Technically Speaking

Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.44 lower at $65.37. The spot-month contract continues to hold below resistance at $69.22, a price that marks the 33% retracement level of the previous downtrend from $117.34 through the low of $45.19. Support is at the 4-week low of $63.90. The bearish crossover by weekly stochastics above the overbought 80% level (week of May 4) indicates the secondary (intermediate-term) trend has turned down.

Crude Oil: The spot-month contract closed $0.03 higher at $59.72. The secondary (intermediate-term) trend looks to have turned sideways, with the spot-month contract holding below resistance at $65.41. This price marks the 33% retracement level of the previous secondary downtrend from $112.24 through the low of $42.03. A move to a new 4-week low, below $56.07, could lead to a bearish crossover by weekly stochastics (above the overbought 80% level) indicating the secondary trend is turning down.

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Distillates: The spot-month contract closed 5.23cts lower at $1.9525. Despite the lower close the secondary (intermediate-term) trend remains sideways-to-up. The spot-month contract continues to hold near resistance at $1.9841, a price that marks the 23.6% retracement level of the previous downtrend from $3.2633 through the low of $1.5890. Initial support is at the 4-week low of $1.9049. Weekly stochastics remain neutral to bullish.

Gasoline: The spot-month contract closed 0.29ct lower at $2.0539. Indications are that the secondary (intermediate-term) trend remains up, though the spot-month contract needs to post a new 4-week high (above $2.0950) to confirm. The next target remains $2.1892, a price that marks the 50% retracement level of the previous downtrend from $3.1520 through the low of $1.2265. However, last Friday's CFTC Commitments of Traders report showed noncommercial traders continuing to liquidate a portion (1,354 contracts) of their net-long futures position. This means support will have to continue to come from the commercial side, as indicated by the strengthening backwardation (inverse) in the forward curve, for the market to move higher. Weekly stochastics continue to show an overbought situation.

Ethanol: The spot-month contract closed 10.50cts lower at $1.5750. The spot-month contract posted a bearish reversal last week, indicating the secondary (intermediate-term) trend has turned down. However, while weekly stochastics saw a bearish crossover, it happened below the overbought 80% mark meaning the market could retest last week's high of $1.7090 in coming weeks. Initial support is at $1.5497, the 38.2% retracement level of the rally from $1.2920 through last week's high.

Natural Gas: The spot-month contract closed 12.9cts lower at $2.887. Despite the lower close the secondary (intermediate-term) trend remains up. Initial resistance is pegged at $3.39, a price that marks the 23.6% retracement level of the previous downtrend from $6.493 through last week's low of $2.443. A test of this resistance would also be a test of the lower end of a bearish price gap ($3.351) left the week of December 22, 2014. Weekly stochastics remain bullish.

Propane (Conway cash price): Conway propane closed 4.63cts lower at $0.3850. The secondary (intermediate-term) trend remains sideways. Cash propane equaled its previous low of $0.3775 last week, setting up a potential double-bottom formation.

The weekly Commitments of Traders report showed positions held as of Tuesday, May 19.

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

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