supply. Increasing output from OPEC also helped with Crude oil price action. Meanwhile Iranian President Hassan Rouhani was lobbying in Europe to salvage JCPOA deal and simultaneously threatening to block Strait of Hormuz which served as a key sea route for Oil shipment from Middle Eastern countries and could greatly affect global supply which helped pair stay near monthly high price levels.

Oil Moves Lower

The second week of July opened with OPEC members expressing their discomfort over US President Donald Trump’s tantrums of OPEC controlling and being responsible for rise in Crude oil price level. WTIUSD was trading at $74.20/b around when UAE energy minister Suhail Al Mazrouei mentioned that OPEC has enough capacity to offset output shortfalls while hinting indirectly that it was US actions which resulted in current situation regarding Crude Oil price activity. The next day news hit market that US Secretary of State Mike Pompeo said “The United States may consider granting relief to some countries from economic sanctions that will be imposed on Iran’s oil exports in November” which resulted in Crude oil taking a bearish dive testing $70 price handles. Crude Oil price continued to stagnate at mentioned price level as Libya opened 4 export terminals in eastern Oil production heartland. On the other side of globe, US Shale Oil shipments to India hit record high as refiners move to replace supply from Iran and Venezuela.

Oil weekly
Oil weekly

The third and fourth week of July saw price action trapped inside above mentioned price band limits. Russia reported that it restored Oil productivity by 80% in July while blaming that Crude oil price action was triggered by US Tariff related trade war proceedings. In response to same U.S. Treasury Secretary Steven Mnuchin said that “The United States in certain cases will consider waivers for countries that need more time to wind down imports of oil from Iran as it seeks to avoid disrupting global oil markets while re-imposing sanctions against Tehran”. US Crude Oil inventory from API & EIA both showed build up of Crude Oil on weekly forecasts. Saudi Arabia predicted exports to decline by 100000 barrels per day in August with Crude oil taking to mixed movement. Crude oil opened flat for the fourth week as worries over production loss was outweighed by concerns that trade dispute would reduce economic growth and hit global energy demand. Crude Oil moved up as tensions between Iran and US escalates and Saudi Arabia suspended Crude oil shipments through red sea shipping lane. Meanwhile US weekly crude stockpile saw decrease in value when compared to readings from previous week. Crude Oil price action faltered of Friday’s market hours as investors took to profit booking over gains made earlier that week.

Oil Trying to Find Support

The last two days of July which came in first week of August 2018 saw gold trade near flat in a narrow price range as the week was full of volatility inducing major news release and back to back central bank interest rate decisions across key global economies. Forecast for the pair for coming week remains neutral, however all hope is not lost for Oil bulls, as we still have the potential for supply shocks given some of the geopolitical tensions that have flared in key producers like Venezuela or Iran, and this may be an operative reason for a hold of support this week despite the continued threat of increasing supplies.

Gold Monthly Forecast – August 2018

Gold market was on steady decline across the month of July 2018 with over 4% decrease in value as traders replaced precious metals and traditional safe haven instruments with US Greenback. Investors betting on a stronger U.S economy and higher interest rates have sought out the dollar, sapping any benefits gold and other so-called “safe havens” might have gained from global trade tensions between the world’s largest economies. US Economy’s outlook has remained positive in recent times and with multiple rate hikes in way USD continues to attract more investors despite fear of trade war impacting the market. First week of July saw gold move range bound near monthly highs due to multiple factors such as US President Trump threatening World Trade Organization after EU spoke of retaliation for US tariff on Automotive sector, Canada imposing tariff on US goods worth $12 billion in response to steel & aluminum tariff imposed by US government and US tariff on Chinese goods taking effect on last day of the week as investors focused on 2 day US Fed Rate decisions. The price action remained well within $1237 to $1260 price range.

