The Daily Energy Technical Report 7.15.13

Stanton Analytics
July 15, 2013

Much of the rally was inspired by a surging rbob price that tagged more than 12 cents per gallon on the price at one point, but it still managed to settle nearly ten-cents higher on the day. Analysts attribute the rise to a few refinery glitches around the entire nation. While most deal with power outages, The Come-By-Chance refinery and St. John’s irving refinery are running low on crude since the Canadian train derailment. The accident ruined the tracks that would be to transport the black gold to the factories.

But over the weekend, one of the bearish items that started the sell off was removed from a panoply of negative aspects. The Central Bank of China said in a statement that a full range of monetary tools would be used in a bid to assure rattled markets. While maintaining a conservative approach to policy, the bank stands ready to “adjust policy” as needed to steady and lead the markets on a steady helm at credit in social financing. They also included price and quantitative tools to stir the economy through choppy waters.

On the Middle East-North Africa circuit, Turkey remains in a protesting mood, but violence was at a minimum at the time of this writing. Nevertheless Nigerian sectarian violence ahs reared its ugly head when the Boko Harem raided and destroyed schools that taught Western idea. They shot dead and of the children that were above the age of puberty. How does an organization or purported religion justify that kind of inhumanity is beyond our ken. While the group is located in the north of the country, there is fear that it will spread to the oil regions in the south.

Oil traders on both sides of the Atlantic have eyes peeled for news articles on the resumption of the 450,000-bbl/d conduit. The flow was shut down according to an oil intelligence report Thursday. Ostensibly on a revelation of a diminished power draw at four flow stations. There is no date for resumption. A return to full flow will drive the WTI price higher and firm the crude curve.


DAILY 10319 10508 10595 10704 10809 PEAK
WEEKLY 9746 10180 10595 10819 11288 PEAK

 Daily Moving Averages: 21, 55, & 100: 99.44, 96.54 , 94.70

Weekly Moving Averages: 21, 55, & 100: 94.87 , 92.66 , 93 .76

August’s outlook is pegged on a bifurcated outlook.

  • The late Friday rally moved August right to the pattern resistance at 106.20 to 106.30.
  • A break of 106.50 will give it a stab at a new high from last week.
  • The model below shows that the third and longest wave of structure is complete.
  • August is in a consolidation phase before the final blowout is seen.
  • While the larger degree pattern does allow for such an occurrence, the intraday pattern indicates a poke of the downside to test the 104.30 support.
  • Actually the short-term formation sees the potential for a drop below 104.00to see the 103.50 to 103.25 zone.
  • This scenario will be dismantled with the return of the Seaway pipeline.
  • That will indicate the bullish outlook has taken precedence.
  • In this event the break over 106.50 will give 107.45 a charge. It is with a rise above that level that August will yield a rise to 108.10 to 108.25, with a potential to extend to 108.75.
  • We will take the stand to sell the rally at 106.25 with a protective stop above 106.50.
  • The spreads will be the clue to its likely due.


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DAILY 10609 10705 10881/10793 10999 11179 PEAK
WEEKLY 10039 10552 10881 11179 11493 PEAK

Daily Moving Averages: 21, 55, & 100: 104.86 , 103.90 , 105.39

Weekly Moving Averages: 21, 55, & 100: 105.65 , 108 .69, 110.14

The continuation chart had a key reversal to the downside Thursday, it reversed that outlook with a reversal (though not key) to the upside.

  • While this is an unusual turn of events, it is not unprecedented.
  • It does appear as if Sept has a more positive looking pattern than that of its American cousin.
  • The model for Monday has Sept punching higher to see it test the key upside pivot at 109.80 to 110.00.
  • It is the latter level that is the pivot and it is likely that Sept will have a difficult time penetrating that level.
  • Although there is minor support at 107.20 to 107.00, the key downside pivot is 106.35.
  • Breaking below this level will confirm a short-term top.
  • It will also suggest that Sept will drop to the 105.00 to104.80 zone.
  • We are a seller of the strong rally at the 109.85 level with a protective stop above 110.11.
  • The Chinese news on economic adjustments should act to initially support this market.
  • There has been a surge of managed money into both crude oil markets. At the first sign of material market weakness the doors will be crowded on the exit.


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DAILY -475 -390 -286 -202 -120 CONGEST
WEEKLY -1098 -689 -286 -145 -54 PEAK

Daily Moving Averages: 21, 55, & 100: -3.32, -3.81 , –5.17

Weekly Moving Averages: 55, 100, & 200: - 7.37 , -10.80 , –15.83

It appears as if August will stage a minor bounce off the -3.10 level seen Friday.

