DTN’s Technical Analysis | ENERGY | Jul 16

Daily technical analysis of crude oil, heating oil, gasoline and natural gas

Dominick A. Chirichella - DTN Director of Risk Management and Advisory Services,
July 16, 2018

Brent Crude Oil: Last week the spot September Brent contract was hit with a round of selling for the second week in a row even with a modest upside move on Friday. The spot-month contract tested and breached the upward trending linear regression trading channel support at $74.80 but was able to recover on Friday and settle above its key support level. The contract has not recovered from the steep sell-off from mid-last week with the MACD indicator pointing lower. On the other hand, Brent is still in backwardation, a bullish market structure, although the front end of the forward curve has narrowed to just $0.07 bbl at Friday’s close. The relative strength index shows a neutral market condition.

Crude Oil: The spot August West Texas Intermediate contract, set to expire Thursday, July 20, declined strongly last week to $71.01 and hovering near its channel support level of $70.45 bbl. The spot-month contract breached support twice last week but settled above support both times. WTI is in backwardation, a bullish market structure, but the front end of the curve narrowed to only $0.06 bbl. The MACD indicator is negative with the relative strength index at a neutral market level.

Distillates: On Friday the ULSD spot contract recovered some of Wednesday’s strong loss for the second day in a row but is still close to the low hit on Wednesday of $2.0944 a level that the market tested on Thursday and Friday. As the dust settled the market was able to remain above the trading channel support level of $2.1140 gallon from Wednesday through Friday. Heading into this week’s trading the contract is hovering near the support level after clearly breaking down mid-last week. Support is found at $2.1140 with resistance at 2.1500. The forward curve is in a seasonal contango through January delivery. The MACD indicator is bearish with the relative strength index shows a neutral market condition.

RBOB Gasoline: The RBOB contract fared better than ULSD and WTI with the contract not declining as much during Wednesday’s sell-off with the upside recovery slightly stronger on Thursday and Friday. With Friday’s gains the contract only declined $0.0018 gallon for the week. The spot-month contract tested support at $2.0515 on Wednesday, Thursday and Friday and settling above this level all three sessions. The gasoline market is in a seasonal backwardation, a price supportive market structure. The MACD indicator and the relative strength index shows a neutral market condition.

Natural Gas: The Natural Gas market continued in its declining trend since peaking mid-June. The August contract declined $0.106 Mmbtu for the week and below its current downward trending linear regression trading channel. The next stopping point for this contract could be at $2.74 and then $2.65 levels. The August contract holds a premium to September delivery, but switched back to contango for the September/October combo. The MACD indicator is bearish with the relative strength index starting to slowly approach oversold territory.

*For technical analysis of monthly (long-term) and weekly (intermediate-term) trends see DTN’s Technically Speaking blog on your ProphetX system.

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