Technically Speaking

Monthly Analysis: Energy Markets

Source: DTN ProphetX

Brent Crude Oil: The spot-month contract closed at $52.21, down $11.37 on the monthly chart. The market remains in a major (long-term) uptrend with the sell-off since May 2015 high of $69.63 looking like Wave 2 of an Elliott Wave 5-Wave pattern. Support is at %50.96, a price that marks the 76.4% retracement level of Wave 1 from the January 2015 low of $45.19 through the May high, then the January low. Monthly stochastics are back near 20% after establishing a bullish crossover below this level at the end of February.

Crude Oil: The spot-month contract closed at $47.12, down $12.35 on the monthly chart. The market remains in a major (long-term) 5-Wave uptrend with the sell-off since May 2015 amounting to Wave 2. This wave coincides with a continued reduction of the noncommercial net-long futures position from about 348,000 contracts (end of May 2015) to 243,419 contracts (end of July 2015). Initial support is pegged at $46.88, a price that marks the 76.4% retracement level of Wave 1 from $42.03 (March 2015) to $62.58 (May 2015). Monthly stochastics have moved back below the oversold level of 20%, setting the stage for a secondary (confirming) bullish crossover in the months ahead.

Distillates: The spot-month contract closed at $1.5840, down 30.26cts on the monthly chart. The close below the previous low of $1.5890 would imply that the major (long-term) trend has turned down again. However, the September contract will now take over the role of spot-month trading near that support level. With monthly stochastics already below the oversold level of 20% the market could see the return of buying interest. The noncommercial net-futures position actually grew over the month of July, with the month's final CFTC Commitments of Traders report showing it at 12,557 contracts as compared to the end of June's 6,,012 contracts.

Gasoline: The spot-month contract closed at $1.8410, down 24.86ct on the monthly chart. Despite the lower monthly close the major (long-term) trend remains up. Next support is pegged at $1.7062, a price that marks the 50% retracement level of Wave 1 (of a 5-wave uptrend) from $1.2265 (January 2015) to $2.1858 (June 2015). Monthly stochastics are bullish, reflecting increased buying by noncommercial traders over the course of the month. Also, the backwardation in the nearby futures spread also strengthened during July reflecting a more bullish commercial outlook.

Ethanol: The spot-month contract closed at $1.505, down 10.7cts on the monthly chart. The key to the ethanol market could be monthly stochastics, with the last major (long-term) signal a bullish crossover below the oversold level of 20% at the end of April. This continues to indicate the major trend is up. If so initial resistance is pegged at $1.712, a price that marks the 23.6% retracement level of the previous downtrend from $3.07 through the low of $1.292. Support is at $1.431, the 67% retracement level of the rally from $1.292 through the May 2015 high of $1.709.

Natural Gas: The spot-month contract closed at $2.716, down 11.6cts on the monthly chart. The major (long-term) trend is sideways with monthly stochastics neutral-to-bullish below the oversold level of 20%. Resistance is at the May 2015 high of $3.105 while support is the April 2015 low of $2.443.

Propane (Conway cash price): Conway propane closed at $0.3038, down 4.62cts on its monthly chart. The major (long-term) trend remains sideways to down as cash propane stayed within its June price range during the month of July. That means support could continue to be found at the June low of $0.2675. Monthly stochastics are neutral and still well below the oversold level of 20%.

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