Trade Crude Oil

New York, NY, United States (AHN) – Wall Street opened lower Friday after a report showed that the U.S. economy expanded less than forecast..

Just after the opening bell, the Dow Jones Industrial Average was lower by 33 points, the Standard and Poor’s 500 Index was flat and the NASDAQ was up by about 6 points.

Weighing on stocks was a report that showed the U.S. economy expanded at 2.8 percent in the fourth quarter, less than the 3 percent that had been projected.

In Europe the Stoxx Europe 600 Index slipped 0.7 percent as investors await word on developments on the region’s sovereign debt crisis. European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are “very close” to reaching an agreement on private-sector involvement in a Greek debt swap.

Despite those words of optimism, the dismal growth of GDP in the U.S. was keeping investors cautious. The health and growth of the U.S. economy is a very important and leading indicator of economic growth worldwide. As analysts like to say, “when the U.S. sneezes, the world catches a cold.”

In corporate news, Ford fell after reporting numbers that missed estimates. Starbucks shares slipped despite reporting better than expected numbers, and Juniper Networks plunged after the second biggest maker of computer networking equipment forecast sales and profits that missed estimates.

In commodities, oil was unchanged at $$99.60 a barrel, gold rose $4.70 to $1,725 a troy ounce and silver was up a few pennies at $33.63.

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Manila, Metro Manila, Philippines (AHN) – The World Bank retained its previous forecast of a 5 percent gross domestic growth rate for the Philippines for 2011. It likewise kept the 5.4 percent economic expansion forecast for next year.

The bank, in its quarterly updated released on Wednesday, explained its outlook to strengthening of investments, private consumption and services sector this year. Besides services, the bank identified the outsourcing, manufacturing, construction, mining, agriculture and merchandise sectors are growth drivers for the Philippine economy.

However, the World Bank warned of smaller-than-expected remittances from overseas-based Filipino workers because of a stronger peso and weaker labor markets abroad, particularly in the U.S. and Europe.

Despite projections of growth rate patterns for the country, the bank warned of structural weaknesses in the Philippine economy, particularly widespread poverty and joblessness.

The report recommended a steady focus on reforms and for additional resources to bring the Philippines onto a more inclusive growth path.

The World Bank’s forecasts are lower than the Philippine government’s projection of a 7 to 8 percent yearly GDP growth rate for the country from 2011 through 2016.

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Tokyo, Japan (AHN) – The International Monetary Fund reduced the its 2011 growth forecast to 1.4 percent from 1.6 percent because of the impact of the magnitude 9 earthquake on March 11 on Asia’s wealthiest nation.

The IMF explained its lower forecast to higher level of uncertainty on Japan’s economy, despite the projected limited impact of the tremor, tsunami and nuclear meltdown that hit the country. However, the fund said the new forecast excluded the effects of power shortages and risks linked with the Fukushima Daiichi nuclear crisis.

The natural catastrophe is expected to shrink Japan’s gross domestic product this year by 3 to 5 percent. The 1.4 percent forecast is based on assumptions that the power outages and nuclear crisis will be resolved within the next few months.

Last year Japan logged a 3.9 percent GDP growth rate. The IMF forecast that the country would partially recover from the crisis and would register a 2.1 percent growth in 2012.

Another threat to Japan’s recovery is questions of safety of food imports from the country. To address this problem, Japanese Prime Minister Naoto Kan assured Tuesday that produce from the region around the damaged Fukushima facility is safe to eat, despite radiation leaks.

Kan said radiation levels are decreasing. To show to the world that the food from the region is safe, he encouraged residents to consume local products to support the area.

The International Atomic Energy Agency confirmed Kan’s claim. The agency said the latest food sample tests indicated that radiation contamination in the region has decreased below legal limits set by the Japanese government.

IAEA Deputy Head Denis Flory said that samples of different vegetables, fruit, meats, seafood and processed raw milk from eight prefectures had no traces or below regulation values for iodine 131, caesium 134 and 137.

The World Health Organization also said that its public health assessment showed there is very little public health risk outside the 30-kilometer (18-mile) evacuation zone.

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London, England, United Kingdom (AHN) – The Organization for Economic Cooperation and Development reduced its 2011 growth forecast for Britain to 1.5 percent from 1.7 percent.

The OECD explained the cut to significant risks the British economy is exposed to such as weak domestic consumption, dipping house prices, fiscal consolidation and uncertain global demand.

The agency also encouraged the Bank of England to retain a loose monetary policy even if there is a short-term hike in inflation rate, which OECD forecast would go up to 3.3 percent this year from its previous prediction of 2.6 percent.

The OECD approved the coalition government’s austerity program, but pointed out that the cost-cutting measures would limit spending and would reduce household income, which would slow down economic recovery.

Britain’s Office for Budget Responsibility forecast a higher 2.1 percent gross domestic product growth rate for this year.

The lower OECD forecast came on the same day that Britain registered an unemployment level of 2.53 million from November 2010 to January 2011. The 8 percent national unemployment rate is the highest since 1994.

Britain reduced its unemployment rate in 2010 when the country started to climb out of recession, but the labor situation worsened toward the end of last year when gross domestic product growth slowed and the government started to impose spending cuts.

The OECD pointed out that the decline hit Britain even before the government could implement its austerity program in an effort to reduce the country’s record-high budget gap that exceeds over 10 percent of U.K.’s GDP.

