Technically Speaking

Monthly Analysis: Energy Markets

Source: DTN ProphetX

Brent Crude Oil: The spot-month contract closed at $62.58, up $9.59 on the monthly chart. As discussed at the end of January, the major (long-term) trend turned up in February. The spot-month contract closed near its monthly high, establishing a bullish crossover by stochastics well below the oversold level of 20%. Initial resistance could be seen at $74.44, the 23.6% retracement level of the previous downtrend from $128.40 through January's low of $45.19. The 38.2% retracement level is up at $84.75.

Crude Oil: The spot-month contract closed at $49.76, up $1.52 on the monthly chart. While the market did see a bullish crossover by monthly stochastics below the oversold level of 20% at the end of February the major (long-term) trend is not up but sideways. The strengthening downtrend in the spot futures spread (strengthening contango/carry) reflects an increasingly bearish supply and demand situation that should limit noncommercial buying interest. Initial resistance is at the January high of $55.11, then $60.39. The latter is the 23.6% retracement level of the previous downtrend from $114.83 through the January low of $43.58.

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Distillates: The spot-month contract closed at $1.9737, up 28.74cts on the monthly chart. February's strong rally saw the spot-month contract test initial resistance at $2.1821, a price that marks the 33% retracement level of the previous downtrend from $3.37 through the January low of $1.5890. While the spot-month contract did close well off its monthly high of $2.3514, stochastics established a bullish crossover below the oversold level of 20% indicating the major (long-term) trend has turned up. Given the forward curve remains inverted (bullish supply and demand), the market could look at extending its uptrend to the 50% retracement level of $2.4795 and possibly the 67% level of $2.7769.

Gasoline: The spot-month contract closed at $1.9779, up 56.27cts on the monthly chart. Monthly signals are mixed in RBOB, with stochastics posting a bullish crossover above the oversold level of 20%. This would imply that the market is in a major (long-term) sideways trend, though the spot-month contract closed near its monthly high of $1.9893. Given the inverted forward curve (bullish supply and demand), the major trend has likely turned up with a long-term target of $2.6185. This price marks the 61.8% retracement level of the previous downtrend from $3.4789 through the January low of $1.2265. Initial resistance could be seen at $2.0869 and $2.3527, prices that mark the 38.2% and 50% retracement levels respectively.

Ethanol: The spot-month contract closed at $1.444, up 7.7cts on the monthly chart. While monthly stochastics would indicate the major (long-term) trend remains down, the spot-month contract did consolidate within January's range of $1.665 to $1.292 during February, hinting at a possible move to a sideways trend. This would set the stage for a bullish crossover by stochastics in the coming months, establishing a major uptrend.

Natural Gas: The spot-month contract closed at $2.734, up 4.3cts on the monthly chart. The major (long-term) trend remains down as the spot-month contract posted a new low of $2.567 during February. However, the spot-month contract was able to rally off its low to close higher for the month. While monthly stochastics continue to indicate the major (long-term) trend remains down, the market is nearing a potential change in trend given stochastics are well below the oversold level of 20%.

Propane (Conway cash price): Conway propane closed at $0.4887, up 3.87cts on its monthly chart. The major (long-term) trend appears to have turned sideways with cash propane holding above its December low of $0.4000 during January. With monthly stochastics deep in single digits the market is in position to establish a major uptrend, possibly in February.

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