Natural Gas Price Forecast – natural gas markets fall on Thursday

Natural gas markets fell rather hard during the day on Thursday, as the inventory numbers came in roughly as we expected. Because of this, there was no further catalyst to continue going higher in what is already in the overbought market. I think that the market probably pulls back towards the $3.20 level, perhaps down to the $3.15 level in general. Overall though, I think that we are in a seasonably positive time of year, so of course natural gas markets should continue to find buyers at lower levels. However, when you do get overbought like this you need a little bit of a pullback, if for no other reason than to collect profits.

I believe that the $3.00 level will be the “floor” in the market, and therefore if we were to break down below there it would be very difficult to continue to go higher at that point. That would be an extraordinarily bearish sign and we would probably unwind to the $2.75 level. We could break above the $3.35 level, but at this point I think that area is offering a massive amount of supply that we simply struggle with. I think what we will need to break above that level is some type of inventory figure that comes out much more bullish than anticipated, or perhaps a cold snap that offers us an opportunity to see more burned of natural gas, and of course more demand. I’m looking for value at lower levels at this point.

NATGAS Video 19.10.18

Gold Price Forecast – Gold hangs onto gains

Gold markets rallied, breaking towards the $1225 level recently, but since then we have gone sideways. This is a very bullish sign though, because it shows us that the market is comfortable hanging onto the gains from the move last week. If that’s the case, then it shows real resiliency and I think eventually we will try to go to the $1250 level. Once we break above that level, the market should continue to go much higher. Otherwise, we could get a pullback that I think there is enough support underneath the continue to attract money if we do fall. I think that the market is trying to turn around and form some type of large bays, as gold has been sold off so drastically.

The alternate scenario would be breaking down below the $1175 level, which would be very negative and could unwind the gold market even further. If that’s the case, the market probably rolls down to the $1100 level, and then possibly the $1000 level after that. This is a market that has a lot of greed and fear built into it, so pay attention to the fact that headlines out there are continuing to make people very nervous, and that seems to be helping gold. Beyond that, we have what looks to be rather cheap gold, and I think a lot of longer-term investors are starting to get involved at this point. I prefer physical gold, but short-term pullbacks can offers short-term buying opportunities at this point.

Gold Outlook Video 19.10.18

Natural Gas Price Prediction – Profit Taking Following Inventory Release Weighs on Prices

Natural gas prices moved lower on Thursday mid-day as traders took profit following an in line inventory report released earlier in the day by the Department of Energy.  The trajectory of injections remains subdued which will put the US at a year over year deficit when the withdrawal season begins on November 1. There are no tropical cyclones in the Atlantic or the Caribbean.  The weather is expected to be colder than normal for most of the mid-west and east coast for the next 2-weeks according to the latest forecast from NOAA.

Technical Analysis

Natural gas prices reversed course mid-day on Thursday following an inventory report from the Department of Energy. Prices dropped losing all of Wednesday’s gains, as prices failed near resistance levels at a downward sloping trend line that comes in near 3.37. Prices sliced through support which is now short-term resistance near the 10-day moving average at 3.23. Momentum is neutral as the MACD (moving average convergence divergence) prints near the zero index level with a flat trajectory which  points to consolidation. The relative strength index (RSI) moved lower in tandem with prices forming a topping pattern which reflects accelerating negative momentum. The current reading of 57, is in the middle of the neutral range and also reflects consolidation.

Natural Gas Inventories Where In Line with Expectations

The Energy Information Administration reported that working gas in storage was 3,037 Bcf as of Friday, October 12, 2018. This represents a net increase of 81 Bcf from the previous week. Expectations were for an increase of 82 Bcf for the week. Stocks were 601 Bcf less than last year at this time and 605 Bcf below the five-year average of 3,642 Bcf. At 3,037 Bcf, total working gas is below the five-year historical range. The decline below this long term range is troubling and should put upward pressure on natural gas prices.