Gold Pushes Lower

Gold hit the month’s high of $1265.90 as trading session began for the second week as Sino-US trade war and retaliatory tariff imposition on both countries remained the main focus but gold price began to see steady decline in second week as Investors took to investing in US Greenback over gold or other safe haven instruments and given the fact that Chinese import of US goods are very less while US tariff accounted for nearly $200 billion greatly affecting Chinese economy analysts predicted that US would remain on top in case of intense trade war which provided strong support to dollar bulls. China who is the major player in global market for Gold aside from USA reduced its gold investments as dollar denominated gold was costly investment especially when the asset yielded no interest in long term holdings resulting in Gold losing its luster. While NATO meeting outcome which turned sour gave gold a minor boost, strong inflation reading and hawkish comment from Fed’s Jerome Powell on US economy gave US Greenback positive momentum resulting in gold continuing its downtrend movement.

Gold Weekly
Gold Weekly

Gold continued its downtrend movement in both third and fourth week of June hitting new 2018 low’s but gold gained minor uptrend triggers on multiple occasions such as spike in demand for gold ahead of Trump-Putin summit, ahead of EU-US trade war related talks and before Jerome Powell’s congressional testimony from which investors hoped to gain clues on further rate hikes. Gold did make some uptrend movement on each of these triggers but US dollar’s outlook remained positive in medium to long term which resulted in continued decline despite deviating on multiple occasions. The decline in third week of June was caused due to two major events which helped USD, an upbeat testimony by Fed Chair Jerome Powell in front of congressional committee and when Gold hit lowest for month of June at $1211.49 on 19th July 2018 as Powell reiterated his case for raising interest rates to keep the U.S. economy on a sustainable path as Trump confirmed that despite expressing his dislike for Fed rate hikes he will not interfere with their decisions and Fed members confirmed that President Trump has no say to change Fed’s rate hike decisions.

Gold Looking to Bounce But Unlikely to Get Far

The last week of July saw USD continuing to grow strong while 10 year US treasury yields hit 5 week high which resulted in continued bearish price action in Gold market. But gold managed to stay above the month’s low thanks to volatility gained ahead of EU-US tariff related talks which ended on positive note temporarily weakening US Greenback. As month came to an end in first week of August which had two days from July’18, gold moved in a narrow range with investors focus shifting towards back to back central bank monetary policy meetings scheduled across the week. Post updates from US Fed meeting, gold continued to decline for rest of week reaching new 2018 lows around $1204/$1207 price range. When looking at pair from technical perspective, 5-month and 10-month moving averages are biased toward the bears. The relative strength index (RSI), which pierced the ascending trend line in May, has now found acceptance below 50.00 (in the bearish territory). As a result, the yellow metal could continue losing its shine for the rest of the year and is seen revisiting the December 2016 low of $1,122 in early 2018. While the long-term outlook has turned bearish, in the short-term a minor corrective rally cannot be ruled out as the metal looks oversold as per the daily chart indicators.

Silver Weekly Price Forecast – Silver continues to find major support

Silver markets were very noisy during the trading week, breaking down below the $15.50 level at one point. We turned around to form a bit of a hammer, and for the third week in a row we have seen buyers underneath willing to pick this market up. I think that this market certainly has plenty of support underneath, and therefore a buyer from the longer-term perspective. However, I also recognize that it’s difficult to be a buyer of this market with a lot of leverage. Because of this, I think it’s only a matter time before the value hunters return on these dips, and I believe that they are building larger positions, perhaps reaching towards the $16.50 level.

If we can break above there, the next target of course is the $17.50 level, which is massive resistance. This is an area that has been difficult to break, and although I don’t expect that we are going to break above there in the short term, I believe that if we can get above that level, the market could be looking at $18.50, and then perhaps the $20 level after that.

If we break down from here, I believe the $15 level will be a bit of a “floor” in the market, and that’s probably about as far as we go to the downside. Given enough time, this market will find buyers, especially if we can get the EUR/USD pair to turn around at the 1.15 handle.

