Crude oil prices skipped the $100 level Tuesday amid concerns of oil disruptions after Iran threatened to stop the Strait of Hormuz oil lane to west should Iran face more sanction over its nuclear potentials.
Keeping in mind, sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.
The outlook for crude oil prices remains generally to the downside, as persistent fears from the EU debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure.
Traders will also continue to monitor the developments from the 17-bloc euro nation and the European leaders’ latest moves to contain the debt crisis, where we expect volatility to persist during the sessions this week.
The year 2011 is coming to an end, and markets are facing low volume trading, noting that many markets are closed today including UK and Australia, but the US data that came out today showed that the US economy improved lately.
While eyes still focused on Italian bond’s sales, as their results are expected to come out later on this week which could make movement in markets, yet the European and American stocks managed to rise after the better than expected US confidence.
In Europe DAX jumped nearly 0.3% while CAC 40 rose by 0.2%, on the other hand, the euro inclined slightly trading around the 1.3071 level compared with the opening level today of 1.3054, while the pound rose to trade around 1.5661 level.
In the final week of this year markets are still in the holiday mood, where trading remains quiet with thin volumes as investors continue to be cautious ahead of the year-end.
investors await the release of the US consumer confidence, looking for more signs of recovery in the world’s biggest economy, amid continued concerns over the euro-zone’s debt crisis.
The recent upbeat US data spurred rallies in riskier assets, yet as uncertainties regarding the global economic outlook remain high, risk aversion might be triggered anytime, and trading may become volatile due to the low volume.
Several markets remain closed today for an extended Christmas holiday, including New Zealand, Australia, Hong Kong and UK. In Europe however markets will be quite on lack of economic data and bond auctions.
Yet the European stocks rose today unlike their Asian counterparts, as markets focus on the US consumer confidence which could show improvement in during Dec. while the house prices may fall but at a slower pace.
DAX gained 0.77% while CAC 40 gained 0.92%. The euro is also moving with a slight bullish momentum yet in a tight range around the 1.3070, while the pound is following the euro’s footsteps trading around the 1.5640.
The CL contract had a very positive week as traders piled into the market. The formation we are currently seeing is looking like one of two potential reads: either a bullish flag or a downward channel. The burden of proof is on the bulls presently, but a serious break north of current levels would have this market possibly seeing prices as high as $130 in the future as measured by the potential pole for the flag. However, we are willing to sell any weakness at the moment as we would return towards the bottom of the channel.
Brent markets rose as well over the week, and reentered the previous consolidation range. The market looks like it wants to grind sideways with a slightly bearish tone. The next $10 or so will be full of noise on this chart, so selling weakness is our preferred trade at the moment.
The CL contract rose slightly on Friday as traders continued to buy up the market in response to the bombings in Iraq, the tensions with Iran, and the uncertainty in North Korea. The market is currently attempting to break above the $100 level again. The market is currently forming what looks like either a bullish flag or a downward channel. With this in mind, the next few dollars will be very important.
The breaking higher above the $103 level would not only be a higher high, but a breaking to the upside of a massive flag that would measure a projected run to the $130 area. The markets would certainly be affected by a spike in oil prices, and in that scenario we could see a crash going forward. However, in the short-term, we think this would be very bullish for CL.
The Brent markets aren’t quite as cut and dry. The $105 – $110 area seems to be some kind of equilibrium for this market. The Brent contract has spent most of the last year in this general vicinity, and could continue to do so. The $112.50 level above is certainly resistive, and the level should continue to keep prices lower. The $95 level below is the absolute bottom of support in this market going forward, but we aren’t looking for a run back down to that level in the near term. The situations around the world right now are simply too volatile to think that the real risk is to the downside, although bad news in Europe will continue to keep the market down in general.
Because of the situation in Europe running simultaneously with the tensions in the Middle East, this market will continue to be very choppy. This could be because the Europeans tend to use Brent much more than the CL contract, and this will certainly be affected by recession in Europe more than the CL which is used extensively in the United States. With this in mind, we could see the spread between these two contracts tighten finally.
