Oil spread widens to $20 as WTI and Brent both fall

Daily Market Analysis (SHORT TERM) Thursday 10/04/12


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 10/02/12 @ 111.46. Confirmation of a top with a close violation on 10/03/12 @ 108.17. Downside Targets = 103.22 – 101.89.
  • November Brent Crude was unable to find the necessary support around the $110 and sank to its lowest level in nearly two weeks after violating last week’s low.
  • Look for a modest short-covering rally on Thursday before continued selling returns to the market and drops it to new two-month lows at $103.22.
  • Projected Daily Range: 2.22
  • Projected Weekly Range: 6.30
  • Projected Monthly Range: 12.02

WTI Crude Oil (November):

  • Short Term Trends are bearish.
  • Confirmation of a top with a range violation on 10/03/12 @ 91.25. Confirmation of a top with a close violation on 10/03/12 @ 88.94. Downside Targets = 89.28 – 86.44.
  • November WTI Crude Oil dropped lower on Wednesday, once again increasing the spread to more than $20 with Brent and closing just inside the daily Support Bollinger Band.
  • WTI has now generated a weekly OVB and should this market close below the weekly mid-range, it will have a 90% probability of trading below this week’s low of 87.70 next week.
  • Projected Daily Range: 2.50
  • Projected Weekly Range: 5.96
  • Projected Monthly Range: 11.33

Natural Gas (November):

  • Short Term Trend is bullish.
  • 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.
  • C < LOHB (Close Below Low High Bar) generated on Wednesday. Possible confirmation of a top with a range violation @ 3.347. Possible confirmation of a top with a close violation @ 3.347 or lower.
  • November Natural Gas dropped sharply throughout the session on Wednesday on reports of cooler whether to go along with a large round of profit taking from bulls that have picked up $0.60 in the last week and a half.
  • Currently the rate of change has pushed this market too high, too fast and traders should look to sell any rallies on Thursday aggressively unless there is an unexpected miss in supply injections.
  • Projected Daily Range: .128
  • Projected Weekly Range: .298
  • Projected Monthly Range: .624

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