SILVER Video 06.08.18

Crude Oil Weekly Price Forecast – crude oil very noisy for the week

WTI Crude Oil

The WTI Crude Oil market went back and forth during the week, trying to break above the $70 handle but failing. We also found plenty of support near the $67 level, so it’s likely that we will continue to see volatility. It’s going to be difficult to trade this market from the longer-term, as I think we are essentially stuck in a range between the $67 level and the bottom and the $70 level on the top. If we can break above $71, then the market probably goes to the $74 level above. If we break down below the uptrend line underneath, then the market should break down significantly.

Brent

Brent markets were a little bit more negative than the WTI market, as we have touched the uptrend line. The $72 level offering support as far as I can see, making a nice opportunity for buying if we can stay above there on a pullback. However, if we can break above the $76 level, that’s also a buying opportunity as we should then go looking towards $79. Otherwise, if we break down below the uptrend line, then the market probably goes down to the $70 level, a large, round, psychologically significant number. A breakdown below that level sends this market down to the $67 level. Remember, this is a market that should continue to be noisy overall, and probably difficult to trade from a longer-term perspective until we break out of this small range.

WTI Video 06.08.18

Natural Gas Weekly Price Forecast – natural gas markets rally for the week

The natural gas markets have initially pulled back during the week but found enough buyers below to turn things around and exploded to the upside, especially on Friday. Because of this, I think we continue the overall consolidation that we have been in for some time. The $3.00 level above shows resistance that extends to the $3.10 level after that. Because of this, I think that the market will have a couple of weeks of buying pressure, only to turn right back around and stay within the range. This market continues to be very volatile, and I don’t think much as changed even though this candle is somewhat impressive.

Natural gas market participants continue to deal with an oversupply in the market longer-term, and I think that unless something changes longer-term, I think that we are going to continue to see a lot of back-and-forth. If we were to break above the $3.10 level, then we could go as high as $3.40 at that point, but I don’t anticipate that happening. If we break down below the $2.60 level, that would be catastrophic for this market and we would probably get down to the $2.40 level, perhaps even lower than that. However though, I believe it is “steady as she goes” going back and forth in the range that I have marked on the chart. This has been very reliable for some time.

NATGAS Video 06.08.18

Gold Weekly Price Forecast – Gold markets looking to find support underneath

Gold markets fell significantly during the week, reaching down towards the $1200 level, an area that has been support more than once. By forming a hammer, it looks as if we are ready to turn around and try to rally a bit, perhaps reaching towards the $1250 level, and maybe even back towards the highs over the longer-term. However, pay attention to the US dollar and what it is doing. If it starts to fall in value, then I think gold could turn things around as it offers plenty of value.

If we do break down below the $1200 level, it would not surprise me at all to see this market goes looking towards the $1120 level, and then perhaps the $1000 level after that. That is an area where I would buy as much gold as a possibly could, because it should be such a longer-term buying opportunity based upon a break out years ago. That being the case, this will simply move counter to what the US dollar does, so pay attention to the FX markets if you are going to trade gold. I suspect that if there is a time where buyers should return, this is probably it. That isn’t to say that we are going to shoot straight up, but I certainly think that the buyers are willing to take a chance in this area based upon the candlestick that we just formed. I think that the selloff has been overdone to say the least, and this is a strong demand area.

Gold Price Predictions Video 06.08.18

Silver Price Forecast – Silver markets skyrocket on Friday

Silver markets reached towards the $15.50 level above, which is a significant amount of resistance in the market. I think we will probably pull back from here, but quite frankly I think it should be a nice buying opportunity, as a should offer plenty of value. Alternately, if we break above the $15.65 level, that would also be a very positive sign. I have no interest in shorting Silver, because quite frankly we are at the bottom of a longer-term consolidation area. The rally on Friday simply confirms this, and I feel it is only a matter of time before Silver explodes that the upside.

