The energy markets are certainly feeling the effects of increased uncertainty and tensions in the Middle East, with the focus on Syria and Turkey. Crude oil, after experiencing a swift drop to the key $88 level, has rapidly reversed course and now is up around 1% this morning, trading over $93. This $93 level is our key pivot for this market. We call this level the decision level. If crude can hold above $93, we look for a bullish trend to resume. If this rally is short-lived and crude can trade back below and hold below $93, we look for the bears to take control again and bring this market back to $88 and possibly $82. However, middle east tensions seem to have a hold on this market thus putting in a potential floor at $88. Natural gas, after some slight profit-taking has resumed a bullish move and is now close to its recent high. Heading into winter, these markets might continue to show strength.
We focus on heating oil today. Heating oil dipped below $3.00 per gal. very briefly last month, but could not hold below that key level. After putting in a lower low at around $3.06 earlier this month, heating oil bulls have been in control, and this market is trading above its first resistance level of $3.22 and approaching the next key level at $3.27. This market looks strong to us, and again especially heading into winter, bulls may keep control of heating oil through 2012. Our key pivot for this market is $3.18. Now, heating oil is holding above $3.18. Furthermore, the Energy Information Administration stated today that U.S. households that mainly use heating oil to warm their homes should pay 19% more for it this winter compared to a year earlier based on expectations of a colder winter and as low distillate stocks and new fuel regulations drive up prices.
