June Oil Future at $85 Resistance, Rig Count Down 9 to 1482 On Week, Up 524 Annually, Watching Spreads (WTIC, USO, CLM10, UNG)

June Crude Oil (courtesy of optionsxpress)
June oil (CLM10) looks cautiously decent here in my opinion, if hedged with volatility.  It could fail again and hit channel support aka continue trading in this long sideways channel. See INO's recent video on my previous post, we could continue sideways.  The June oil future tonight will feed into ETF action tomorrow ($USO, $OIL) if it holds up (+0.39% at $85.48).  RSI is at the mid-point and the future is testing resistance again after a failed break-out.  Not sure how high oil can go here before the big "income" squeeze.  The US Dollar, oil, gold and S&P relationship will be interesting next week.  Add the Euro to that.  I'm going to mainly look at the oil ETFs tomorrow and perhaps the options.  I actually looked at XLE's chart the other day when revisiting the USO/XLE correlation during the 2008 oil peak.  The Goldman charge could throw oil prices a curve ball....

Read Josh Brown's article at CSM.com [Goldman Sachs' legal problems may slam oil prices]. So be aware of the ongoing Goldman fraud allegation.

I remember people were putting on bullish spreads on USO in early April, including the May $40-$38 bull put spread (Onn.tv) and a July $43-$48 call spread  (Optioninsider).  You never know if they were hedging an underlying short position or what-have-you, but still a USO move at resistance is something to monitor (imho).

You can see different channels and support and resistance levels on both charts.  Oil is obviously in a sideways trading range and June oil has been testing the upper eighties since October of last year.  It pierced resistance a few days ago but the oil volatility monster appeared and scared off the momentum.  If you zoom in on the weekly chart I provided two trading channels and an ascending triangle from the March lows.  It is also riding the 50 day moving average.  When looking at the chart, if the contract does indeed crack above ceiling resistance on strong volume, it will probably want to hit the upper end of that channel from June 2009 (chart above).  We'll see.

Recent oil and natural gas articles to guide you to the light:

Baker Hughes North American Rig Report for 4/23/2010:
"Total US rigs for 4/23/2010 were 1482 Down 9 compared to 4/16/2010 Up 527 compared to 4/24/2009" See Charts at Baker Hughes.
Analyst says U.S. gas drilling pace unsustainable - April 22, Reuters

Iranian VLCCs back on storage duty - Lloyds List

Iran hoarding up to 38m barrels on supertankers - Arabian Oil and Gas

Crude Oil Rises a Fifth on Signs Global Fuel Demand to Recover - April 26, Bloomberg
"Speculative net-long positions, the difference between orders to buy and sell the commodity, increased 7 percent to 121,475 contracts on the New York Mercantile Exchange" (Read more at Bloomberg)
Gas market gripped by fear, says analyst - April 23, Calgary Herald
"Crude oil prices will rebound to triple digits within three years on growing demand, but natural gas will stay below $7, according to the latest forecast by investment house FirstEnergy Capital Corp." (Read More at Calgary Herald)
A contrarian (Henry Groppe) makes another call – this time, natural gas - April 18, Globe Investor

Natural gas jumps with supplies less than expected - April 22, AP

Midwest most vulnerable to refinery outages in US - April 18, Gulf News

Halliburton Q1 Profit Drops 45% - Update - April 19, Trading Markets