Gold Price Prediction – Gold Moves Higher Despite Robust Jobs Data

Gold prices moved higher on Thursday as US yields whipsawed initially moving higher following a stronger than expected jobless claims report.  With claims close to a 59-year low, wages should begin to move higher which is why the Fed in its meeting minutes said that it was likely to move to restrictive monetary policy. With short-term policy still somewhat accommodative, its possible that short term rates rise to 3%, which is close where the 2-year yield is currently pricing. This could buoy the dollar and in turn put downward pressure on gold prices.  Despite this scenario, yields moved lower, paving the way for higher gold prices.

Technical Analysis

Gold prices moved higher testing the top end of a bull flag range, which is seen near 1,233. Support on the yellow metal is seen near the 20-day moving average at 1,203. The 20-day moving average crossed above the 50-day moving average which shows 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 a flat trajectory which points to consolidation.

Leading Indicators Rise

The index of leading indicator increased for the 12th consecutive month in September.  The LIE increased by 0.5% according to the Conference Board which was in line with expectations.

Jobless Claims Declined

US initial jobless claims declined on Thursday falling to 45-year lows as the labor market continues to tighten. According to the Labor Department Jobless claims declined by 5K dropping to 210K for the week ending October 13. Claims fell to 202K during the week ending September 15 which was a 48-year low. Expectations were for jobless claims to fall to 212K in the latest week. The BLS said that issue related to Hurricane Florence continued to affect the jobless claims data. The four-week moving average of initial claims, increased by 2K to 212K in the latest week.

Price of Gold Fundamental Daily Forecast – Traders Waiting for Next Catalyst to Drive Price Action

Gold is trading slightly lower Thursday while clawing back earlier losses. The range remains tight as investors continue to assess the impact of rising U.S. Treasury yields, a firm U.S. Dollar and the potential for stock market volatility. Traders appear to be waiting for a trigger to generate some fresh volatility.

At 0945 GMT, December Comex Gold is trading $1226.00, down $1.40 or -0.11%.

On Thursday, gold was pressured by hawkish U.S. Federal Reserve minutes from its September meeting. Fed policymakers voted unanimously to raise its benchmark rate 25-basis points. Furthermore, it also said it will maintain its policy of gradual rate hikes because it is the best policy to follow – one that helps slow inflation while allowing the economy to continue to grow.

At its meeting on September 25 to September 26, the Fed also said it will raise rates in December, possibly three more times in 2019 and at least once in 2020.

In economic news, U.S. building permits came in at 1.24 million. This was below the 1.27 million forecast. Housing starts were also below the forecast

Forecast

Gold investors continue to receive mixed signals from a few key outside market drivers. Bullish factors for gold include stock market volatility and weakness, a falling U.S. Dollar and a drop in interest rates. Gold could feel downside pressure if demand for risk returns, rates rise and the dollar trades steady to better.

Key U.S. economic data to watch today includes the Philadelphia Fed Manufacturing Index, the Conference Board’s Leading Index and Weekly Unemployment Claims.

Overall, the stock market trend and volatility will be the primary drivers of the price action.

Oil Price Fundamental Daily Forecast – Bearish EIA Report Pressuring Prices

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower early Thursday after a steep sell-off on Wednesday. The selling pressure was strong enough to drive U.S. crude to its lowest level since September 19. The catalyst behind the selling was a rise in U.S. stockpiles equal to almost triple what analysts had forecast.

At 0829 GMT, December WTI crude oil is trading $69.56, down $0.14 or -0.20% and January Brent crude oil is at $79.42, down $0.21 or -0.26%.

According to the U.S. Energy Information Administration, U.S. crude stocks rose 6.5 million barrels during the week-ending October 12, the fourth straight weekly build. Traders were looking for a 1.6 million barrel build.

Inventories rose sharply even as U.S. crude production fell 300,000 bpd to 10.9 million bpd last week. Analysts said the drop was attributed to the effects of offshore facilities closing temporarily for Hurricane Michael.

Gasoline stockpiles fell by 2 million barrels last week, while distillate stockpiles declined by 800,000 barrels, according to the EIA. Forecasts called for a drop of 1.52 million barrels in gasoline and 1.5 million barrels for distillates.

Forecast

Oil prices are under pressure on Thursday because of the jump in inventories, however, losses are being limited by rumors the United States may be pressured to go ahead with sanctions on Saudi Arabia. This could push prices higher if the Saudi’s decide to retaliate the move with a supply cut.

