Technically Speaking

Monthly Analysis: Energy Markets

By Darin Newsom , DTN Senior Analyst
Source: DTN ProphetX

Brent Crude Oil: The spot-month contract closed at $35.97, up $1.23 on the monthly chart. As discussed last month, the major (long-term) trend is up. February saw the spot-month contract consolidate within January's range before closing higher. The initial upside target remains $51.01, a price that marks the 23.6% retracement level of the previous downtrend from $128.40 (March 2012) through the low of $27.10 (January 2016). Support is at the January low.

Crude Oil: The spot-month contract closed at $33.75, up $0.13 on the monthly chart. Using a monthly candlestick chart, the spot-month contract posted a doji in February, confirming the bullish crossover by monthly stochastics at the end of January and signaling the major (long-term) trend has indeed turned up. The initial target is $47.00, a price that marks the 23.6% retracement level of the previous downtrend from $114.83 (May 2011) through the low of $26.05 posted in February 2016. One concern is that the market's fundamentals remain bearish, with the contango in the spot futures spread strong at $1.83.

Distillates: The spot-month contract closed at $1.0760, up 2.9cts on the monthly chart. As with crude oil markets the spot-month distillates contract looks to have confirmed a major (long-term) uptrend during February. The initial upside target is $1.4437, a price that marks the 23.6% retracement level of the previous downtrend from $3.37 (January 2014) through the January 2016 low of $0.8487. Monthly stochastics posted a bullish crossover below the oversold level of 20% at the end of January.

Gasoline: The spot-month contract closed at $1.0497, down 5.34cts on the monthly chart. The major (long-term) trend remains down as the spot-month contract posted a new low of $0.8975 in February. However, the subsequent rally to close out the month has the market in position to quickly turn its major trend up, particularly with the large contango from the expiring March to now spot-month April contract. Despite a bearish forward curve, this could lead to a bullish crossover by monthly stochastics at the end of March, signaling a change in trend.

Ethanol: The spot-month contract closed at $1.378, down 4.8cts on the monthly chart. Despite the lower monthly close, stochastics established a bullish crossover below the oversold level of 20%. This could be the initial signal that the major (long-term) trend is set to turn up. Support remains at the double-bottom near $1.292. Resistance is at the October 2015 high of $1.62.

Natural Gas: The spot-month contract closed at $1.711, down 58.7cts on the monthly chart. The market saw a dramatic turn of events during February as the spot-month contract reversed course form December and January, falling to a new low late in the month. This would suggest that the major (long-term) trend is down again. However, the market remains highly volatile with monthly stochastics well below the oversold level of 20%.

Propane (Conway cash price): Conway propane closed at $0.3875, up 6.37cts on its monthly chart. The major (long-term) trend remains up. Initial resistance is at the September 2015 high of $0.4700, then $0.5428. The latter marks the 23.6% retracement level of the previous downtrend from $1.4825 through the low of $0.2525.

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

Comments

To comment, please Log In or Join our Community .