The US dollar being sold off is what could help this market going higher, and one of the easiest ways to pay attention to that is monitoring the EUR/USD pair. If the pair at rallies, that should put downward pressure on the US dollar in general, and it should send this market higher. However, we are a bit parabolic in the short term so don’t be surprised if we get a pullback that we can take advantage of at lower levels. The $15.40 level looks to be a cluster, and then the $15.30 level after that. Overall, I think it is “buy on the dips” type of situation, and I believe that longer-term traders are certainly starting to buy physical silver down at this area. However, I think that the back-and-forth consolidation on the weekly chart continues to be the case, as traders go back and forth in the futures market.

SILVER Video 06.08.18

Crude Oil Price Forecast – crude oil markets noisy on Friday

WTI Crude Oil

The WTI Crude Oil market has gone back and forth over the last several sessions, but Friday was a bit of a yawner as markets couldn’t do anything. The $70 level above is significant resistance, with the $67 level being massive support. I think if you pay attention to the overall attitude of the market will we get to those two levels, you have a nice play just waiting to happen. If we can break out of this range, then it’s a longer-term move just waiting to happen.

Brent

Brent markets when sideways during the trading session on Friday, hanging about the $73.53 level. There is an uptrend line underneath that offer support, so I think Brent traders will be looking at pullbacks as potential buying opportunities. I also recognize that the $75 level above is significant resistance and a lot of supplies sits just above that level. I believe that we are stuck in this range, but if we break down below the uptrend line, perhaps below the $72 level, then the market should break down towards the $70 level. This is a market that continues to be very noisy, and that should continue to be one that you attack in both directions on short-term charts. Once we break out of the range, you simply follow for the longer-term move. In the meantime, take your profits quickly as markets are jittery.

Crude Oil Inventories Video 06.08.18

Natural Gas Price Forecast – natural gas markets explode to the upside

Natural gas markets have exploded to the upside, reaching towards the $2.85 level. What’s been even more impressive is that we not only reached that level, but we have broken above it. Obviously, now is not the time to jump in and trying to chase the trade. A short-term pullback should be a nice buying opportunities though, especially near the $2.83 level, or perhaps the $2.85 level. I think that chasing the trade up at these high levels would be very difficult. Markets don’t move in one direction forever, but certainly they should offer plenty of opportunities.

If we broke down below the $2.83 level, then I think we would probably drop down to the $2.80 level next. However, I think that there is plenty of buying opportunities underneath, and that we will eventually go looking towards the $3.00 level, an area that has been massive resistance in the past. I look at this as a nice short-term buying opportunity on dips, but I will not hesitate to turn things around at the $3.00 level and start shorting as I anticipate that we are not ready to break out of the range quite yet. Interestingly enough, the EIA has announced that US natural gas production has hit a new record during the month of May. Because of this, I think it’s only a matter of time before the fundamentals get in the way, not just the technical resistance that we see above. We’ve been range bound for some time, so you should be able to take advantage of it.

NATGAS Video 06.08.18

Gold Price Forecast – Gold markets explode to the upside on Friday

Gold markets broke down for most of the week, but Friday was very bullish. We reached towards the $1220 level, an area that offered a lot of supply. The market looks likely to roll over a bit here, but longer-term charts show that there is a lot of support underneath. This is especially true near the $1200 level, and the weekly candle that we are forming is a hammer. Pullbacks at this point should be buying opportunities, and I think that the value hunters are starting to come back in into this market.

If we can break above the $1225 level, we then should continue to go higher. I believe that the market will continue to be very noisy, but I also believe that the closer we get to the $1200 level, the more likely we are to have plenty of value hunters. I think that the market breaking below the $1200 level would be very destructive, and it would break down the gold market overall. I don’t think that the market is good to be easy to deal with, so keep that in mind. I’d be somewhat quick to take profits if I have a lot of leverage on, but physical traders may be looking to pick up value all along this core door of trading that we have seen.