In an attempt to prevent a speculative rally and keep prices under control, on Wednesday, Saudi Arabia assured OPEC that it is “committed, capable and willing” to ensure there will be no shortage in the oil market, OPEC’s secretary-general said on Wednesday. Russia also stands committed to increase supplies if necessary.

In other news, Saudi Arabia and Kuwait are expected to struggle to resume oil production from jointly operated fields that produced some 500,000 bpd any time soon due to operational differences and souring political ties, CNBC sources said on Wednesday.

Silver Price Forecast – Silver markets quiet for Wednesday

Silver markets continue to be very choppy and sideways, and therefore a bit undecided. I think at this point we are just simply deciding whether or not the recent gains are justifiable. If the US dollar strengthens, that will probably drive down the price of silver, perhaps down to the $14.50 level. The alternate scenario of course is that we rally, but I think the $15 level above is going to be a major barrier to get above. I think longer-term traders believe it will happen, and I certainly think it will eventually, but in the meantime it’s going to be difficult. I think at this point we are looking at consolidation between $14.60 level and the bottom, and $14.80 level on the top.

Remember, Silver markets are extraordinarily sensitive to the US dollar, and if the US dollar starts to strengthen silver will come undone much quicker than gold will at times. The $14.50 level will obviously attract a lot of attention as well, so we could see a bit of value hunting in that area. Currently, I think the markets are waiting to see what the FOMC Meeting Minutes are going to say, which of course is after I am recording this, and that could have a major influence on what happens with the US dollar.

That being the case, I think we are still in a range but clearly we have some barriers that we could end break above or break down below to decide where to go next. I think at this point it’s likely that the markets will hold up in that usual manner.

SILVER Video 18.10.18

Crude Oil Price Forecast – crude oil markets get hit hard on Wednesday

WTI Crude Oil

The WTI Crude Oil market fell hard during the trading session on Wednesday, reaching down towards the vital $70 level as the inventory number was an addition of 6.5 million barrels in America. That is much higher than the expected 1 million barrels, and of course a very bearish for crude oil. At this point though, we do have a lot of structural support here so it’ll be interesting to see whether or not it can hold. If the $70 region can hold as support, then I think we will probably continue to bounce. Keep in mind that the Iranian sanctions are in effect now, so there is a bit of bullish pressure there and the question is whether or not demand will pick up. I think the next 24 hours will be crucial and I would be on the sideways looking for a daily candle for the trade.

Brent

Brent markets also fell hard during the trading session, crashing through the $80 level, and testing the $79 level as we have seen support before. I think at this point, if we break down below the $79 level, we would continue to go even lower. Otherwise, I believe that the market is trying to find support in this area, but it’ll be interesting to see how we close over the next 24 hours. If we can break above the $80 handle, and stay above there for a daily close, then I think the buyers will continue to push to the upside. Otherwise, if we break down below the $79 level, the market will unwind a bit further.

Crude Oil Price Forecast Video 18.10.18

Natural Gas Price Forecast – natural gas markets continue to grind

Natural gas markets continue to go sideways as we are trying to digest the gains that we had recently seen. The explosive move to the upside was very important, as it was in the usual manner at the end of the year. The colder temperatures in the United States will continue to drive demand up in theory, and typically this time of year we will see a lot of buying pressure. Now that we are well above the $3.00 level, the market is most certainly in a bullish section, but I think we are probably better off look at short-term pullbacks to pick up a bit of value. That value will present itself occasionally, and I look at large figures to start buying.

The $3.20 level is the beginning of significant support down to the $3.15 level below, and I think that any dip towards that area is probably short term buying opportunity. Overall though, the market continues to be bullish, but look for value as we had if reached very extreme highs. I think that colder temperatures coming will continue to be a focus so obviously you will have to pay attention to the weather reports. Beyond that, we also pay attention to inventory figures, which have been all over the place. There was an initial shot higher after the hurricane reports, but that is in our rearview mirror and seems to not be affecting price at all. I think that the $3.35 level will take a lot of effort to get beyond to the upside.

