Oil builds momentum as WTI-Brent spread narrows

Daily Market Analysis (SHORT TERM) Wednesday 10/17/12


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (December):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 10/15/12 @ 112.92. Confirmation of a bottom with a close violation on 10/09/12 @ 113.41. Upside Targets = 117.15 – 117.88.
  • VRCB generated on Tuesday. Possible confirmation of a bottom with a range violation @ 114.88.
  • December Brent Crude gave up some ground to WTI on Tuesday exhibiting bullish divergent price action as the market put in a higher high and higher low yet closed below the previous day’s close and mid-range in a thin trading session.
  • Look for Brent to break through the resistance of last week’s high as well as the psychological buffer of $115 on Wednesday to go after the upside targets of $117.87.
  • Projected Daily Range: 1.80
  • Projected Weekly Range: 5.34
  • Projected Monthly Range: 12.02

WTI Crude Oil (December):

  • Short Term Trends are bullish.
  • Confirmation of a top with a range violation on 10/15/12 @ 91.01. Confirmation of a bottom with a close violation on 10/09/12 @ 92.39. Upside Targets = 94.56 – 95.72.
  • VRCB generated on Tuesday. Possible confirmation of a bottom with a range violation at $92.80. Possible confirmation of a bottom with a close at $92.80 or higher.
  • December WTI Crude Oil narrowed the spread with Brent by more than $1 on Tuesday as it logged its second consecutive day of gains amid a tight trading session as the contract roll began.
  • Given the fact that there is more than an 87% chance that last week will have either its high of $93.66 or low of $88.21 violated this week, look for the current price action to push this market higher through last week’s high to $94.91.
  • Projected Daily Range: 2.57
  • Projected Weekly Range: 5.11
  • Projected Monthly Range: 11.33

Natural Gas (November):

  • Short Term Trend is bullish.
  • Confirmation of a top with a range violation on 10/16/12 @ 3.446. Confirmation of a top with a close violation on 10/16/12 @ 3.437. Downside Targets = 3.338 – 3.263.
  • November Natural Gas dropped lower for the second consecutive day on Tuesday before finding support just a single tick above the July 31 high and moving sideways during much of the second half of the pit trading session.
  • Unless natural gas can continue to accelerate lower down through the previous two weeks low range of $3.325 and $3.327 the bulls may return to this market soon as the profit taking sell-off expires and the price continue to rise back higher toward the top of our Intermediate Term resistance zone near $3.747.
  • Projected Daily Range: .113
  • Projected Weekly Range: .349
  • Projected Monthly Range: .624

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