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Is the oil rally over?

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E-mini S&P (December)

Yesterdays close:Settled at 2629.25

Fundamentals:The S&P has edged higher into this morning as traders look to optimism on tax-reform ahead oftomorrowsNonfarm Payroll Report and next weeks FOMC policy decision. Yesterday, the Senate voted to begin formal negotiations with the House in what is a positive sign that congress can work together to put a final bill in front of the President before Christmas. The House passed a similar vote this week, but it is the Senate that must be more careful in negotiations as they cannot afford to lose more than two votes. GDP data out of the Eurozone this morning came in better than expected. Challenger Job Cuts (U.S) are due at6:30 am CTand Jobless Claims at7:30. Mario Draghi speaks at10:00. Trader prepare fortomorrowsNonfarm Payroll report and we discussedon SundaysTradable Events this Week how the more important number for us is Average Hourly Earnings growth. Expectations of which come in at .3% MoM while 200,000 jobs are supposed to have been added.

Technicals:Price action has pared losses off a low of 2620 that came against our key support at 2618-2619.25. This level yesterday came into play for multiple reasons, however, one was a trend line, and this now comes in today at 2626. Yesterday, we also discussed how we like selling the first test against 2637.50 and the overnight high was 2637. This level is now less precise and has widened to 2637.50-2640.75; traders can look to sell the first test into here after the bell this morning. However, traders should consider that while we were more Neutral yesterday and leave our bias the same today, we believe the risk to the upside ahead oftomorrowsNonfarm Payroll


Resistance 2637.50-2640.75**, 2648.25-2651.25**, 2666***, 2679-2685**, 2712****

Pivot 2629-2631

Support 2626*, 2618-2619.25**, 2605-2607**, 2594.50-2596****, 2555.50-2565***

Crude Oil (January)

Yesterdays close: Settled near the session low at 55.96 and lost nearly 3%

Fundamentals:Yesterdays EIA report was just enough to satisfy the bear camp. As we discussed, with what was potentially such an outlyingly bearish API reporton Tuesdayevening, it encouraged many bears or worried bulls to sell. We ultimately needed to see something from EIA that was almost as bearish to keep the momentum lower. Looking at the number as a whole is one way to analyze such a report and the API reported a total build of about 8 mb. While expectations were looking for a total draw, the API report skewed that, and we stated yesterday we wanted to see a build of nearly half as much from EIA in order to see continued pressure. They showed a total build of about 2.8 mb and this combined with an addition of 25,000 bpd in production was just enough to satisfy the bear camp, or more so worry the bulls. Remember,on Mondaywe figured that although we might not see a new record net-long position on thiscoming FridaysCommitment of Traders, we suspected that it could have been reached temporarily within the reports week. If everyone has already bough, who is left to buy.

Technicals:Price action secured another close below key support at 56.75, a level that we have denoted to give the bears the edge. Today isThursdayand prices have slid more than 3% this week. We are still targeting major three-star support at 55.00-55.25 but traders must be cautious in pressing the trade as we could see a bottom intoSundaynight come in the next 24 hours (byFridaymorning). With a move this week getting so close to our target, sometimes it is best not to push our analysis to the edge, or in old-fashioned words, dont push your luck. We will look to reposition next week. We now have 55.95 aligning with yesterdays low and strengthening from minor support to a two-star key level. Major resistance is now at 56.75-56.99 and if the bulls achieve a move out above here, we could see further buying into the weekend. We remain intermediate to long term Bearish.


Resistance 56.75-56.99**, 57.35**, 57.71-57.92**, 58.97***, 59.96***, 62.58**

Support 55.82-55.95**, 55.00-55.25***

Gold (February)

Yesterdays close:Settled at 1266.1

Fundamentals:Gold is moving lower into this morning and as a reminder, we Neutralized our position last week. However, we remain bullish in the long-term and have been clear that we are welcoming this lower price action in order to cleanse the over-extended net-long position as tax-reform, Nonfarm Payroll and next weeks Fed rate hike meeting come into the picture. Challenger Job Cuts is due at6:30 am CTand Jobless Clams at7:30.

Technicals:Gold has officially taken out major three-star support at 1262.8 this morning and this opens the door down to 1250.2. Bulls must be very cautious here because strong data over the next 24 hours (Nonfarm Payroll) could open the door to a mass exodus. But what have we been saying? No better opportunity to buy than a sale.


Resistance 1272.7-1273.1**, 1277.1-1278.6***, 1283.3**, 1287.5**, 1292-1292.5**, 1304.7***

Pivot 1266.1-1268.1

Support 1262.8***, 1250.2**, 1214.5-1225***

Natural Gas (January)

Yesterdays close:Settled at 2.922

Fundamentals:Did you get the memo? Winter is over. Though it is not a joking matter, thats what the price of Natural Gas is saying this morning as it is down nearly 10 cents. Let us reiterate, winter is just beginning. As we discussed yesterday, we believe algos are taking advantage of pockets of volume-less trade and jumping on freshly created momentum. We all know that last week was very mild and todays storage estimates come in at -7 bcf, data at9:30 am CT.

Technicals:We did reintroduce our Bullish thesis yesterday as risk against the low was tight. Price action held through yesterdays session but has gotten hammered today and has already gone through S2. Todays stock read will be key, but it now feels as if this market is targeting major three-star support at 2.753-2.7565.


Resistance 2.903-2.929**, 2.981-2.996***, 3.04-3.053**

Pivot - 2.847-2.861

Support 2.753-2.7565***, 2.486-2.522****

10-year (March)

Yesterdays close:Settled at 12419

Fundamentals:Weakness in global equity markets as well as geopolitical nerves kept a bid under the 10-year through yesterdays session. However, Asian markets are recovering well into today and the S&P has stabilized. Furthermore, the Senate voted to go to the table on tax-reform yesterday and work with the House in order to get a bill in front of the President by Christmas. U.S data has not been good this week, but traders turn their eyes to Challenger Job Cuts this morning at6:30 am CTand Jobless Claims at7:30. Of course the big read this week is Nonfarm Payrolltomorrow. Next week brings the FOMC rate hike meeting and we always discuss how treasuries see selling pressure ahead of these meetings as we are now in a rate hike cycle. However, we have been eyeing this as the beginning of a potential bottoming pattern.

Technicals:Price action ran right into key resistance yesterday with a high of 12423 before backing off into this morning. The tape is right at the 124145-124155 pivot though it feels slightly heavy and the door is open to fish for first support intotomorrowmorning.


Resistance 12422-12424**, 124295-12500***

Pivot - 124145-124155

Support 124065-124095**, 124015**, 12327***

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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About the author

Bill Baruch is President and founder of Blue Line Futures a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line’s mission is to put the customer first and bring YOU the best customer service, consistent and reliable research and state of the art technology. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.

Contributing author since 10/6/17 

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