NATGAS Video 18.10.18

Gold Price Forecast – Gold markets continue to grind sideways

Gold markets have broken above a significant resistance barrier in the form of the $1220 level. After that, it looks like we are trying to grind sideways overall in order to digest the gains and perhaps build a bit of confidence at these higher levels. However, I do see the $1250 level above as a massive resistance barrier, and it will take a lot of momentum to finally get above there. If we can get above there, then the market really will take off. Overall though, I think what we are going to see over the next couple of days is a lot of back and forth trading.

However, if we were to break down below the $1220 level, the market will more than likely go down to the $1200 level after that. I think that this market will probably continue to see a lot of jittery trading due to the various economic issues around the world, not the least of which will be the trade negotiations or better yet, the lack of trade negotiations between the United States and China. We also have interest rates out there that are throwing the markets around right now, so I think at this point you are better served to trade this market back and forth in a short and choppy manner in this basic region. I would pay clear attention to the $1220 level, because it is massive support, and a break down below there could very well send this market below to the $1200 level. If we continue to find support at that level, then it will be a simple “buy on the dips” situation.

Gold Analysis Video 18.10.18

Natural Gas Price Prediction – Price Rally 3% Ahead of Inventory Report

Natural gas prices surged nearly 3% on Wednesday ahead of Thursday inventory report from the Department of Energy. Inventory levels are below the 5-year average range and the colder than normal weather is putting upward pressure on prices. Inventories are expected to draw by 85 Bcf according to Estimize.  There is currently no tropical activity in the Atlantic or the Caribbean according to the National Oceanic Atmospheric Administration.

Technical Analysis

Natural gas prices surged higher rising by 3%. Prices are fast approaching resistance near a downward sloping trend line that comes in near 3.37. Support is seen near the 10-day moving average at 3.23. Momentum on natural gas prices has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices. The fast stochastic surged higher reflecting accelerating positive momentum. The only caveat is that the fast stochastic is printing a reading of 92, above the overbought trigger level of 80 which could foreshadow a correction.

Temperatures This Winter are Expected to be Normal

The EIA reported that temperatures for the winter of 2018–19, based on the most recent forecast of heating degree days from the National Oceanic and Atmospheric Administration, are expected to be roughly similar to last winter for most of the country. On a national-average basis, temperatures last winter were generally close to the 10-winter average. Although NOAA’s forecast for this winter indicates temperatures could be close to levels from both last winter and the typical winter from the past 10 years, recent winters provide a reminder that weather can be unpredictable.

Gold Price Prediction – Soft Housing Data is Offset by Weak UK Inflation Keeping Gold Steady

Gold prices edged lower and continued to trade sideways forming a bull flag pattern that is a pause that refreshes. The dollar gained traction against the Euro and the Pound despite softer than expected housing starts numbers. The weaker than expected US data was countered by softer inflation data in the UK and EU.

Technical Analysis

Gold prices continued to form a bull flag pattern. After breaking out last week prices have moved sideways. Support on the yellow metal is seen near the 20-day moving average at 1,202. Resistance is seen near the October highs at 1,233.  The 20-day moving average recently crosses above the 50-day moving average which means that a short-term up trend is now in place. Momentum remains positive as the MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices for gold. Short-term gold is oversold as the fast stochastic is printing a reading of 84, above the oversold trigger level of 80 which could foreshadow a correction.

Housing Starts Disappoints

US Housing starts dipped in September driven by declining construction in the South. Most of the decline was due to Hurricane Florence.  The commerce department reported that housing starts fell 5.3% to an annual rate of 1.2 million units in September. August data was also revised lower to a rate of 1.27 million units down from 1.282 million units. Starts in the South dropped nearly 14% in September, which was the largest decline since October 2015. Building permits fell 0.6% percent to a rate of 1.241 million units in September, according to the Commerce Department. That was the second straight monthly decline in permits and suggested homebuilding is likely to remain tepid. Expectations were for housing starts to dip to 1.22 million units last month.  Housing starts remain robust in the North east where the surged 29%. Starts in the west were solid rising 6.6%, while they were soft in the mid-west dropping 14%.

