The Daily Energy Technical Report 6.12.13

MrTopStep.com

The yen gained over 3% vs the greenback. The next shoe to drop was the OPEC outlook for demand. They lowered the forecast for 2013 by a minor 10K b/d, but they warned the risks for demand are to the downside. They cited a poor economy in Europe, and possible setbacks to the US economy. The Brent curve moved towards contango and this was also a hurdle for the bulls. This is in spite of the lowest output for Libya since the war. Their output has fallen below 1M b/d.

The crude oil markets caught a bid on the increasing instability in Turkey. The streets of Istanbul are littered with rocks and bottles as the populous protests the leadership of their President Erdogan. He has moved the country more towards an Islamic orientation. Also in the Middle East, the US is considering arming Syrian rebels, which would escalate an already sour relationship with Russia.

The DOE expectations are as follows: Crude -400K; Mogas +500K; Dist +1.3M.

API: CRUDE +8.965 MB; MOGAS: +1.0 MB; DIST: +199 KB; CUSHING: -768 KB

WTI
WTI S2 S1 CLOSE R1 R2 TREND
DAILY 9321 9460 9538 9684 9824 CONGEST
WEEKLY 8714 9182 9603 9980 10300 UP

 Daily Moving Averages: 21, 55, & 100: 94.60, 93.79 , 94.08

Weekly Moving Averages: 21, 55, & 100: 94.08 , 91.29 , 93 .44

The fundamentals stink. The stock market weak. Geopolitics are strong.

  • Hence July stays in a range. The volume has taken it on the chin as banks and hedge funds are no longer playing the game.
  • The banks have Dodd-Frank to thanks. The hedge funds too have to deal with the regulation.
  • When one stops to consider the short yenlong Nikkei trade that many funds have put on in huge plays is down 20 percent in six days one gets the feeling that the markets are on a precipice.
  • Nevertheless, July has two factors underpinning its price: Protests in Turkey and the arming of the Syrian rebels.
  • Moreover, Libyan crude oil production has fallen below 1.0 mm b/d.
  • Yet if the bulls want the market to gallop higher there is but one prerequisite. It is pictured below as a massive head and shoulders bottom.
  • However, that will be a difficult task without any help from a geopolitical blow up.
  • it is likely that July will test the minor support at 994.65 to 94.50. The pivot is 94.40.
  • The key pivot is 94.00.
  • Busting that level will throw the bulls down to 93.25 to 93.00.
  • We see this market as top down early in the day. There will be resistance at 95.25 to 95.40. The upside pivot is 95.50. We will sell 95.25 with a proteective stop above 95.50.
  • The key upside pivot is the neckline of the head and shoulders bottom at 96.85.

 

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crude 061213

 

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CRUDE WKLY 061013

BRENT
BRENT S2 S1 CLOSE R1 R2 TREND
DAILY 10027 10176 10296 10379 10489 DOWN
WEEKLY 9357 10013 10456 10855 11060 CONGEST

Daily Moving Averages: 21, 55, & 100: 103.16 , 103.69 , 107.96

Weekly Moving Averages: 21, 55, & 100: 108.18 , 108 .11, 110.59

It had a weaker picture than that of WTI all day and it appears as if the weakness will continue into Wednesday.

  • The moving of the curve into less backwardation signals ample crude available.
  • Despite Libyan production below 1 mm b/d the market is soft.
  • When a market reacts bearishly to bullish news it is by definition bearish.
  • July is likely to move to 101.85 to 101.70 as an initial minor support level.
  • The pivot is 101.40.
  • We are a seller of the rally early in the day. This will be at the 102.90 to 103.00 area. The protective is placed above  103.35.
  • The bulls will need to break above 104.50 to give July some semblance of strength.
  • However, it is the macro-economy that is flavoring the oil markets for now, but geopolitics will keep the market from falling precipitously.

 

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brent 061213

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BRENT WKLY 061013

WTI-BRENT
WTI-BRENT S2 S1 CLOSE R1 R2 TREND
DAILY -917 -832 -758 -698 -618 UP
WEEKLY -1355 -1000 -853 -698 -379 UP

Daily Moving Averages: 21, 55, & 100: -8.76 , -8.80 , -8.64

Weekly Moving Averages: 55, 100, & 200: -10.25 , -14.14 , –17.37

Although the short-term trend is for higher prices, July is likely to retrace before the next leg to the up[side is sustained.

  • Our labeled chart below has July nearly completing its third segment of five.
  • Wednesday’s price action appears as if a mild retracement is due.
  • July will back and fill to see the -8.10 to -8.35 area.
  • The downside extension pivot is -8.60.
  • July should have another leg to the upside that will use the move to -8.30 as a springboard to the next high.
  • The objective in this event is for July to tag the recent high of -7.00 to -6.95 with a break of the minor upside pivot at -7.40.
  • Although this will probably top this formation, a daily settle above -7.00 will probably see strength spill over to the Aug arb.
  • We view this market as a two way ordeal for Wednesday.
  • The trading path should be to sell the -7.00 area with a stop placed above -6.85 or to buy the -8.30 level with a stop below -8.60.