The agency also suggested that the British government put in place a permanent medium-term fiscal framework to guide policymakers, instead of the current 5-year outlook.

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THE next round of European stress tests incorporates falls of up to 22.7pc in Irish government bonds, marking our sovereign out as the fourth-riskiest debt provider in Europe.

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London, England, United Kingdom (AHN) – The British Chamber of Commerce forecast over the weekend a 1.9 percent economic expansion for the country in 2011. It is actually a downgrade from the chamber’s September prediction of a 2.2 percent gross domestic product growth rate.

The BCC explained the less rosy outlook to the eurozone debt crisis, the coalition government’s austerity measures and weakness in the housing market.

The chamber, which represents 100,000 businesses, also blames the increase in value added tax to 20 percent from 17.5 percent in January as another reason behind the anticipated slower economic growth in Britain.

The BCC forecast followed the Office for Budget Responsibility’s downgrade of GDP growth rate for 2011 to 2.1 percent from 2.3 percent. However, the BCC said the OBR forecast is still very optimistic.

For 2012, the BCC foresees Britain’s economy slowly inching to a 1.8 percent growth rate from a previous forecast of 2.1 percent, while the OBR’s estimate is that Britain will have a 2.6 percent growth in 2012.

One bright forecast by the BCC is that the number of unemployed Britons will decrease in 2012 by 50,000 to 2.6 million.

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LONDON (MarketWatch) — The International Energy Agency on Friday revised up its forecast for global oil product demand growth for 2010 by 200,000 barrels a day to 2.3 million barrels a day, or 2.8% growth year on year. As reasons for the upgrade in the forecast, the IEA cited mostly higher-than-expected third-quarter data in the OECD, as well as slightly stronger readings in the non-OECD. Overall, global oil demand is now expected to average 87.3 million barrels a day in 2010, the IEA said in its monthly oil market report released Friday. For 2011, the IEA kept its growth forecast broadly unchanged at 1.2 million barrels a day, or 1.4% growth year on year, with demand averaging 88.5 million barrels a day.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

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There can be little question that energy costs have profound effects on all areas of the economy. Leading up to the Market top and subsequent crash in 2008, oil prices rose to unprecendented levels. It could be said that rising energy costs has as profound an impact on the economy as the credit default swap scandal.

That said, it would make sense to track and forecast crude oil prices as part of your high level market analysis process. Fortunately, it is perfect legitmate and effective to apply technical analysis techniques to crude oil prices, making it possible for tradeers to determine near term price movements in crude.

Using charting software such as stockcharts.com, traders can analyze chart patterns and apply technical indicators to predict the future direction and degree of movement. I recommend utilzing Monthly charts for determining the overall trend of crude oil, and weekly charts for examining chart patterns and daily charts for confirming pattern breakouts using technical analysis indcators.

One aspect of forcasting crude oil prices is that crude oil tends to trend, making it very easy to trade profitably. For instance, crude oil has been in a steady uptrend, creating a postive slopped support trendline at points in July, late September, and early December. This is a valid and strong trenline which suggest that crude will continue to rise.

Crude oil also tends to trade in channels and triangles. A break above or below these pattern lines suggests a large move is comming in crude. As of the writing of this article, crude oil recently crossed above its’ 200 day exponential moving average, as well as broke out of the topside of a symetrical continuation triangle. With little resistance overhead, it is quite reasonable that crude oil will continue to rise from it’s current price of $83 / barrel, to over $96 per barrel.

As a technical trader, I usually don’t spend much time talking about market fundamentals. However, there are some underlying forces that can never be ignored when doing market forecasts. Clearly the price of crude oil has had a profound effect on the stock market over the past 5 years.

You can clearly see that $70 crude oil caused the markets to slow down, eventually creating the tell tale double top. Once crude crossed $90 per barrel, the S&P 500 crashed through the 1400 support level, and the previous bull market which lasted nearly 6 years came to a screeching halt. Will it happen again? It’s quite possible.

Looking back to analysts reports from last year, the momentum of crude oil prices seemed hard to counteract. As oil prices rose, many economists predicted long-run oil prices above $200 per barrel based upon growing international demand and a leveling off of global supplies.
Forecasting the future path of crude oil prices is significantly more difficult, as international demand patterns and new supply exploration depends on a wide variety of factors that can be difficult to predict. Consensus estimates on the future of crude oil prices suggest that long-run prices will continue to slowly rise based upon growing demand from developing nations.

Given the adaptation of global financial markets, many analysts expect a more stable band of shifts in global crude prices after last year’s major price swings.  Speculation on oil futures markets is more related to fundamentals now that there have been growing restrictions on futures markets trading from the FDIC and international governments.  Proposals that seek to move oil trading away from dollar based currencies to a basket of international currencies could further solidify international oil prices in a long, slow upward swing.
Linked to the dollar, which is facing inflation pressures related to growing US debt, crude oil prices can be highly uncertain.  OPEC is continuing to explore alternatives to trading global commodities in dollars, considering an IMF (International Monetary Fund) proposal to trade commodities in a basket of international currencies.

Consensus estimates anticipate a slight upward trend in oil prices for the remainder of the year, with a stabilization of prices based upon the end of the global recession. With a cold winter, demand for crude oil is anticipated to increase, resulting in upward pressure on crude prices as we head toward the end of the calendar year.