Natural gas takes off on supply miss, but seen overbought

Daily Market Analysis for Friday, 07/19/2013

KEY TERMS

OVB      Outside Vertical Bar

VRCB   Volatility Reduced Compression Bar

ENERGIES

Brent Crude Oil (September ‘13):

  • Short Term Trend is bullish.
  • Confirmation of a bottom with a range violation on 06/27/13 @ 102.09. Confirmation of a bottom with a close violation on 06/27/13 @ 102.82. Upside Targets = 104.35 – 104.89.
  • VRCB generated on Thursday making new highs on the current move @ 108.87.
    • September Brent Crude seems relegated to playing second fiddle to WTI as it traded within its most narrow range in almost six months and has nearly lost the premium it has carried over the domestic oil for more than two years.
    • Should Brent be unable to push higher to at least $109.22 by Friday’s close, it will generate its second consecutive weekly VRCB formation which has previously signaled a possible end to current price movements and a correction may ensue.
  • Projected Daily Range: 1.09
  • Projected Weekly Range: 4.12
  • Projected Monthly Range: 9.49

WTI Crude Oil (August ‘13): (NYMEX:CLQ13)

  • Short Term Trend is bullish.
  • Confirmation of a bottom with a range violation on 06/27/13 @ 96.18. Confirmation of a bottom with a close violation on 06/27/13 @ 97.05. Upside Targets =  99.22102.73
  • New highs made on the current move Thursday @ 108.43.
    • August WTI Crude Oil moved sharply higher after the reduction in volatility it had experienced over the previous four trading sessions to log its highest printed price since the 2012 highs were made.
    • After closing the premium spread between itself and Brent to less than $0.50 at one point during the session, WTI seems to be reasserting its dominance in the oil space and should continue upwards into the weekend just above $109.
  • Projected Daily Range: 1.76
  • Projected Weekly Range: 6.03
  • Projected Monthly Range: 9.13

Natural Gas (August ‘13): (NYMEX:NGQ13)

  • Short Term Trend is bearish.
  • Confirmation of a bottom with a range violation on 07/18/2013 @ 3.719. Confirmation of a bottom with a close violation on 07/02/2013 @ 3.654. Upside Targets = 3.708 – 3.764.
  • Bullish EROVB generated on Thursday making new highs on the current move @ 3.835.
    • August Natural Gas exploded higher on a miss in supply injection expectations to make new highs for the month and trade up near the daily RBB.
    • After moving through the recent 61.8% Fib retracement value of 3.821 and being overbought by over 250% in terms of daily volatility, expect for natural gas to make an early push higher on Friday to impact the RBB and then move lower to close below $3.80 heading into the weekend.
  • Projected Daily Range: .123
  • Projected Weekly Range: .237
  • Projected Monthly Range: .548
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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