 

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wti-brent 061213

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wti-brent wkly 060313

RBOB
RBOB S2 S1 CLOSE R1 R2 TREND
DAILY 27555 27820 28231 28300 28855 DOWN
WEEKLY 26880 27465 28715 29770 30415 PEAK

Daily Moving Averages: 21, 55, & 100: 2.8390, 2.8566 , 2.9372

Weekly Moving Averages: 21, 55, & 100: 2.9534 , 2.8748 , 2.8846

July is reacting to weaker Asian markets and a general sense of foreboding as the removal of stimulus is being considered.

  • The pattern is weak and is reacting to poorer demand.
  • Moreover, refinery runs have been increased adding fuel to the bearish fire (pun intended).
  • July will test the Tuesday low at 2.7850 to 2.78. It is possible to make a marginal new low from Tuesday and then bounce.
  • Woe onto the bulls if 2.78 is given, however.
  • This will immediately set July to tackle trend support 2.7550 to 2.75.
  • The pivot is also the key pivot for the pattern at 2.7370.
  • We are a seller of the rally. Since the market fell after regular trading hours, the hoped for sell level is 2.82 to 2.8250.. The pivot is 2.83.

 

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mogas 061213

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MOGAS WKLY 061013

ETHANOL
ETHANOL S2 S1 CLOSE R1 R2 TREND
DAILY 2385 2405 2440 2464 2484 DOWN
WEEKLY 2365 2430 2506 2650 2750 DOWN

Daily Moving Averages: 21, 55, & 100: 2.627, 2.546 , 2.498

Weekly Moving Averages: 21, 55, & 100: 2.500 , 2.414 , 2.424

We warned of lower prices to come with the key reversal look to the daily chart from Monday.

  • Although July hit our intraday target at 2.42 spot on, it does not appear that the larger degree pattern is yet complete.
  • This model calls for July to find minor resistance at 2.46 to 2.465.
  • The minor upside pivot is 2.475.
  • The key upside pivot to the intraday chart is 2.535, but we do not think that will be visited.
  • We are in a sell the rally mode.
  • The next level for the bears to test is 2.405 to 2.40.
  • But the strong pattern support hits below that level at the 2.385 to 2.38 zone.
  • This is a likely level to hold before the crop report.

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ethanol 061213

 

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ETHANOL WKLY 061013

DISTILLATE
HEAT S2 S1 CLOSE R1 R2 TREND
DAILY 27720 28225 28575 28800 29085 DOWN
WEEKLY 27255 27665 28931 29995 30540 PEAK

Daily Moving Averages: 21, 55, & 100: 2.8776 , 2.8872 , 2.9630

Weekly Moving Averages: 21, 55, & 100: 2.9700 , 2.9699 , 3.0030

As the equities sink so too will distillate.

  • As the lifeblood of an industrial economy, distillate will follow if not in lock step certainly in the same direction.
  • July appears to be weakening again following the jump to the 2.9150 area.
  • The model suggests July will slip to 2.8250 to 2.82.
  • The pivot is 2.8150. With a break of that level July will continue to sink to see 2.7750 to 2.77.
  • We are a seller of the rally. July will have initial resistance at 2.8750 to 2.88. The pivot is 2.8850.
  • Bulls will need to protect 2.82. Their desire will be to better the above mentioned pivot to give them an opportunity to test 2.9150.
  • While we do not think that will be the case for Wednesday, nor can we rule it out.
  • But if bonds and equities mean anything the risk markets are in for a

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heat 061213

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HEAT WKLY 061013


NATGAS
NATGAS S2 S1 CLOSE R1 R2 TREND
DAILY 3565 3645 3724 3809 3869 DOWN
WEEKLY 3385 3645 3828 4030 4350 DOWN

Daily Moving Averages: 21, 55, & 100: 4.023 , 4.075 , 3.809

Weekly Moving Averages: 21, 55, & 100: 3.804 , 3.367, 3.264

From San Francisco to New York mild temperatures are seen for the next 6-10 days.

  • In a market so well supplied demand is crucial and this weather forecast will not give the bulls anything to hang their hat on.
  • The 100 DMA was broken and settled below on both the continuation chart and the contract chart.
  • We are a seller of the rally.
  • July will have initial resistance at 2.79 to 2.805.
  • The minor pivot is 2.8150.
  • The key  upside pivot is 2.87.
  • The target for Wednesday’s decline is 3.65 to 3.64.
  • While that area is likely to hold prior to inventories a break thereof will net a drop to 3.575 to 3.55.

 

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nat 061213

 

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NAT WKLY 061013

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