Gold Price Futures (GC) Technical Analysis – October 17, 2018 Forecast

Gold futures are trading higher at the mid-session after reversing earlier weakness. Buyers are reacting to weak demand for higher risk assets, making gold a more attractive safe-haven asset. Treasury yields are also trading lower, however, the U.S. Dollar remains firm, which may be limiting gains in the dollar-denominated gold market.

At 1431 GMT, December Comex Gold is trading $1231.80, up $0.80 or +0.07%.

 Comex Gold
Daily December Comex Gold

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, the current uptrend has stalled inside a retracement zone. Taking out $1236.90 will reaffirm the uptrend with $1244.70 the next main top target. The trend is safe. It will turn down on a move through $1184.30.

The market is currently trading inside a 50% to 61.8% retracement zone, bounded by $1222.70 and $1235.80.

The short-term retracement zone support is $1210.60 to $1204.40.

The next retracement zone on the upside is $1246.30 to $1264.90. This zone is potential resistance.

Daily Technical Forecast

Based on the early trade, the direction of the December Comex Gold futures contract is likely to be determined by trader reaction to the Fib level at $1235.80 and the 50% level at $1222.70.

Taking out $1235.80 will signal the presence of buyers. Overcoming $1236.90 will indicate the buying is getting stronger. This could trigger a rally into a downtrending Gann angle at $1242.70. Taking out this angle will likely lead to a test of the main top at $1244.70, followed by the main 50% level at $1246.30.

The 50% level at $1246.30 is a potential trigger point for an acceleration to the upside.

A break through $1222.70 will indicate the presence of sellers. This could trigger an acceleration to the downside with the first target a support cluster at $1210.60 to $1210.30.

Crude Oil Price Update – Trading on Weak Side of Retracement Zone Ahead of EIA Report

U.S. West Texas Intermediate crude oil futures are trading lower shortly before the latest U.S. Energy Information Administration’s weekly inventories report, due to be released at 1430 GMT. The report is expected to show a build of 2.2 million barrels during the week-ending October 12. Yesterday’s American Petroleum Institute’s inventories report showed a 2.1 million barrel draw so an EIA build is likely to fuel a volatile reaction in the market.

At 1410 GMT, December WTI Crude Oil is trading $70.70, down $1.06 or -1.48%.

WTI Crude Oil
Daily December WTI Crude Oil

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $70.37 will indicate the selling is getting stronger. The next main bottom target is $67.74.

The minor trend is also down. This is why momentum is trending lower. A trade through $75.16 will change the minor trend to up and shift momentum to the upside.

The market has been trading inside the October 11 range for four sessions. It won’t affect the trend, but a drive through $70.37 could trigger an acceleration to the downside, while a breakout over $72.63 could trigger an acceleration to the upside.

The main range is $67.74 to $76.72. Its retracement zone at $72.23 to $71.17 is controlling the near-term direction of the market.

The minor range is $76.72 to $70.37. Its retracement zone at $73.55 to $74.29 is the primary upside target and resistance.

Daily Technical Forecast

Based on the early price action, the direction of the December WTI crude oil futures contract the rest of the session is likely to be determined by trader reaction to the uptrending Gann angle at $70.62.

A sustained move over $70.62 will signal the return of buyers. This could trigger a rally into the Fib level at $71.17, followed by the downtrending Gann angle at $71.72. Look for sellers on the first test of this Gann angle.

Overtaking $71.72 will indicate the buying is getting stronger. This could trigger a rally into $72.23 and $72.63. Look for a potential breakout over $72.63 with $73.55 the next likely target.

A sustained move under $70.62 will indicate the presence of sellers. This should extend the selling into $70.37. Look for an acceleration to the downside if $70.37 fails as support. This could spike the market into the next uptrending Gann angle at $69.18. This is the last potential support angle before the $67.74 main bottom.

Positive Spike in Equity Market Pressured Gold Bulls, US Futures Fall Ahead of the FOMC Meeting

Gold prices edged lower on Wednesday as equities and the dollar gained amid waning risk-averse sentiment and earning season coming into investor focus across key global markets, as trader await minutes from the U.S. Federal Reserve’s latest policy meeting for fresh clues on the pace of interest rate hikes. The firming in equities and the dollar has led to the market discounting U.S. President Donald Trump’s latest criticism of the Fed, which should have otherwise been supportive of gold. US futures trade lower before the market opens on US-Saudi tension and ahead of the FOMC minutes tonight at 18:00 GMT.

