Oil nearing oversold as WTI-Brent spread cracks $20

Daily Market Analysis (SHORT TERM) Thursday 09/27/12


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (November):

  • Short Term Trends are bearish.
  • Confirmation of a top with a range violation on 09/17/12 @ 111.99. Confirmation of a top with a close violation on 09/19/12 @ 111.10. Downside Targets = 107.18 – 106.50.
  • Possible confirmation of a bottom with a range violation @ 111.71. Possible confirmation of a bottom with a close @ 111.71 or higher.
  • November Brent Crude spent most of the early session lower in a continuation of Tuesday’s downward momentum but rallied back to close in the upper 85% of the day’s trading range after finding support once again at the daily Support Bollinger Band.
  • As mentioned in this Monday’s report, the Brent-WTI spread finally cracked the $20 point on Wednesday and should maintain this presence throughout the week’s end as it moves back higher toward $112.
  • Projected Daily Range: 2.20
  • Projected Weekly Range: 6.09
  • Projected Monthly Range: 13.05

WTI Crude Oil (November):

  • Short Term Trends are bearish.
  • Confirmation of a top with a range violation on 09/19/12 @ 94.97. Confirmation of a top with a close violation on 09/19/12 @ 94.27. Downside Targets = 89.28 – 86.44.
  • New lows made on Wednesday @ 88.95. Initial Downside Target over 110% achieved.
  • November WTI Crude Oil sank lower on Wednesday despite a draw in crude inventories and closed below $90 for the first time since 08/02 after achieving our initial downside target.
  • WTI has dropped nearly $12 over the last two weeks and is currently reaching a point where the market is oversold in the near-term and could experience a small short-covering rally toward the weekend to as high as $92.59 before resuming its downward thrust and moving lower to $86.44.
  • Projected Daily Range: 2.38
  • Projected Weekly Range: 5.76
  • Projected Monthly Range: 10.76

Natural Gas (November):

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 09/24/12 @ 3.080. Confirmation of a bottom with a close violation on 09/25/12 @ 3.105. Upside Targets = 3.211 – 3.283.
  • New 6 week highs made on current move Wednesday @ 3.241. Upside Targets 97% achieved
  • November Natural Gas traded to within 6 ticks of the mid-point of our 2 upside targets on Wednesday after a HFT rally was sustained throughout the session and come within $0.03 of new 2012 spot contract highs.
  • Look for a continuation of an upward movement leading into Thursday’s EIA storage report and then a pullback on what should be another large storage build.
  • Projected Daily Range: .106
  • Projected Weekly Range: .297
  • Projected Monthly Range: .665

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