Natural gas trading at discount ahead of inventory reports

Daily Market Analysis (SHORT TERM) Tuesday 12/04/2012


KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (January ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a bottom with a range violation on 11/30/12 @ 111.31. Confirmation of a bottom with a close violation on 11/06/12 @ 109.11. Upside Targets = 110.78 – 112.12.
  • New highs made on current move Monday @112.33. Upside Targets over 100% achieved
  • January Brent Crude moved significantly higher in early trading on Monday as it broke through the November highs (112.20) before settling back just off the session’s lows.
  • Brent has traded sideways between effectively $105-$112 since the sharp breakdown in prices in the middle of September and without closing above $114 with a wide range and strong daily close, the back and forth price action within these price parameters are likely to continue for the coming weeks.
  • Projected Daily Range: 1.56
  • Projected Weekly Range: 3.89
  • Projected Monthly Range: 9.03

WTI Crude Oil (January ‘13):

  • Short Term Trends are bullish.
  • Confirmation of a bottom with a range violation on 11/30/12 @ 86.70. Confirmation of a bottom with a close violation on 11/06/12 @ 87.86. Upside Targets = 88.99 – 89.89.
  • New highs made on current move Monday @ 90.33. Upside Targets over 120% achieved
  • January WTI Crude Oil was maligned to the same fate as Brent on Monday as it made new five week highs but was unable to sustain the gains as it closed in the lower 20% of the day’s trading range.
  • WTI’s price action on Monday points to a lower opening and low on Tuesday but current ST support lies just below at $88.04 and should prop the market from those levels this week.
  • Projected Daily Range: 1.78
  • Projected Weekly Range: 3.36
  • Projected Monthly Range: 8.74

Natural Gas (January ‘13):

  • Short Term trend is bearish.
  • Confirmation of a top with a range violation on 11/28/2012 @ 3.840. Confirmation of a top with a close violation on 11/28/2012 @ 3.801. Downside Targets = 3.746 – 3.708.
  • New lows made on current move Monday @ 3.526.
  • January Natural Gas initially gapped lower in Monday’s overnight session before rallying back strongly throughout the trading session to close in the upper 60% of the day’s trading range as investors saw value in the market after twice penetrating the daily SBB.
  • Natural gas is trading at an extreme discount at current levels and should receive another round of follow-through buying on Tuesday as a precursor to an expected draw in inventories and rally as high as $3.70 by day’s end.
  • Projected Daily Range: .143
  • Projected Weekly Range: .317
  • Projected Monthly Range: .557

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