The Fed raised interest rates last month for the third time this year and said it planned four more increases by the end of 2019 and another in 2020. If the FOMC Minutes update released today signals that Fed is still on path for four rate hikes in 2019 it could greatly trim cash flow in the gold market, while a spike in US Greenback’s value as a result of the rate hike will further add bearish pressure to dollar-denominated yellow metal in the broad market.

Gold Could Continue Bearish Decline Based on FOMC Minutes Update

The release of the minutes from the Fed’s September policy meeting is due at 1800 GMT, today. Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on the precious metals market as it increases the opportunity cost of holding non-yielding bullion. Spot Gold XAUUSD is % currently trading at $1227.11 an ounce up 0.17% on the day, while US Gold futures GCcv1 is currently trading flat at $1231.10 an ounce up 0.008% on the day. US Dollar index DXY which measures the strength of US Greenback against six major global currencies is currently at 95.15 up 0.06% on the day ahead of FOMC update. Meanwhile, spot Silver XAGUSD is currently trading at 14.697 up 0.23% on the day.

Oil prices rose on Wednesday after industry data showed a surprise decline in U.S. crude inventories and tension over the disappearance of a prominent Saudi journalist stoked supply worries. Numbers from the American Petroleum Institute surprised the market as U.S. crude oil inventories declining by 2.13 million barrels over the last week, compared to expectations of a stock build. U.S. gasoline stocks dropped by a larger-than-expected 3.4 million barrels, while distillate fuel stockpiles declined by a smaller-than-expected 246,000 barrels as per API data and investors now await inventory data from the U.S. Energy Department’s Energy Information Administration which is due at 1430 GMT today. Spot US Crude WTIUSD is currently trading at $71.88/b after touching an intra-day high at $72.36/b earlier today.

Price of Gold Fundamental Daily Forecast – Strengthens Over $1236.90, Weakens Under $1222.70

Gold is trading lower shortly before the regular session opening on Wednesday. Profit-taking and position-squaring in reaction to a rebound in stocks and a firmer dollar are weighing on prices. Traders are also lightening up on the long side ahead of the release of the Fed minutes at 1800 GMT.

At 0949 GMT, December Comex Gold is trading $1229.90, down $1.00 or -0.07%.

Gold improved on Tuesday, but the market posted an inside move, which typically indicates investor indecision and impending volatility. Traders said the gains were related to short-covering. New longs appeared to be scarce since the rally in the equity markets forced them to re-evaluate their reasons for being long.

If you recall, gold rallied last week primarily on safe-haven buying due to a steep two-day drop in U.S. equity markets. That move may have been fueled by a rapid rise in U.S. Treasury yields. If yields continue to consolidate and stocks continue to recover from last week’s steep sell-off then gold buyers may decide to start booking profits.

In other gold related news, according to CNBC, “holdings of the largest gold-backed ETF, SPDR Gold Trust, rose nearly 2 percent last week. That was its biggest weekly inflow since January, with the fund having registered declines of more than 4 million ounces since hitting a peak in late April. Holdings rose 0.6 percent to 748.76 ounces on Monday.”

Forecast

Demand for risk, economic reports and the Fed minutes should dictate the direction of the gold prices on Wednesday.

Strong U.S. economic data and hawkish Fed minutes should be bullish for Treasury yields which will make the U.S. Dollar a more attractive investment and put pressure on dollar-denominated gold.

U.S. Building Permits are expected to come in at 1.27 million units. This will be up slightly from 1.25 million units. Housing Starts are forecast at 1.22 million units, down from 1.28 million units.

The Fed is scheduled to release the minutes of its September meeting at 1400 GMT. Traders will be looking for more details as to the pacing of the central bank’s future rate hikes. At the meeting, the Fed increased its benchmark rate by 25 basis points, while hinting at a similar move in December. The central bank also said it could increase rates at least three times in 2019 and perhaps once more in 2020.