Gold Price Forecast Video 06.08.18

Natural Gas Price Prediction – Prices Surge as Inventories Drop

Natural gas prices surged higher by slightly less than 1.5% on Friday, as warmer than normal weather is forecast to cover most of the United States for the next 8-14 days.  The warm temperatures will increase cooling demand just as inventories have reached critical levels.  On Thursday the Department of Energy reported that stocks increased by 35 Bcf compared to the 40 Bcf expected by analysts.  Inventories are now below the 5-year average range while prices remain below the 5-year average price of natural gas at 3.14.  Prices fell short of taking out resistance near the 50-day moving average at 2.87. Support is seen near the 10-day moving average at 2.78.  Momentum on natural gas prices is positive as the MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices. The fast stochastic generated a crossover buy signal which points to accelerating positive momentum.

Natural Gas Supplies Remain Unchanged

The EIA reported this week that natural gas production was unchanged notching up an average total supply of 86.7 Bcf per day. Dry natural gas production remained constant week over week, according to the Department of Energy. Average net imports from Canada decreased by 4% from last week.

The EIA also reported that May set a fresh record of production.  In their short-term production report the EIA revealed that May 2018 dry natural gas production averaged 80.4 Bcf per day which was the highest level since EIA began tracking dry natural gas production in 1973. The previous record was 79.5 Bcf per in March 2018 according to the EIA report.

Demand falls

Total U.S. consumption of natural gas fell by 1% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 4% week over week as temperatures moderated somewhat in the Southwest. Industrial sector consumption stayed constant, averaging 19.9 Bcf per day according to the EIA report. In the residential and commercial sectors, consumption increased by 8% but remains a minor source of consumption during the summer months. Natural gas exports to Mexico increased 2%.

Gold Price Prediction – Gold Rallies Generating Outside Day Following Soft Payroll Report

Gold prices rebounded on Friday following a weaker than expected U.S. payroll report that put downward pressure on the dollar paving the way for higher gold prices. Gold generated an outside day which is a higher high, a lower low and a higher close. An outside day usually occurs as the top or bottom of a trend. The outside day could be creating a bottom for gold, but prices were unable to pierce through resistance near the 10-day moving average at 1,221. A close above this level would lead to a test of target resistance near the 50-day moving average at 1,258. Support is seen near the August lows at 1,204 which coincides with the July 2017 lows at the same level. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which reflects consolidation.  The fast stochastic is printing a reading just below 15, which is below the oversold trigger level of 20 and could foreshadow a correction.

Jobs Data was Softer than Expected

On Friday the U.S. Labor Department reported that non-farm payrolls increased by 157K jobs, less than the 190K expected. The unemployment rate dipped to 3.9% which was in line with expectations. Average hourly earnings, which is a key gauge of wage inflation, increased 2.7% which was also in line with expectations. Last months payroll report showed a revision which increased the number of jobs produced. Overall, traders were less than enthusiastic about the jobs report, which helped put downward pressure on yields. Lower yields allowed the dollar to ease paving the way for a rebound in gold prices.

On the trade front, China said it plans to retaliate and increase tariffs on approximately 60 billion of U.S. imports.  The central bank also reinstated a 20% reserve ratio for financial institutions conducting FX forward transactions, to help ease the downward pressure on the yuan.

Crude Oil Price Update – Trend Down, but Confirming Yesterday’s Reversal Shifts Momentum to Upside

U.S. West Texas Intermediate crude oil futures are trading lower shortly before the cash market opening on Friday. There has been no follow-through to the upside following yesterday’s 2-percent gain.

At 1203 GMT, September WTI crude oil futures are trading $68.67, down $0.31 or -0.45%.

Yesterday’s rally was fueled by low-volume short-covering tied to expectations of a decline in inventory at the Cushing, Oklahoma delivery hub. Today’s weakness is being fueled by concerns over increased production and worries that China may slap sanctions on imported U.S. crude oil.

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 trend turned down earlier in the week when sellers took out the last swing bottom at $67.56. However, momentum may be getting ready to shift to the upside following Thursday’s reversal bottom. A trade through $69.36 will confirm the chart pattern.

