Technically Speaking

Weekly Analysis: Energy Markets

Darin Newsom
By  Darin Newsom , DTN Senior Analyst
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Source: DTN ProphetX

Brent Crude Oil: The spot-month contract closed $2.02 higher at $65.25. Though weekly stochastics continue to show the market is overbought, the major (long-term) trend remains up as the spot-month contract tests resistance at $65.38. With monthly stochastics also above 80% the market could soon run out of bullish momentum long-term, and if so the secondary (intermediate-term) trend could turn down again. For now the market continues to be driven by a bullish forward curve.

Crude Oil: The spot-month contract closed $1.17 higher at $58.47. The spot-month contract continues to consolidate below the recent high of $59.05 while weekly stochastics sit above 90% indicating a sharply overbought situation. This could lead to a test of initial support at the 4-week low of $55.82, with a break of this mark again indicating a move to a possible secondary (intermediate-term) downtrend.

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Distillates: The spot-month contract closed 6.59cts higher at $1.9694. Despite weekly stochastics sitting above the sharply overbought level of 90% the market continues to extend its major (long-term) uptrend. However, distillates' forward curve (fundamental indicator) is growing more bearish, possibly to the point of putting pressure on the futures market.

Gasoline: RBOB gasoline futures market closed 10.75cts higher at $1.7623. The secondary (intermediate-term) trend looks to be sideways with resistance at the previous high of $1.8402. Support is at the 4-week low of $1.6438.

Ethanol: The spot-month contract closed 4.4cts higher at $1.306. The secondary (intermediate-term) trend turned up last week as the market rallied off its recent low of $1.251, establishing a bullish crossover by weekly stochastics below the oversold level of 20%. Initial resistance is at $1.371, the 23.6% retracement level of the previous downtrend from $1.760. However, it would not be surprising to see the nearby futures contract test the 38.2% to 50% retracement area between $1.445 and $1.506.

Natural Gas: The spot-month contract closed 5.5cts higher at $2.667. The market's secondary (intermediate-term) trend remains sideways-to-down, with support still seen at $2.521. This price marks the 61.8% retracement level of the previous uptrend from $1.611 through the high of $3.994. If this support fails, the 76.4% retracement level is down at $2.1773. Weekly stochastics are bearish above the oversold level of 20% indicating there is room for the market to extend a downward move.

Propane (Conway cash price): Conway propane closed 6.12cts higher at $0.9000. Despite the higher weekly close the market remains in a secondary (intermediate-term) downtrend. The recent rally looks to be Wave B (second wave) of a 3-wave downtrend with cash propane testing resistance between $0.9000 and $0.9422, prices that mark the 50% and 76.4% retracement levels of Wave A from $0.9800 through the low of $0.8200.

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