Technically Speaking

Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.30 lower at $60.22. Despite the lower close the secondary (intermediate-term) trend remains up with weekly stochastics bullish. However, the spot-month contract did find resistance at $62.22 (last week's high was $63.00), a price that marks the 23.6% retracement level of the previous downtrend from $117.34 through the low of $45.19. If this leads to follow-through selling, initial support is pegged at $56.20, then $54.09. Given the uptrend in the spot futures spread (weakening contango), this area should hold a possible sell-off. The longer-term price upside price target remains the 38.2% retracement level of $72.75.

Crude Oil: The spot-month contract closed $2.44 lower at $50.34. While technical signals continue to show the secondary (intermediate-term) trend is up, the market may look to continue its consolidation between resistance at the 4-week high of $54.24 and the recent low of $43.58. To this point the rally has lacked the backing of the commercial side of the market, with the trend in the spot futures spread still down (strengthening contango). Support has come from noncommercial short-covering, with Friday's CFTC Commitments of Traders report showing this group reducing their short futures holdings by 28,111 contracts.

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Distillates: The spot-month contract closed 14.04cts higher at $2.1118. The secondary (intermediate-term) trend uptrend continues to strengthen with the next target $2.2286. This price marks the 38.2% retracement level of the previous downtrend from $3.2633 through the low of $1.5890. However, given the market's inverted forward curve the spot-month contract could extend this rally the 61.8% retracement target of $2.6237.

Gasoline: The spot-month contract closed 1.45cts higher at $1.6407. The secondary (intermediate-term) uptrend is poised to strengthen following the bullish outside week posted by the spot-month contract. While it hasn't been able to clear initial resistance at $1.7081, a price that marks the 23.6% retracement level of the previous downtrend from $3.2672 through the low of $122.65, a slightly weaker contango in the spot futures spread could result in a test of the $2.0060 to $2.2469 area. These prices mark the 38.2% and 50% retracement levels.

Ethanol: The spot-month contract closed 1.0ct lower at $1.4320. The secondary (intermediate-term) remains sideways as the spot-month contract continued to consolidate. Resistance remains at $1.5040 with support at $1.2920, the highs and lows from the week of January 12. Weekly stochastics remain neutral below the oversold level of 20%.

Natural Gas: The spot-month contract closed 14.7cts higher at $2.951. As discussed last week, the secondary trend looked to have turned up with the establishment of a 2-week reversal. This past week saw the spot-month contract follow-through with a solid rally, allowing weekly stochastics to establish a bullish crossover below the oversold level of 20%. This would confirm the previous technical signal. Initial resistance is pegged at $3.494, the 23.6% retracement level of the previous downtrend from $6.493 through the low of $2.567. A test of this level would close a bearish gap on the weekly chart between $3.444 and $3.351.

Propane (Conway cash price): Conway propane closed 0.75ct higher at $0.5675. The secondary (intermediate-term) trend remains up. Initial resistance is pegged between $0.7455 and $0.7996, the 33% and 38.2% retracement levels of the previous downtrend.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, February 17.

To track my thoughts on the markets throughout the day, follow me on Twitter: www.twitter.com\DarinNewsom

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