The main trend changes to up on a trade through $70.43. A move through $66.92 will signal a resumption of the downtrend. Taking out the main bottom at $66.29 will indicate the selling pressure is getting stronger.

The main range is $62.99 to $72.98. Its retracement zone at $67.99 to $66.81 is support. This zone is controlling the longer-term direction of the market.

The short-term range is $72.98 to $66.29. Its retracement zone at $69.64 to $70.42 is the first resistance zone. This zone stopped the rally earlier this week at $70.43.

This week’s range is $70.43 to $66.92. Its 50% level or pivot is $68.68. This price level appears to be controlling the direction of the market today.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the September WTI crude oil futures contract is likely to be determined by trader reaction to the pivot at $68.68.

A sustained move over $68.68 will indicate the presence of buyers. This move will gain momentum buyers can overtake yesterday’s high at $69.36. The next targets are $69.64, $70.42 and $70.43. The latter is the trigger point for an acceleration to the upside.

A sustained move under $68.68 will signal the presence of sellers. This could trigger a break back to $67.99.

Taking out $67.99 with rising volume could trigger an acceleration into $66.92, $66.81 and the main bottom at $66.29. This is a potential trigger point for an acceleration to the downside.

Gold Price Futures (GC) Technical Analysis – August 3, 2018 Forecast

Short-covering and position-squaring ahead of the U.S. Non-Farm Payrolls report has helped gold recover from early session weakness that drove the precious metal to its lowest level in more than a year. The market is currently in a position to turn higher for the session, but still remains in a position to close lower for a four straight week.

At 1130 GMT, December Comex Gold futures are trading $1220.50, up $0.40 or +0.04%.

At 1230 GMT, the U.S. will release its latest Non-Farm Payrolls report. The Non-Farm Employment Change is expected to show an increase of 190K. The unemployment rate is expected to decline to 3.9% and Average Hourly Earnings are expected to come in at 0.3%, up from 0.2%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, the prolonged move down in terms of price and time has put the market in the window of time for a closing price reversal bottom. This chart pattern will not change the trend, but it will indicate the buying is greater than the selling at current price levels. This could lead to a 2 to 3 day counter-trend rally.

A trade through $1220.10 will put the market in a position to post a reversal bottom, while a move through $1212.50 will signal a resumption of the downtrend.

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

The current short-term range is $1244.70 to $1212.50. Its 50% level or pivot at $1228.60 is the first upside target.

The current main range is $1278.20 to $1212.50. If the trend changes to up then look for a possible test of its retracement zone at $1245.40 to $1253.20.

Daily Technical Forecast

Based on the early trade, the direction of the December Comex Gold futures contract today is likely to be determined by trader reaction to yesterday’s close at $1220.10.

A sustained move under $1220.10 will indicate the presence of sellers. This could lead to a re-test of the intraday low at $1212.50. Taking out this level with conviction will indicate the selling is getting stronger. The daily chart is wide open to the downside under $1212.50 with the main bottom at $1162.00 the next major target.

A sustained move over $1220.10 will signal the presence of buyers. If this creates enough upside momentum then look for the rally to extend into the downtrending Gann angle at $1226.70. This is followed by the short-term pivot at $1228.60.

Look for a technical bounce on the first test of $1228.60. Overtaking it, however, could trigger an acceleration into the next downtrending Gann angle at $1235.70, followed by the minor top at $1237.80.

Price of Gold Fundamental Daily Forecast – U.S. Jobs Report Expected to Have Little Impact on Gold Prices

Sellers continue to pressure gold prices early Friday on the strength of the U.S. Dollar. Gold is now trading at its lowest level in more than a year after taking out the July 19 bottom at $1221.00 the previous session. Given the current downside momentum, it’s not going to take much to put an $1100 handle on this market with the next major support coming in at about $1162.00.

At 0725 GMT, December Comex Gold is trading $1214.30, down $5.80 or -0.48%.

The current price action strongly suggests that hedge funds and money managers are increasing their net short bets on gold futures. However, we won’t know for sure until the Commodity Futures Trading Commission releases its latest data.

