Oil volatility expected as trading resumes

Daily Market Analysis (SHORT TERM) Wednesday 10/31/12


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (December):

  • Short Term Trends are bearish.
  • Confirmation of a bottom with a range violation on 10/26/12 @ 109.35. Confirmation of a bottom with a close violation on 10/26/12 @ 109.55. Upside Targets = 112.07 – 113.69.
  • DOUBLE VRCB generated on Tuesday. Possible confirmation of a top with a range violation @ 108.50. Possible confirmation of a top with a close @ 108.50 or lower.
  • December Brent Crude moved just fractionally lower on Tuesday as it only managed to attract about 2/3 of the normal daily volume in the aftermath of the hurricane in the northeast.
  • While the past two sessions price action could reasonably be argued as unreliable, traders should not forget that this market is coming off of a Short Term trend reversing move lower and with demand destruction that is likely to follow, Brent could drop to what will be new three-month lows below $105 to our Intermediate Term targets of 101.89 – 103.22.
  • Projected Daily Range: 2.11
  • Projected Weekly Range: 4.87
  • Projected Monthly Range: 12.02

WTI Crude Oil (December):

  • Short Term Trends are bearish.
  • Confirmation of a top with a range violation on 10/22/12 @ 90.18. Confirmation of a top with a close violation on 10/19/12 @ 90.44. Downside Targets = 86.82 – 85.38
  • Inside VRCB generated on Tuesday. Possible confirmation of a bottom with a range violation @ 86.44. Possible confirmation of a bottom with a close @ 86.44 or higher.
  • December WTI Crude Oil faired only slightly better than Brent on Tuesday as it has tried over the past five trading sessions to find support near the $85 threshold on depressed trading volume.
  • With the NYMEX re-opening on Wednesday, look for an extremely volatile trading session as the market should ultimately finish lower and approach our first Intermediate Term target of $82.95.
  • Projected Daily Range: 2.11
  • Projected Weekly Range: 5.16
  • Projected Monthly Range: 11.33

Natural Gas (December):

  • Short Term trend is bearish.
  • Confirmation of a top with a range violation on 10/25/12 @ 3.751. Confirmation of a top with a close violation on 10/26/12 @ 3.724. Downside Targets = 3.661 – 3.577.
  • New lows generated on current move Tuesday @ 3.650.
  • December Natural Gas dropped lower in Tuesday trading as it nearly impacted the daily Support Bollinger Band and traded just pennies away from the October lows of $3.609.
  • Natural gas should trade lower throughout the rest of the week as decreased demand should push storage levels much higher than recent weeks and possibly fill the gap left from the November contract into the $3.40s.
  • Projected Daily Range: .127
  • Projected Weekly Range: .301
  • Projected Monthly Range: .624

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