DTN’s Technical Analysis | ENERGY | Jul 19

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

Dominick A. Chirichella - DTN Director of Risk Management and Advisory Services,
July 19, 2018

Brent Crude Oil: The Brent contract is back on the defensive in the overnight trading period after a whipsaw trading session in Wednesday with September Brent lower by $0.76 to $72.14 bbl. The contract is continuing to break down technically and has moved below the downward trending linear regression trading channel after bouncing off support yesterday. 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 is unchanged from yesterday and is now in a $0.09 contango. The front end contango structure is a bearish indicator for the market. The MACD indicator is pointing lower with the relative strength index moving back to a neutral level after yesterday’s light round of short covering.

Crude Oil: The August West Texas Intermediate contract, which expires today at the close of trade, declined in the overnight trading session after a light round of short covering in Wednesday’s session. In the early US trading session, the contract is lower by $0.71 to $68.05 bbl and trading below the linear regression trading channel support level for the fourth day in a row. The WTI backwardation is continuing to narrow another $0.16 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 back below the linear regression trading channel support after moving back into the trading channel yesterday. So far in early US trading the contract is hovering around the channel support level of $2.08 gallon and if breached again could be looking at the next major support level of $1.96 last hit in the first part of April. In the overnight trading session, the contract is trading lower by $0.0169 at $2.0734 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 more than the ULSD contract so far this morning. The contract is now back below the linear regression trading channel support after moving back into the trading channel yesterday 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 $0.0189 at $2.0255 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 higher, up $0.006 mmbtu at $2.727. The support level for this contract is at $2.671 with the next resistance level at $2.753. 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.

Click here for more information onDTN ProphetX®, or here for a free trial of DTN ProphetX® Energy Edition.

(c) 2017 DTN. All rights reserved.