Crude oil prices rose on Friday as Baghdad faced today series of bombings that killed more than 72 people, fueling concerns about possible oil disruption to Europe, especially in light of Iranian naval started military, and that will continue for ten days, which raised fears of disruption or interruption regarding crude oil supplies for Europe.
As traders switched on holiday mode with Christmas on doors, so trading volumes ebb down and market movement is rather limited in a tighter range before the New Year’s holiday, yet with slight punch of risk. Sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.
The outlook for crude oil prices remains generally to the downside, as persistent fears from the EU debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure, where traders will also continue to monitor the developments from the 17-bloc euro nation and the European leaders’ latest moves to contain the debt crisis, where we expect volatility to persist over sessions next week.
Crude oil prices inclined last week, as the EIA report showed crude oil inventories fell heavily last week by 10.6 million barrels opposite to expectations, which provided the oil prices with more upside momentum last week.
We started from last week to see the thin holiday volume with the choppy trading evident, where the eyes were on the ECB three year loans which flooded banks with 489 billion euros and the market still has a cautious reaction to it.
This week we are surly in the holiday mode and with thin volumes of trading any move might be violent and especially with the lack of major data.
Our overall outlook for crude oil prices is somewhat neutral with a downside tendency, as the outlook for global growth is worsening due to mounting concerns from Europe and the fact that major economies around the globe are still weak, and that should put negative pressure on crude oil prices. Nonetheless, if the outlook for global growth improves, crude oil prices are likely to rise in that case.
Highlights for this week that will probably affect Crude Oil direction are:
Monday December 26:
Markets closed for Christmas holiday.
Tuesday December 27:
The United States will release the Consumer Confidence for December at 15:00 GMT which is expected to rise to rise to 58.1 from 56.0.
Wednesday December 28:
No major news scheduled and the market movement will be thin on low volume and focused on the sentiment. The eyes will be onItalythat will be preparing to auction new bonds.
Thursday December 29:
The U.S. will start with the weekly jobless claims for the week ending December 24 at 13:30 GMT after last week they dropped to 364,000.
The Chicago PMI for December is due at 14:45 GMT and expected to ease to 60.2 from 62.6. At 15:00 GMT we have the pending home sales for November which is expected to ease to 1.8% after the 10.4% surge.
At 16:00 GMT, the EIA report for crude oil inventories will be released for the week ending December 23, where last week crude oil inventories decreased by 10.6 million barrels.
Friday December 30:
No major news scheduled and the market movement will be thin on low volume and focused on the sentiment.
Still the market is facing low volume trading, as investors are entering the holiday season, one day only to Christmas and trading is becoming thinner and the market’s movement is limited in tight ranges, yet with some appetite for risk.
And despite the slowdown in US economy’s growth during the third quarter, and despite the report that came today and showed a lower than expected income and spending in the US economy, nevertheless, jobless claims declined to the lowest level since April 2008, so investors felt optimistic again before Christmas.
Noting that Asian stocks ended today’s session in green, where the European and American stocks followed the incline till now as optimism was spread among traders.
In Europe DAX jumped nearly 0.3% while CAC 40 rose by 0.8%, on the other hand, the euro returned to the opening levels trading around the 1.3037 level compared with the highest level today of 1.3095, while the pound dropped to trade around 1.5655 level.
As markets are entering the holiday mood with only one day to Christmas, trading is becoming thinner and the market’s movement is limited in tight ranges, yet with some appetite for risk.
The upbeat US data which provided signs the world’s largest economy is recovering continue to drive the year-end gains, yet the persistent worries over Europe’s unsolved debt crisis still weigh on sentiment.
Yesterday the US jobless claims hit a 3-1/2 year low last week while consumer sentiment reached a 6-month high. Today the personal spending may rise to 0.3% in Nov. while the new home sales may rise to 315 K.
The focus will also turn to Europe as well, after European officials created recently a European System Risk Board (ESRB) that will act like a super-watchdog which could ease the dangers facing Europe’s financial system.
The strengthening US economy brought gain in Asia today, with the MSCI Asian Pacific Index Ex. Japangaining 1.3% although the weakening Asian outlook determined Fitch to cut its growth forecasts for the region.
In Europe stocks are extending their rally in thin-trading on optimism from the upbeat US data which overshadowed the worries from Europe’s debt crisis. FTSE gained 0.42%, DAX gained 0.31% while CAC 40 gained 0.96%.