One thing that traders don’t expect the minutes to reflect is last week’s rapid rise in U.S. Treasury yields and its negative impact on the stock market.

 

Natural Gas Price Fundamental Daily Forecast – Likely to Straddle $3.306 Until EIA Data is Released on Thursday

Natural gas prices are trading firm early Wednesday, supported by forecasts for cooler temperatures in several key demand areas. However, gains are being limited by reports of high production and general uncertainty ahead of this week’s U.S. Energy Information Administration’s weekly storage report on Thursday.

At 0839 GMT, December Natural Gas is trading $3.319, up $0.018 or +0.55%.

Yesterday’s two-sided price action was fueled by offsetting U.S. temperature forecasts. According to the latest data from the National Weather Service, much of the Midwest, Northeast and Southern regions of the U.S. are forecast to experience below-average temperatures. At the same time, warmer-than-average temperatures are in the forecast for the Rockies, Northwest and Southwest regions. The forecasts are driving up both gas-fired power burn and heating demand.

Over the next two weeks, demand is estimated to decline slightly and average 80 Bcf/d as power burn and residential and commercial demand weaken, according to Platts Analytics.

Platts Analytics is also estimating that production will rise over the next two weeks and average 83.1 Bcf/d as shoulder season maintenance projects wind down.

In October so far, output averaged 83.4 Bcf/d, up nearly 10 Bcf from year-ago levels of 73.6 Bcf/d.

Forecast

The current short-term range is $3.409 to $3.202. Its mid-point is $3.306. This price is controlling the short-term direction of the market.

A trade through $3.409 will signal a resumption of the uptrend. A trade through $3.202 will change the main trend to down.

Unless the forecasts call for extreme cold temperatures or an extended cold spell, the $3.409 top will be hard to exceed at this time. If you recall, this top was put in last week during the height of the hurricane scare.

At the same time, unless we see a large jump in production or injections, the bottom at $3.202 is likely to remain intact over the near-term.

Therefore, I have to conclude that we’re likely to see a sideways trade with the market straddling the pivot at $3.306 most of the session.

Thursday’s EIA report is expected to show an injection of 85 Bcf.

Oil Price Fundamental Daily Forecast – API Data Shows Unexpected Draw, EIA Traders Looking for Build

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures settled higher on Tuesday after the American Petroleum Institute reported a surprise crude oil draw. The market also continues to be supported by geopolitical tensions over the disappearance of a prominent Saudi journalist. Some are saying if the Saudi’s are pushed too hard on the issue, they may retaliate by pulling supply from the market.

At 0813 GMT, December WTI crude oil is trading $71.98, up $0.22 or +0.28%. January Brent crude oil is at $81.30, up $0.26 or +0.32%.

API Report

According to the API, U.S. crude inventories fell by 2.13 million barrels during the week-ending October 12. Analysts were looking for an inventory build of 2.167 million barrels.

The API also reported a 3.4 million barrel draw in gasoline inventories for the week-ending October 12. Analysts had forecast a draw of 1.074 million barrels.

Distillate inventories were down during the same period by 246,000 barrels, compared to a larger expected draw of 1.280 million barrels.

Inventories at the Cushing, Oklahoma, futures hub increased by 1.5 million barrels.

Forecast

The direction of the crude oil markets on Wednesday is likely to be determined by trader reaction to the U.S. Energy Information Administration’s weekly inventories report, due to be released at 1430 GMT. The report is forecast to show a build of 1.6 million barrels during the week-ending October 12. However, the estimate may change ahead of the report due to the surprise API inventories number.

In other news, according to CNBC, U.S. President Trump gave Saudi Arabia the benefit of the doubt in the disappearance of journalist Jamal Khashoggi even as U.S. lawmakers pointed the finger at the Saudi leadership and Western pressure mounted on Riyadh to provide answers.

This is important because according to rumors, Saudi Arabia could cut as much as 500,000 barrels per day of crude production in response to any U.S. sanctions. If this were to occur, prices could rise $10 to $20 over the near-term.

Supporting the market are reports that Iranian crude exports are falling faster than anticipated ahead of the start of the November 4 sanctions. Perhaps in response to this news, OPEC Secretary-General Mohammad Barkindo urged oil producing companies to increase capacities and invest more to meet future demand as spare oil capacity shrinks worldwide.