For the week, gold is down more than 1 percent and in a position to post its fourth straight weekly decline.

Forecast

Gold should remain under pressure as long as the U.S. Dollar continues to rise. Gold is a dollar-denominated asset so when the dollar goes up, foreign demand for gold goes down.

Longer-term, the dollar is being supported by expectations of rising interest rates in the United States. This week’s hawkish U.S. Federal Reserve monetary policy statement strongly supports the notion for at least two more rate hikes this year and possibly three more in 2019 before normalization takes place.

Short-term, the dollar is being driven higher by safe-haven buying tied to the escalation in trade tensions between the United States and China.

Earlier this week, President Trump proposed additional tariffs on China to force them to the negotiating table, but China vowed on Thursday to retaliate if the United States acted on the threat to raise tariffs on the Asian nation’s exports, fueling fears in financial markets that the trade war between the world’s two biggest economies would escalate.

Later today at 1230 GMT, the U.S. will release its latest Non-Farm Payrolls report. The Non-Farm Employment Change is expected to show an increase of 190K. The unemployment rate is expected to decline to 3.9% and Average Hourly Earnings are expected to come in at 0.3%, up from 0.2%.

I don’t expect the report to have much of an impact on gold prices unless the headline number and average hourly earnings completely miss the mark. If there is a reversal in gold prices, it will be fueled by short-covering and profit-taking. Given the current price action, I don’t expect to see a big buyer in gold at this time. There are just too many other places to invest at this time that actually make money.

Oil Price Fundamental Daily Forecast – Aggressive Hedgers Betting on Drop in U.S. Inventories

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching lower early Friday, following Thursday’s steep rise. Traders said yesterday’s nearly 2 percent rise was fueled by aggressive hedge buying tied to an industry report suggesting domestic crude stockpiles would soon decline again after a surprise rise in the latest week.

At 0653 GMT, September WTI crude oil is trading $68.93, down $0.03 or -0.04% and October Brent crude oil is at $73.40, down $0.05 or -0.07%.

Traders said prices rallied early in the session when industry information provider Genscape reported that crude inventories at the Cushing, Oklahoma delivery hub for U.S. crude, dropped 1.1 million barrels since Friday, July 27.

Helping to push prices lower earlier this week have been a combination of factors. On Wednesday, prices plunged when the U.S. Energy Information Administration reported that in the week-ending July 27, total U.S. inventories rose 3.8 million barrels, while supplies at Cushing fell 1.3 million barrels.

Throughout the week, gains were limited and prices pushed lower on concerns about oversupply. Recently, Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production to help compensate for an anticipated shortfall in Iranian crude supplies once U.S. sanctions take effect and to stabilize prices to prevent a global economic slowdown, which would lower demand.

Forecast

September WTI crude oil has been essentially rangebound since the July 10 top at $72.98. Based on the mid-June to mid-July trading range, the 50% to 61.8% retracement zone is $67.99 to $66.81. The market has been straddling this zone since the July 18 bottom at $66.29. Yesterday’s low occurred inside this zone.

The short-term range is $72.98 to $66.29. Its retracement zone at $69.64 to $70.42 stopped the rally earlier this week at $70.43.

The price action suggests the fundamentals are balanced at this time especially with the production loss from the Iranian sanctions being offset by the output increases from Saudi Arabia and other non-OPEC producers.

The market is not expected to remain rangebound or balanced for long, however. There are potential escalation events that could trigger a huge move to the upside, or a huge move to the downside. All the charts are indicating is that volatility is coming, but they are not indicating direction.

One particularly bullish factor showed up on Thursday in the form of an expected drop in U.S. inventories. The next is a little more speculative. It concerns possible military exercises by the Iranian navy in the Gulf.

On the bearish side, an escalation of trade tensions between the United States and China could force China to impose additional duties on oil and refined products imported from the U.S. This would lead to a drop in demand and a possible increase in U.S. inventories.