As risk appetite improved yet volume is thin the USD is moving in a tight range but with a slight downside momentum around the 79.80 level. The euro is slightly higher trading around the 1.3070 while the pound is at 1.5670.
The CL contract managed to squeak out a gain on the light Thursday session. The markets are general quiet so close to Christmas at this point, but the bias has certainly shifted to the upside over the last couple of sessions. The potential for a downward channel is still there, as well as the potential for a bullish flag. Only time will tell which one ultimately proves to be correct, but none the less – there will be some kind of move coming soon.
Currently geopolitical risks are taking the forefront in this market, and as long as there is unrest in Iraq, uncertainty with the Iranians, and general turmoil in the Middle East, there will be a risk that we see higher oil prices. The markets are currently very sensitive to these issues, and the price can very easily reflect this on headlines coming out of various parts of the world. We are slightly bullish, but not enough to put on a position at this moment time due to the holidays.
Brent fell during the session as the volume receded for the Thursday trading day. The market is moving into a resistance area, and the area held true. Of course, only so much can be read into it as the market simply doesn’t have the volume necessary to remove the long-term selling that the area above has seen over the last several months. The Brent market is going to be heavily influenced by the problems in the Middle East, and elsewhere. However, there is a question about demand going forward. If the global economy is really going to slow down, one has to wonder how much longer the bulls can stand on “potential” issues in the Middle East. Sooner or later, somebody is going to have to increase consumption for a sustained time period in order to keep pushing prices higher.
Last week we saw a massive drawdown in inventories of crude out of the United States. However, this could be partly due to all of the shipping that goes on at Christmas time. The real test will be down the road as we exit the holiday season, and get into more normal conditions. In the mean time, we are slightly bearish of this market, but will remain flat until the volume picks back up.
Crude oil prices rose on Thursday after dollar dropped and stocks gained amid signs the economy is strengthening, as the US jobless claims dropped to the lowest level since April 2008, and the US confidence came better than expected, together overshadowed slower than forecasted US GDP.
As the year nears to end, lights are about to fade upon the financial markets and we will accordingly see low volumes and limited trading as well before Christmas holiday. The sentiment will start to shape as investors stay cautious ahead of the New Year’s but traders will be mostly concerned about the latest development from the 17-bloc euro area.
The outlook for crude oil prices remains generally to the downside, as persistent fears from the EU debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure. Traders will continue to monitor the developments from the 17-bloc euro nation and the European leaders’ latest moves to contain the debt crisis, where we expect volatility to persist over the sessions this week.
Mix sentiments were spread among investors after the data that was released today, as the British data showed a better than expected growth in the final reading of the third quarter, furthermore, the US jobless claims declined last week to give some hope in markets.
However, the US GDP report showed a slowdown in growth during the third quarter as today’s reading came below expectation to reach a growth by 1.8% compared with the previous and the estimated reading of 2.0%.
Noting that Asian stocks ended today’s session in red, while the European and American stocks inclined on the jobless claims and better than expected US confidence.
In Europe DAX jumped nearly 1.0% while CAC 40 rose by 1.1%, on the other hand, the euro returned to the opening levels trading around the 1.3038 level compared with the highest level today of 1.3118, and same thing happened to the pound trading around 1.5666 level.
Broad markers reversed losses as investors await some important economic data from the US expected to signal that the world’s largest economy is recovering which improved the traders sentiment and increased their appetite for risk.
The ECB said yesterday that 523 European banks took a record 489 billion euros of funds, which raised fears over how dependent is the banking sector on the central bank, triggering sharp sell-offs.
Yet as consumer confidence might improve this month in theUS, while the growth may hold still at 2.0% in Q3 and the jobless claim may remain under 400 K last week, sentiment started improving as theUSis signaling recovery.
Markets will also eye today Italy’s confidence vote on the 33-billion-euro austerity package and ECB’s president Mario Draghi’s speech in Frankfurt, as he might confirm the “substantial downside risks” to the economy by the debt crisis.
