The demand side for the global oil trade rests on the Far East and specifically China. News of a slackening economy and a slowdown in factory orders has helped keep a tenuous cap on oil prices .But there are signs that China will not wallow in the malaise of money, but would work to accelerate growth. This is according to Lou Jiwei, Minister of Finance. He notes increases in electricity consumption, a metric that we believe is the most reliable reading of economic health or dis-ease. These comments were made on the side at the G-20 meeting this week. Moreover, none of the fellow delegates at the meeting thought that China would undergo a hard landing.
News that sent WTI lower early Friday was a break through on Palestinian and Israeli peace negotiations beginning after a three year hiatus. One notable aside, when the announcement was made to the press that both sides had agreed to the negotiations, it was done by Sect. of State, John Kerry standing along instead of the with the participant delegates from each side. In diplomacy when one wants to underscore unity in action, the photo op is usually showing conviviality among the participants. The lack of accompaniment by the entire group demonstrates that this will not be an easy or quickly rewarded process.
Venezuela has formally ended their efforts to reconcile diplomatic relations with the U.S. At issue is the Obama nominee for U.N. ambassador. The Venezuela for their part are incensed that the Ambassador referred to the country as a repressive regime and would contest “the crackdown on civil society.” Since there has been little oil of late that has moved to the U.S. from the South America country we see this as more of a state issue and not an oil problem.
Daily Moving Averages: 21, 55, & 100: 101.69, 97.79, 95.40
Weekly Moving Averages: 21, 55, & 100: 95.58, 93.08, 94.02
With favorable economic data from Jobless Claims Thursday and refinery run rates at near record use, it is no wonder that the funds pressed this market higher Friday,
- Although Friday’s high was a very short-term peak, the more important terminus is likely to be seen Monday.
- This is just in time for the two-week cycle to turn down.
- While we look for a betterment of the Friday high if it occurs will be marginal.
- Then the forecast is for Sept to drop back to test the downside pivot at 106.90.
- With a daily settle below that level the large degree third leg of this advance has been recorded.
- This event will signal a probable look at 103.00 to 102.50.
- September is seen to be in a two way market for Monday. We are looking to sell the rip then buy the dip.
- It is the Sept arb that will determine if the new high is to be seen before a turn around.
- Note the very overbought view on the stochastic measure below the chart.
- This type of pattern may allow for a momentary move to or above 109.00 it is unlikely to grab a foothold above that mark.
Daily Moving Averages: 21, 55, & 100: 105.72, 104.46, 105.19
Weekly Moving Averages: 21, 55, & 100: 105.37, 108.88, 110.14
It appears to us that September completed a wave to the upside with a break above 109.00 Friday.
- The price action, while not registering a key reversal did nevertheless see a reversal.
- There is likely to be a test of the Friday high before Sept turns lower.
- This may have been seen with the late Friday rally off the low of the day.
- However, there is an alternate model that will allow for trend resistance to be tested at 109.30.
- There is a disparity between the two grades of crude oil and their respective formations. Of the two the Brent is the weaker structure.
- Although there will be minor support at 107.70 to 107.55 it is the 107.00 level that is the key downside pivot to the intraday chart.
- Busting this mark will confirm a top to the wave structure.
- We are cautious sellers of the rally at 108.50 to 108.75. The protective stop above 109.17.
- The key downside pivot to the daily chart is a daily settlement below 106.60.
Daily Moving Averages: 21, 55, & 100: -1.91, -2.31, -3.52
Weekly Moving Averages: 55, 100, & 200: -6.70, -9.87, –15.36
Though it was brief, Sept did turn positive Friday and settled at the strongest level since August of 2010.
- But this pattern is in the final throes of life.
- There is still a likely move to stretch September well above level to rise to .50 to .65.
- Although this is completing a large degree wave structure, we doubt the retracement will much more than a move back to -3.50 to -4.00.
- We continue to consider the intermediate term outlook as positive and we would avail ourselves of a big dip.
- The key pivot is a daily settle below -1.00.
- This will also be our initial support on the day.
- For those wishing to punt from the short side at the +.50 area keep in mind there is not a good pivot to protective oneself with.
