Technically Speaking

Weekly Analysis: Energy Markets

By Darin Newsom , DTN Senior Analyst
Source: DTN ProphetX

Brent Crude Oil: The spot-month contract closed $0.70 lower at $33.36. Despite another lower weekly close the secondary (intermediate-term) trend remains up. The spot-month contract was able to rally off last week's low of $29.92, putting trendline support this week at $30.86. Initial resistance remains at $37.14, a price that marks the 23.6% retracement level of the previous downtrend from $66.93 through the major low of $27.10. The 4-week high is at $36.25. Weekly stochastics remain bullish following a crossover below the oversold level of 20% the week of January 18.

Crude Oil: The spot-month contract closed $1.45 lower at $29.45. The spot-month contract moved to a new major (long-term) low of $26.05 last week. This keeps the major trend down on the monthly chart with weekly stochastics still bearish below the oversold level of 20%. However, given the rally to close out the week the secondary (intermediate-term) trend looks to be sideways between support at the new low and resistance at the 4-week high of $34.82. The latter is also a test of the 23.6% retracement level of the previous downtrend from $62.58 through the previous low of $26.19. Also, Friday's weekly CFTC Commitments of traders report* showed noncommercial interests reducing their net-long futures position by 8,996 contracts to 187,877. Fundamentally the market continues to grow more bearish with the contango in the spot futures spreads trending down (strengthening), posting a new low of $2.47 on its weekly close chart.

Distillates: The spot-month contract closed 1.03ct higher at $1.0693. The secondary (intermediate-term) trend remains up following a bullish crossover by weekly stochastics below the oversold level of 20% the week of January 17. Last Friday's weekly CFTC Commitments of Traders report* showed noncommercial interests increasing their net-long futures position by 980 contracts to 3,486 contracts, supporting the uptrend. Initial resistance is at the 4-week high of $1.1181 while trendline support is pegged at $0.9984 this week. The spot futures spread is trending up (weakening contango) reflecting a less bearish commercial outlook.

Gasoline: The spot-month contract closed 5.05cts higher at $1.0432. RB0B gasoline remains a mix of technical signals. The sell-off the last two weeks resulted in a new major (long-term) low, erasing the bullish from three weeks ago that looked to be a potential Wave C low turning the secondary (intermediate-term) trend up. However, last week's rally off the new low of $0.8975 to close higher could be viewed as a spike reversal, again establishing a Wave C low. Weekly stochastics saw another bullish crossover below the oversold level of 20%, with numerous previous patterns failing to turn the market higher. Last Friday's weekly CFTC Commitments of Traders report* showed noncommercial interests increasing their net-long futures position by 2,875 contracts, not surprising given the market's seasonal tendency to rally through late April on both its 5-year and 10-year studies.

Ethanol: The spot-month contract closed 6.0cts lower at $1.376. Despite the lower weekly close, technical signals continue to indicate the secondary (intermediate-term) trend is up. However, the market remains in a minor (short-term) downtrend that has resulted in a test of support at $1.369. This price marks the 50% retracement level of the previous minor uptrend from $1.296 through the high of $1.441. The 67% retracement level is down at $1.344.

Natural Gas: The spot-month contract closed 9.7cts lower at $1.966. The extended minor (short-term) downtrend on the market's daily chart has turned the secondary (intermediate-term) trend sideways. However, daily stochastics have finally moved below the oversold level of 20% as the spot-month contract continues to test minor support at $1.954. This price marks the 67% retracement level of the previous minor uptrend (also Wave 1 of the secondary uptrend) from $1.685 through the high of $2.495.

Propane (Conway cash price): Conway propane closed 0.25cts higher at $0.3375. The secondary (intermediate-term) trend remains up with the market between resistance at $0.3249 and $0.3612. These prices mark the 33% and 50% retracement levels of the previous sell-off from $0.4700 through the low of $0.2525. Weekly stochastics remain bullish.

*The weekly Commitments of Traders report showed positions held as of Tuesday, February 9.

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

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