In Asia stocks fell today on fears from European banks, where Nikkei 225 fell 0.77% and Hang Seng fell 0.21%, yet in Europe DAX rose 1.41% and CAC40 rose 1.31% as confidence found support from theUSupbeat data.
As risk appetite improved, the USD was dragged down trading around the 79.70 level from the opening at 79.97, while the euro is trading with bullish momentum rising as much at 1.3099 from the opening at 1.3045.
The GBP found additional support today from the better than expected GDP report indicated the economy grew 0.6% in Q3, while business investments rose 0.3%, trading as of this writing around the 1.5715 level from the opening 1.5673.
The CL contract rose again on Wednesday as the move from the previous session found follow through. The $97.50 level was taken again, and the $100 level is sitting just above. The market is currently in a down channel, but a break above this channel could actually be a bullish flag breaking out. If this is the case, we are looking at much, much higher prices in the Light Sweet Crude markets. The pole would measure this move as high as $132 roughly, and this would be a serious weight on economic output in not only the United States, but also around the world.
It is because of this that we actually believe more in the down trending channel presently, and are willing to sell weakness at this point. However, if we are wrong – there could be a nice buy and hold trade in this market. There are some catalysts out there to potentially case a spike in oil, but demand really isn’t one of them. If the commodity spikes, it is probably more indicative of the US dollar, and less so of oil itself.
Brent markets tried to fall on Wednesday, but bounced at the end of the session in order to form a hammer. The hammer sits just above the $105 level, and it looks like we are reentering the previous consolidation area up to the $112.50 level. A break of the Wednesday range should see this market trying to reach that $112.50 mark, and would have us on board for a short-term scalp. The breaking of the lows from Wednesday would have us bearish again as it would show a failure to rally and that the bulls simply do not have enough power to pick the market up at this point.
With the holiday season in full swing, it is easy to think that this pair may simply go sideways in this range for a while, and as a result this is how we are playing it: for small gains from wither the bottom or top of the range, simply scalping for a dollar or two at a time.
Crude oil prices surged on Wednesdaythough the dollar gained after the European Central Bank offered more than expected loans for the euro-area banks, mirroring the worsening impact of the debt crisis on European lenders, yet crude oil rallied on the EIA report which showed a decline in inventories last week, boosting investors’ appetite the black gold.
While the year nears to end, lights are about to fade upon the financial markets, where will accordingly see low volumes and limited trading as well before Christmas holiday. The sentiment will start to shape as investors stay cautious ahead of the New Year’s but traders will be mostly concerned about the latest development from the 17-bloc euro area.
The outlook for crude oil prices remains mainly to the downside, as persistent fears from the EU debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure, as traders continue to monitor the developments from the 17-bloc euro nation and the European leaders’ latest acts to contain the debt crisis, so we expect volatility to persist over the sessions this week.
By the start of the European session, currencies benefited from the optimism which extended from yesterday’s trading, yet optimism didn’t last as the European Central Bank offered more than expected loans for the euro-area banks.
Knowing that the BoE released its meeting minutes today, where the vote to keep the rates at 0.50% and the Asset Purchase Facility at 275 billion pounds was unanimous, as policy makers await the impact of the program that will end in February.
Noting that Asian stocks managed to end today’s session in green, while the European and American stocks couldn’t, as they dropped despite the data that was released by the US housing sector, where existing home sales incline in November above expectations, knowing that investors felt pessimistic after the ECB’s announcement.
Demand on higher yielding assets persisted today as the upbeat U.S. and German data yesterday alongside the easing worries over North Korea and the strong Spanish bond sale which pushed yields down, improved sentiment among traders.
The positive housing data from the U.S. yesterday and the unexpected improve in the German business confidence reversed the worries ignited by the possible downgrade to UK’s top-notch rating by Fitch.
The focus will turn today to the European Central Bank as it will announce the results of its first tranche of unlimited three-year loans, while Canada will release its retail sales and the US will release its existing home sales and the EIA oil inventories.
BoE released its meeting minutes today where the vote to keep the rate at 0.50% and the Asset Purchase Facility at 275 billion pounds was unanimous, as policy makers await the impact of the program that will end in February.
In Japan the central bank held its interest rate steady at a very low level of 0.10%, and kept the asset-purchase program unchanged, yet it lowered its assessment of the economy for the second month in a row.