- Nevertheless, the pattern does support such an activity.
- We will look to sell +.60 with a protective stop above +1.00.
Daily Moving Averages: 21, 55, & 100: 2.9091, 2.8694, 2.9110
Weekly Moving Averages: 21, 55, & 100: 2.9315, 2.8985, 2.8816
It does appear as if August completed a wave to the upside at the 3.1625 area Friday.
- The resulting decline from that level was a little too large a drop to suggest another leg higher without more of a correction.
- Therefore August will find resistance at 3.13 to 3.1350. The minor pivot is 3.140.
- The key upside pivot is 3.1650 which if punctured by a five minute settle will yield the alternate count’s outlook for 3.18 to 3.1850.
- We are a cautious seller of the rally. This will be at 3.1350. The protective stop placed above 3.14.
- The issue is refinery glitches that have modified gasoline production. One of the situations will be a long term event. That is for Canada’s East Coast refiners that were importing Bakken crude. Since the train tracks have been destroyed by the accident there a few weeks back, the shipments of crude to the refineries have been spot driven and difficult to obtain.
- Nevertheless, European refineries may take up the slack for the New York harbor. This will needs to be seen.
- The downside pivot that will confirm an intermediate term top is a daily settle below 3.0780.
- Its signal will suggest a drop to 3.00 to 2.99.
- The point of elasticity for the price is found at the 3.40 to 3.42 zone. This roughly represents $4.00 per gallon gasoline, which the economy has rebuffed twice earlier.
- August’s outlook for a pinnacle to the pattern rests on its ability to withstand a push by the bulls for a daily settle above trend resistance at 3.1450.
- Note the overbought condition on the stochastic measure below.
Daily Moving Averages: 21, 55, & 100: 2.449, 2.537, 2.516
Weekly Moving Averages: 21, 55, & 100: 2.519, 2.455, 2.400
Favorable growing conditions persist for the corn belt and this has pressured August.
- The model we are employing calls the move down from the 2.56 area as the first leg of a probable three segment construct.
- This model sees minor resistance at 2.48 to 2.485.
- August’s minor pivot is 2.495.
- We are a seller of the rally.
- Following this bump to the upside, profit taking will spill into August and press it lower to see the key downside pivot to the intraday chart at 2.44.
- Failure to hold this level will suggest a drp to 2.40 to 2.395.
- This may not occur by Monday, but it is likely to continue the formation and will probably be seen later in the week.
Daily Moving Averages: 21, 55, & 100: 2.9613, 2.9217, 2.9147
Weekly Moving Averages: 21, 55, & 100: 2.9217, 3.0027, 3.0001
The continuation chart moved to the highest level since April of 2012.
- But it does appear to have completed a leg at 3.1325.
- This model sees the likelihood of a corrective downsides move.
- The minor pivot that will signal additional price decay is removal of 3.0750.
- In this event August will have 3.0350 to 3.03 in its sights.
- August is seen with resistance at 3.10 to 3.1065. The minor pivot is 3.11.
- We are a seller of the rally. This execution will take place at 3.1055. Our protective stop placed above 3.1125.
- The angle of incline on the recent bullish move is 80 degrees.
- Th is an unsustainable slope of accretion. A correction looms. Trade accordingly.
Daily Moving Averages: 21, 55, & 100: 3.673, 3.862, 3.912
Weekly Moving Averages: 21, 55, & 100: 3.904, 3.494, 3.235
A change in the weather forecast as well as better than expected inventories put the bulls on the romp for the late week rally.
- We admittedly on Thursday were looking for softer pricing to develop, but we were miserably wrong. We looked the fool. It was not the first time; it won;t be the last.
- Nevertheless August is likely to slip slightly early in the week.
- This model calls for a drop to 3.75 to 3.73.
- A strengthening market will hold this area. The minor pivot is 3.71.
- The key downside pivot is 3.525.
- The model suggests that a new high above the Friday acme will be seen in short order.
- Busting through the 3.835 hurdle will embolden the bulls for a press of the strength to see a probable run to 3.915 to 3.935.
- We are a buyer of the dip. This will be at 3.745. The protective stop placed below 3.715.