Technically Speaking

Weekly Analysis: Energy Markets

Source: DTN ProphetX

Brent Crude Oil: The spot-month contract closed $1.57 higher at $49.56. The secondary (intermediate-term) trend looks to be sideways. Initial resistance is pegged at $52.70, a price that marks the 38.2% retracement of the downtrend from $69.63 (week of May 4) through the major (long-term) low of $42.23 (week of August 24). Support is at this major low. Weekly stochastics remain bullish indicating the market could build upside momentum over the coming weeks.

Crude Oil: The spot-month contract closed $1.99 higher at $46.59. The secondary (intermediate-term) trend looks to be up after the spot-month contract held minor (short-term) support at $42.14 this past week. Weekly stochastics remain bullish indicating the market could continue to push higher, testing resistance first at $47.24 then $50.16. The 4-week high is at $50.92. The rally could be limited by continued commercial selling, as reflected by the December to January spread testing its strongest contango (weekly close chart) of $0.89.

Distillates: The spot-month contract closed 4.50cts higher at $1.4994. The secondary (intermediate-term) trend looks to have turned up last week as the spot-month contract posted a bullish outside range before closing near its weekly high of $1.5071. Weekly stochastics are also bullish indicating upside momentum could continue to build. Initial resistance is at the 4-week high of $1.6379, with the longer-term target still $1.8203. The latter marks the 23.6% retracement level of the previous downtrend from $3.2633 through the major (long-term) low of $1.3745.

Gasoline: The spot-month contract closed 10.14cts higher at $1.4050. The secondary (intermediate-term) trend remains sideways, though nearing an upturn. Friday's close was near the high for the week of $1.4136, establishing a bullish crossover by weekly stochastics below the oversold level of 20%. The upper end of the sideways range is at the 4-week high of $1.4488, with a move above that mark confirming a secondary uptrend.

Ethanol: The spot-month contract closed 2.2cts higher at $1.602. Technical indicators continue to show the market remains in a secondary (intermediate-term) uptrend. However, weekly stochastics are nearing the overbought level of 80% as the spot-month contract moves toward resistance at $1.664. This price marks the 38.2% retracement level of the downtrend from $2.265 through the low of $1.292. The 50% retracement level is up at $1.779.

Natural Gas: The spot-month contract closed 3.5cts higher at $2.321. The spot-month contract looks to have established a spike reversal on the weekly chart, establishing a bullish crossover by weekly stochastics in the process. If indeed the market has moved into a secondary (intermediate-term) uptrend, then the initial price target would be $3.021, a price that marks the 23.6% retracement level of the previous downtrend from $6.493 through last week's low of $1.948. Seasonally the market tends to move higher through late November.

Propane (Conway cash price): Conway propane closed 2.63cts higher at $0.4188. Despite posting a bullish outside week the secondary (intermediate-term) trend of cash propane could still be called down. The difference between this market and the others in the energy complex is that it is a spot-cash market rather than futures, and therefore more likely to react rather than forecast. Technically the market did rally off its test of support at $0.3688, and if cold weather persists could test its recent high of $0.4700 in the coming weeks. If the market is trying to reestablish a secondary uptrend the target price remains $0.5542.

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