DTN’s Technical Analysis | ENERGY | Jul 17

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

Dominick A. Chirichella - DTN Director of Risk Management and Advisory Services,
July 17, 2018

Brent Crude Oil: The strong selling that hit the market last Wednesday did technical damage to the uptrend formation with another day of selling on Monday. The contract is breaking down technically having now solidly breached its upward trending linear regression trading channel and heading for the next level of support of $71.00. If the $71 level is breached the next stopping point for the contract could be around the $66 level. In overnight trading Brent is lower once again with first/second contract spread has narrowed to just a $0.02 backwardation after trading at a slightly wider level early yesterday. The changing structure is also a bearish indicator for the market. The MACD indicator is pointing lower with the relative strength index starting to move toward an oversold level although it is not yet there.

Crude Oil: The soon to expire, Thursday (7/20), spot Aug West Texas Intermediate contract declined strongly yesterday but not as strongly as the Brent contract. In the early US trading session, the contract is lower by $0.16 to $67.91 and trading below the linear regression trading channel support level of the second session in a row. WTI is in a much wider backwardation than the Brent contract but it is also starting to narrow. The MACD indicator is negative with the relative strength index starting to move toward an oversold level although it is not yet there.

Distillates: After holding support on Thursday and Friday the contract blew right thru support in another day of strong selling. The contract is now solidly below the linear regression trading channel support and could be heading for the next stop of $1.96 level last hit in the first part of April. In the overnight trading session, the contract is trading either side of unchanged. The forward curve is in a seasonal contango through January delivery. The MACD indicator is bearish with the relative strength index moving toward an oversold condition.

RBOB Gasoline: The RBOB contract was also hit with a strong round of selling with RBOB declining more than the ULSD contract on Monday. The contract is now solidly below the linear regression trading channel support and could be heading for the next stop of $1.95 level last hit in the third week of June. In the overnight trading session, the contract is trading either side of unchanged. The gasoline market is in a seasonal backwardation, a price supportive market structure. The MACD indicator is bearish with the relative strength index moving toward an oversold condition.

Natural Gas: The Natural Gas market held support within the confines of the downward sloping linear regression trading channel with the contract slightly higher, $0.010 Mmbtu, in the overnight trading session. The support level for this contract is at $2.73 with the next resistance level at $2.802. The August contract holds a premium to September delivery, but switches 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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