Crude Oil futures rallied for 5.1% to settle at 79.68 bbl, snapped a 3 session losing streak to post good gains today on the back of this morning's Bullish inventory data.

The data, which showed a draw down versus consensus for a build, helped Crude Oil add to overnight gains and traded as high as 79.79 before closing.

Nat Gas futures ended lower by 0.07 at 3.57 per MMBtu, as they traded steadily lower through the session.

Following yesterday's sell-off, the precious metals rebounded today, with Gold posting gains of 1.6% to end at 1641 oz, and Silver finishing higher by 1.8% at 30.35 oz.

Gold futures rallied sharply off the flat line in afternoon trade, while silver futures traded steadily higher throughout the afternoon.

Crude Oil in Short Covering Rally mode

In US trading yesterday the markets experienced a pretty Strong price reversal as Short Covering took control during the later part of the trading session.

The Short Covering rally was led by a turnaround in the USD and equity markets which carried through to the oil complex after WTI dipped below 75 bbl on an intra-day basis and bounced off of a Key technical support mark.

One positive note for WTI is prices are above the low made in early August and could be forming a Double Bottom. Again it is much too early to say with any degree of confidence that oil prices have bottomed at the moment.

The US Dollar Index is still in negative territory for the session and that coupled with a Bullish API Crude Oil inventory report is keeping both Brent and WTI in positive territory ahead of the more widely followed EIA Oil inventory report to be released at 10:30 AM EST.

A news story out of Saudi Arabia yesterday got a bit lost in the overall noise that was permeating throughout the market. There were reports of clashes that injured 14 people in the oil rich eastern province's mostly Shiite population that the Saudi government indicated was the work of an un-named foreign power...which is normally the code used by the Saudi's to indicate Iran as being the un-named country.

The last time any issues arose in Saudi Arabia were back in March but were put down pretty quickly.

So far this is not a big deal but certainly with the way the democracy revolution has evolved in other MENA countries this is worth watching and putting Saudi Arabia back on the radar.

Gold Market Recap: 5 October 2011
The Gold Bulls have to be impressed with the action in Gold Wednesday as the market looked like it was poised to fall under liquidation pressure in the wake of a risk on environment.

In prior trading sessions Gold was tracking safe haven issues and with anxiety toward the EuroZone on the decline today, one might have expected Gold to have come under pressure.

But instead, Gold caught a lift from a broad based physical commodity market rally. Some traders suggested that an upcoming vote on the Chinese currency manipulation bill rekindled macro economic concerns and that is certainly something to consider.

Silver Market Recap: 5 October 2011
Like Gold, Silver managed to throw off some early liquidation pressure to claw its way back to the vicinity of the prior session's highs.

It seems like Silver got some of its lift from a broad based commodity rally and perhaps from slightly better than expected private payroll estimates.

Some players think that Silver remains in a flight to quality mode, and that the recovery in Silver prices Wednesday was anticipation of a possible Trade War with China in the event that US currency manipulation legislation is passed Thursday. Stay tuned...

Paul A. Ebeling, Jnr.

 

Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.