Natural gas finds support amid speculation of colder winter

Daily Market Analysis (SHORT TERM) Wednesday 10/10/12


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (November):

  • Short Term Trends are bearish.
  • Confirmation of a bottom with a range violation on 10/05/12 @ 112.70. Confirmation of a bottom with a close violation on 10/09/12 @ 113.41. Upside Targets = 117.97 – 118.88
  • TREND REVERSAL to bullish @ 113.40. Upside Target = 117.01.
  • November Brent Crude roared back higher on Tuesday to close at its highest level in more than three weeks as tensions in the Middle East continue to rise and technical trends have not reversed back to bullish.
  • Expect a modest setback on Wednesday before the EIA storage report as some profit taking comes into the market and then resume the rally to make a move back near the contract highs @ 117.95.
  • Projected Daily Range: 2.36
  • Projected Weekly Range: 6.82
  • Projected Monthly Range: 12.02

WTI Crude Oil (November):

  • Short Term Trends are bearish.
  • Confirmation of a bottom with a range violation on 10/09/12 @ 91.85. Confirmation of a bottom with a close violation on 10/09/12 @ 92.39. Upside Targets = 94.56 – 95.72.
  • November WTI Crude Oil slightly closed the spread between itself and Brent on Tuesday as it rose over $3 as the Middle East remains on edge.
  • Should WTI trade above last week’s high of $93.33 it would fulfill only a 14% probability of a weekly OVB failure and point the crude market higher over the next few weeks to $95.72.
  • Projected Daily Range: 2.67
  • Projected Weekly Range: 6.15
  • Projected Monthly Range: 11.33

Natural Gas (November):

  • Short Term Trend is bullish.
  • Confirmation of a top with a range violation on 10/05/12 @ 3.347. Confirmation of a bottom with a close violation on 09/25/12 @ 3.105. Upside Targets = 3.602 – 3.747.
  • C > HOLB (Close Above High Low Bar) generated on Tuesday. Possible confirmation of a bottom with a range violation @ 3.516.
  • November Natural Gas once again found solid support under $3.35 on Tuesday as it rallied sharply higher in the second half day of trading on speculation of a colder winter than last year.
  • While we expect natural gas prices to continue to rise in the short term, this current contract should experience extreme difficulty breaking through the topside of the resistance zone near $3.75 as there remains adequate storage supplies as well as the fact that a colder winter when comparing to 2011 could still remain pretty mild historically.
  • Projected Daily Range: .124
  • Projected Weekly Range: .328
  • Projected Monthly Range: .624

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