In Asia stocks extend gains today on the upbeat US and German data, where Nikkei 225 rose 1.48% and Hang Seng rose 1.86%. Stocks rose in Europe as well where DAX gained 1.04% while CAC 40 gained 1.17%.
Meanwhile the safe haven USD weakened trading around the 79.45 level, which helped the yen to rise to 77.75, and provided commodities with a bullish momentum where oil is trading around $98.00 while gold is around $1636.60.
The CL contract rallied very hard on Tuesday as the Iranian tensions and simple lack of volume contributes to the move. The Dollar fell in general, and this helped the oil markets in general. The minor support level at $92.50 has held, but the validity of the move will certainly be questioned. At this time of year, it is hard to take the moves seriously. The day finished very bullish and near the top. However, it also is just starting to see resistance in this area, so we could and would expect to see a pullback at this point. In fact, we are willing to sell rallies at this point if we get any sign of weakness in the markets going forward.
The tensions in Iran with the US and Israel are basically an excuse as far as we can tell. The low volume has allowed the upward momentum to swing much further than normally, so this rally still makes no real sense at this point.
Brent markets did the same thing for the Tuesday session, taking advantage of the low volume and sense of concern in the Middle East. However, unless you believe there is a war coming in the near future – the Iranian question is just market noise. The fact is that we are approaching the bottom of the recent consolidation that was broken below, and this area could be resistance in the near term. The first sign of weakness would have us bearish at this point, as we don’t trust these kinds of moves at the end of the year as they are just more likely to be short covering than anything of substance. Also, one would have to ask exactly what has changed overnight to believe that there is suddenly going to be some kind of economic upsurge and demand in crude will suddenly spike. With this in mind, we are selling rallies as we break a little higher not that we could see serious resistance just above current levels, and the simple lack of reasoning for the move.
Crude oil prices rose on Tuesday, as the US dollar lost strength following data out from both German and US economies, where Germany’s IFO business climate inclined above expectations, in addition, the U.S housing starts and building permits knocked out analysts’ median estimates.
Furthermore, Spain sold short-term bills with lower yields, which accordingly boosted risk appetite among traders for higher-yielding assets, including the Euro, British Pound and stocks.
As the year nears to end, lights are about to fade upon the financial markets, where will accordingly see low volumes and limited trading as well before Christmas holiday. The sentiment will start to shape as investors stay cautious ahead of the New Year’s but traders will be mostly concerned about the latest development from the 17-bloc euro area.
The outlook for crude oil prices remains generally to the downside, as persistent fears from the European debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure, while traders will continue to monitor the developments from the 17-bloc euro nation and the European leaders’ latest moves to contain the debt crisis, where we expect volatility to persist over the sessions this week.
Glimmer of hope returned to the markest following the release of German and U.S. data today, where Germany issued the IFO Business Climate index which came above expectations, which boosted risk appetite among traders, furthermore, the U.S housing data showed a rise in housing starts and building permits higher than forecasted.
Moreover, Spain managed to sell as much as 3.7 billion euros of 3-month bills on 1.735% yields, down from 5.11% an auction earlier, while demand for the Spanish debt was 2.9 times the quantity offered compared with the previous of 2.8%.
In addition, Spain also sold 1.92 billion euros of 6-month bills, producing yields of 2.435% compared with the prior of 5.227%, while the bid-to-cover ratio was 4.1 times down from 4.9 times recorded in the November auction, and with easing fears over North Korea, it gave support to the higher yielding assets which limited demand on the safe haven USD.
Noting that Asian stocks recovered some of the losses today following the sell-off witnessed yesterday on North Korean leader Kim Jong il’s death, fueling fears from a regional instability, where the MSCI Asian Pacific Index rose 0.2%.
Same thing in Europe, where DAX rose nearly 1.4% while CAC 40 gained 1.4%, while the euro gained visibly as risk appetite widened, trading around the 1.3125, dragging the pound higher to trade as of this writing around the 1.5675 level.
The USD lost some of yesterday’s strength trading around the 79.65 level, while the yen declined slightly trading around the 77.78 level. As demand on safe haven eased, the AUD gained trading around the 1.0075 as of this writing.