DTN’s Technical Analysis | ENERGY | Jul 18

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

Dominick A. Chirichella - DTN Director of Risk Management and Advisory Services,
July 18, 2018

Brent Crude Oil: The Brent contract is back on the defensive in the overnight trading period with September Brent lower by $0.56 to $71.60 bbl. The contract is continuing to break down technically and remains below the downward 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 first/second contract spread has narrowed and is now in a $0.16 bbl contango. 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 August West Texas Intermediate contract, set to expire Thursday (7/20), declined in the overnight trading session after a light round of short covering in Tuesday’s session. In the early US trading session, the contract is lower by $0.53 to $67.55 bbl and trading below the linear regression trading channel support level for the third day in a row. The WTI backwardation is continuing to narrow another $0.09 bbl so far today adding to the bearishness of the contract. The MACD indicator is negative with the relative strength index starting to move toward an oversold level although it is not yet there.

Distillates: The ULSD contract is now solidly below the linear regression trading channel support and appears to be heading for the next stop of $1.96 gallon level last hit in the first part of April. In the overnight trading session, the contract is trading lower by $0.0141 at $2.0560 gallon. 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 is also being hit with selling in the overnight session with RBOB declining slightly less than the ULSD contract so far this morning. The contract is now solidly below the linear regression trading channel support and could be heading for the next stop of $1.95 gallon level last hit in the third week of June. In the overnight trading session, the contract is trading lower by $0.0119 gal at $2.0142 gallon. 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 is continuing in a downtrend and trading within the confines of the downward sloping linear regression trading channel. In the early US trading the contract is slightly lower, down $0.003, at $2.737 mmbtu. 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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