  • However, this appears that it will be a correction of the leg down from the -1.45 area.
  • If this model is correct, August will find resistance at -2.05 to -1.95. The minor pivot is -1.80.
  • The key downside pivot to the model is -3.10.
  • It is with a break of this level that August will be setting up a drop to key support at -.390 to -4.00.
  • In terms of Sept that will be at a similar level.
  • We will be looking to buy that zone with a protective stop below -4.20.
  • Again, any news on a restored Seaway pipeline will signal a more bullish response than the one outlined.


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DAILY 30215 30690 31175 31410 31795 PEAK
WEEKLY 28625 30215 31175 32285 34260 PEAK

Daily Moving Averages: 21, 55, & 100: 2.8487, 2.8400 , 2.9054

Weekly Moving Averages: 21, 55, & 100: 2.9294 , 2.8913 , 2.8788

It has been a studly move. Straight up forty-cents in two weeks.

  • On the intraday chart it appears that August will stage a minor correction to see the 3.10 to 3.0950 zone.
  • It is the combination of refinery glitches and lack of crude for the eastern Canadian refineries that has embolden the bulls for such a charge.
  • If there is issued a Jones Act waiver, the situation of high prices will disappear quickly.
  • August demonstrates renewed strength with a break above 3.1375. This combined with removal of the key upside pivot of 3.1460 will net a jump to 3.1750 to 3.1800.
  • This will be a two way market for Monday.
  • One can attempt to buy August at 3.0950 and use a pivot of 3.0850.
  • Or on the other hand one can sell the jump to the 3.18 area as a point of reflection.
  • This will carry a pivot of 3.19.


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DAILY 2368 2411 2449 2465 2535 DOWN
WEEKLY 2300 2368 2449 2580 2655 CONGEST LOWER

Daily Moving Averages: 21, 55, & 100: 2.444, 2.544 , 2.509

Weekly Moving Averages: 21, 55, & 100: 2.513 , 2.451 , 2.404

August fulfilled its intended rise on Friday and posted a reversal of the formation.

  • It is likely that August will correct lower this upcoming week.
  • There will be minor resistance at 2.465 to 2.47. The key pivot is 2.48.
  • It will take a daily settle above that level to sustain the bullish impulse.
  • But the likely early week outlook is for August to slip to the minor support at 2.42 to 2.415. The minor downside pivot of 2.41 will indicate a short-term top when broken.
  • August has a key downside pivot to the intraday chart at 2.385.
  • We are a seller of the rally.
  • Near perfect growing conditions will provide ethanol refiners with ample supply for the new crop year.
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DAILY 29580 29840 30294 30600 30750 PEAK
WEEKLY 28225 29580 30294 30600 31044 PEAK

Daily Moving Averages: 21, 55, & 100: 2.9320 , 2.9033 , 2.9145

Weekly Moving Averages: 21, 55, & 100: 2.9224 , 2.9955 , 2 .9983

August is in the final leg of this climb, however there is likely to more to the advance before a meaningful setback.

  • Of prime importance to the bulls is the .618 retracement target at 3.0550 to 3.06.
  • It is probable that this will be a tough hurdle to cross on the first pass.
  • But the system’s pinnacle will not be acknowledged before a break of the minor downside pivot of 2.9840 is seen.
  • In this event on an intraday basis August will peel off to 2.97 to 2.9650.
  • A daily settle below 2.9650 does indicate a more substantive correction.
  • In this event a potential test of 2.90 cannot be ruled out.
  • We see this as a two way market for Monday.
  • The outlook is to sell the strong rally at 3.0575 with a protective stop above 3.06.
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DAILY 3472 3526 3644 3702 3835 UP
WEEKLY 3050 3470 3644 4093 4368 UP

Daily Moving Averages: 21, 55, & 100: 3.710 , 3.910 , 3.985

Weekly Moving Averages: 21, 55, & 100: 3.880 , 3.477, 3.236

Despite the call for above normal temps to come this week, the 10 to 30 day forecast is for cooler than normal temperatures with the end of August feeling fall like.

  • The less expensive cost of production has kept the injection rate towards the upper end of projections.
  • The technical pattern pictured below shows the potential for August to break below trend support.
  • While that rests at 3.55, the key downside pivot rests at 3.525.
  • We continue to view this pattern with a negative bent.
  • The early week heat may bump August up to test 3.70t o 3.71, which is the minor pivot. However, unless that level is breached by a five-minute settle August will maintain that bearish appeal.
  • We are a seller of the rally with a protective stop above 3.71.
  • Even if removed the resultant advance is likely to be stunted at 2.815 to 2.8350.
  • With the fall of the key downside pivot on an intraday basis August will search for the 3.475 to 3.46 zone.
  • A daily settle below the key pivot will usher in a test of the super-duper downside pivot hinge at 3.05.


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