Oil falls as indicators show oversold after storage report

Daily Market Analysis for Thursday, 05/02/2013

KEY TERMS

OVB      Outside Vertical Bar
VRCB   Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (June ‘13):

  • Short Term Trend is bearish.
  • Confirmation of a top with a range violation on 05/01/13 @ 101.34. Confirmation of a top with a close violation on 05/01/13 @ 99.95. Downside Targets = 96.63 – 94.79.
    • June Brent Crude dropped sharply lower on Wednesday following a huge domestic storage injection that put enormous pressure on the market until late in the session when the FOMC meeting announcement was released stating that the Fed stood ready for accommodative action.
    • Although Brent was able to rally significantly off the daily lows it still generated a weekly outside reversal pattern and should additional pressure be place on the market heading into the weekend, traders can expect another week of lower prices.
  • Projected Daily Range: 2.06
  • Projected Weekly Range: 5.34
  • Projected Monthly Range: 9.28

WTI Crude Oil (June ‘13):

  • Short Term Trend is bearish.
  • Confirmation of a top with a range violation on 05/01/13 @ 92.42. Confirmation of a top with a close violation on 05/01/13 @ 91.03. Downside Targets = 88.20 – 86.57.
    • June WTI Crude Oil likewise dropped significantly lower on Wednesday following a dramatic increase in storage supplies as it dropped back below the 10- and 20-day moving averages near last week’s mid-point.
    • Given the current intraday oversold volatility the WTI market experienced on Wednesday, expect a short-covering rally back near $91.75 before rolling over and breaking through the $90 mark as initially projected in Tuesday evenings report.
  • Projected Daily Range: 1.85
  • Projected Weekly Range: 5.37
  • Projected Monthly Range: 7.11

Natural Gas (June ‘13):

  • Short Term Trend is bullish.
  • Confirmation of a top with a range violation on 04/24/13 @ 4.201 Confirmation of a top with a close violation on 04/24/13 @ 4.200. Downside Targets = 3.988 – 3.875.
  • Bearish OVB generated on Wednesday.
    • June Natural Gas dropped more than $0.12 lower off the new weekly highs this afternoon following Chesapeake’s decision to raise natural gas production. It made new lows into the close of the session while impacting the 10-day moving average.
    • Price action heading into the storage report on Thursday is decidedly bearish and should the number come in above estimates, traders should look for the market to drop as low as $4.14 by week’s end.
  • Projected Daily Range: .125
  • Projected Weekly Range: .304
  • Projected Monthly Range: .580
About the Author
Kris Hicks

KMH is a trading and technical analysis firm that specializes in commodity futures and commodity based ETF’s. Kris Hicks has worked for numerous years in the commodity business and in 2011 accurately forecasted both $25 moves to the downside in May and July and the $25+ move to the upside in October in oil. He also called the all-time high day for gold on Sept. 6, 2011 and forecasted a projected downside target of 1528.10 in March 2012. He was also responsible for projecting the Q2 and Q4 low in the Euro FX to within 13 and 9 ticks, respectively. His trading methodology has a high degree of accuracy which confirms tops/bottoms, projected trading ranges and projected targets for those ranges. His expertise is focused on 16 commodities plus the comparable ETF markets. You can reach Kris at Kris@KMH-Capital.com or visit his website at www.KMH-Capital.com.

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