Helping to keep a lid on prices early is a report on one of Russia’s top energy companies, Gazprom Neft. The company apparently is no longer capping oil output increases by local producers.

 

Gold Price Futures (GC) Technical Analysis – Failure to Hold $1222.70 Could Trigger Break into $1210.60

Gold futures are trading lower early Wednesday as investors booked profits after last week’s run-up. The catalysts behind today’s liquidation-led pressure are increased demand for risky assets and a firmer U.S. Dollar. Traders are also paring positions ahead of today’s U.S. Federal Reserve monetary policy minutes due to be released at 1800 GMT. They are expected to offer some insight on the pace of future interest rate hikes.

At 0651 GMT, December Comex Gold futures are trading $1226.50, down $4.60 or -0.37%.

Comex Gold
Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1236.90 will signal a resumption of the uptrend. The next target is the main top at $1244.70. The main trend will change to down on a trade through $1184.30.

The main range is $1278.20 to $1167.10. Its retracement zone at $1222.70 to $1235.80 is providing both support and position today. Trader reaction to this zone will likely determine the near-term direction of the market.

The short-term range is $1184.30 to $1236.90. Its retracement zone at $1210.60 to $1204.40 is the nearest support zone.

Another main range is $1325.40 to $1167.10. If there is another upside breakout then its retracement zone at $1246.30 to $1264.90 will become the first upside target.

Comex Gold.
Daily December Comex Gold. (Close-Up)

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the December Comex Gold futures contract on Wednesday is likely to be determined by trader reaction to the 50% level at $1222.70.

Holding $1222.70 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to extend into $1235.80 to $1236.90.

Taking out $1236.90 is could trigger a breakout into $1244.70 to $1246.30.

A sustained move under $1222.70 will signal the presence of sellers. This could trigger an acceleration to the downside with the next target zone $1210.60 to $1204.40.

Since the main trend is up, buyers may step in on a test of $1210.60 to $1204.40. They are going to try to produce another secondary higher bottom.

Crude Oil Price Update – Holding $71.61 Could Trigger Rally to $73.55

U.S. West Texas Intermediate crude oil futures are trading slightly better early Wednesday. However, the price action has been limited by low volume ahead of today’s U.S. Energy Information Administration’s (EIA) weekly inventories report, due to be released at 1430 GMT.

Today’s early strength is being fueled by momentum created by Tuesday’s higher close. Prices rose yesterday after the weekly American Petroleum Institute (API) report surprisingly showed U.S. crude inventories fell by 2.13 million barrels during the week-ending October 12. Analysts were looking for an inventory build of 2.167 million barrels.

At 0612 GMT, December WTI crude oil is trading $71.90, up $0.14 or +0.22%.

Today’s EIA report is expected to show a 1.6 million barrel build, however, this forecast could change due to the API number.

WTI Crude Oil
Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $70.37 will indicate the selling is getting stronger. A move through $67.74 will change the main trend to down.

The minor trend is down. This is why the momentum shifted to the downside. A trade through $75.16 will change the minor trend to up and change momentum to up.

The market has been trading inside the wide range formed on October 11 for four sessions. The high of the range is $72.63. The low of the range is $70.37. This formation tends to indicate trader indecision and impending volatility. Taking out $72.63 will make $70.37 a new minor bottom.

The main range is $66.50 to $76.72. Its retracement zone is $71.61 to $70.37. This zone is controlling the near-term direction of the market. Holding above this zone will give crude oil an upside bias.

The short-term range is $76.72 to $70.37. If today’s early strength creates enough upside momentum, we could see a move into the short-term retracement zone at $73.55 to $74.29.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the December WTI Crude Oil market on Wednesday is likely to be determined by trader reaction to the main 50% level at $71.61.

A sustained move over $71.61 will indicate the presence of buyers. Taking out $72.63 could trigger a spike into at least $73.55.

A sustained move under $71.61 will signal the presence of sellers. If the selling momentum is strong enough, we could see a drive into $70.40 then $70.37. The latter could be the trigger point for an acceleration to the downside. There is no major support under this level until $67.74.