The Daily Energy Technical Report 7.12.13

MrTopStep.com

The motivating force for the bulls in this entire rally has been the calendar spreads and the arb. Once they turned, there was no other alternative but to take profits. For example, Aug/Dec crude fell 22% on the day. The Aug arb hit our target to the penny as well, and started a massive sell off. Weaker crude helped support the Dow Jones, as it’s on pace for a record high. The factor that began the decline in Asia was a slower growth forecast by the IMF.  Early morning disappointment spurred by US jobless claims, rising 16K to 360K. This contradicted expectations for a decline to 335K. The short term psychology of the energy complex has turned.

WTI
WTI S2 S1 CLOSE R1 R2 TREND
DAILY 10213 10393 10491 10531 10625 DOWN
WEEKLY 9735 10071 10322 10719 11055 PEAK

 Daily Moving Averages: 21, 55, & 100: 98.74, 96.14 , 94.54

Weekly Moving Averages: 21, 55, & 100: 94.39 , 92.18 , 93 .55

Our target for this leg was 107.20. During Asian trading that level was hit.

  • It was then that the outlook for Chinese growth was revised lower.
  • This started a bout of profit taking, but it was the news that the Seaway pipeline was running at reduced rates that exacerbated the decline.
  • As the pipeline runs less crude Cushing will build. The arb was softer on this and the calendar spreads were hammered.
  • Based on the model below there is more downside to come for this correction.
  • We are a seller of the rally. There is good resistance at 105.10 to 105.30. The pivot is 105.50.
  • The high of the week has been seen although that was a call in real time trading, it seems trite now that the day is over.
  • The immediate target is 104.10 to 103.90. However, below that level August will seek 102.30 to 102.15.
  • The funds have become gorged with length. They will be feeling the pressure below 104.00. Between flat price, arbs and calendar spreads the volume is staggering. Buying the dip is not the play for Friday.

 

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crude 071213

 

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CRUDE WKLY 070813

BRENT
BRENT S2 S1 CLOSE R1 R2 TREND
DAILY 10539 10679 10773 10794 10871 DOWN
WEEKLY 10092 10474 10772 10959 11522 PEAK

Daily Moving Averages: 21, 55, & 100: 104.63 , 103.80 , 105.44

Weekly Moving Averages: 21, 55, & 100: 106.08 , 108 .37, 110.14

Although it is tough to see in the picture below, the circled formation is a key reversal to the downside.

  • This is a pattern that moves above the previous day’s high only to settle below the previous day’s low. It is a sign that psychology has changed dramatically.
  • Although our objective for Thursday was a little higher than the posted high of the day, the pattern was satisfied.
  • The process will now center on correcting the move up from 99.67. This will put the minor pivot at 106.75. It is with a break of this mark that August will spill to 105.50 to 105.30.
  • The extension pivot is 104.90.
  • The partial reason for the weakness is a lowering of expectations for Chinese growth.
  • We are a seller of the rally.
  • This will be attempted at 107.90. The protective stop placed above 108.50.
  • We care not to buy the dip Friday unless much lower prices prevail.

 

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BRENT 071213

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BRENT WKLY 070813

WTI-BRENT
WTI-BRENT S2 S1 CLOSE R1 R2 TREND
DAILY -436 -350 -282 -194 -100 DOWN
WEEKLY -993 -765 -450 -279 0 PEAK

Daily Moving Averages: 21, 55, & 100: -3.67, -4.13 , -5.45

Weekly Moving Averages: 55, 100, & 200: -8.07 , -11.70 , –16.24

On time and on price August met its objective in overnight trading.

  • The slowing of the Seaway pipeline causes the reversal of fortune.
  • There are many funds that have plowed into this trade over the last two weeks.
  • There will be selling on the rally.
  • It is likely to rally off the -3.00 area.
  • There will be resistance at -2.00 to -1.90.
  • The minor pivot is -1.65.
  • The model we employ suggests that there will be more downside to follow.
  • This will eye the -3.50 to -3.65  area.
  • We are a seller of the rally at -2.00. The protective stop above -1.65.

 

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wti-brent 071213

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wti-brent wkly 070812

RBOB
RBOB S2 S1 CLOSE R1 R2 TREND
DAILY 29430 29825 30214 30840 31425 UP
WEEKLY 26970 27625 28968 29965 30780 PEAK

Daily Moving Averages: 21, 55, & 100: 2.8366, 2.8334 , 2.9079

Weekly Moving Averages: 21, 55, & 100: 2.302 , 2.8813 , 2.8758

Although WTI has a bearish look to it, this is anything but.

  • late breaking news has one of the crude units at Whiting down unexpectedly.
  • Although it is not the big tower, the refinery does supply fuel to the NY harbor.
  • That shot August higher after regular trading hours.
  • This is a strengthening market that appears to have much higher to go.
  • There will be support at 3.00 to 2.9950.
  • The pivot is 2.98.
  • we are a buyer of the dip at 3.00. The protective stop below 2.99.
  • August is at the time of this writing poised to break a key pivot on the August contract chart.
  • This will signal a dash to 3.08 to 3.0850.
  • Summer demand and summer heat bring chaos to exothermic reactions.

 

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mogas 071213

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mogas wkly 070813

ETHANOL
ETHANOL S2 S1 CLOSE R1 R2 TREND
DAILY 2415 2445 2460 2480 2509 UP
WEEKLY 2165 2260 2392 2480 2580 UP

Daily Moving Averages: 21, 55, & 100: 2.446, 2.544 , 2.508

Weekly Moving Averages: 21, 55, & 100: 2.509 , 2.444437 , 2.407

Strength in Corn following the USDA report brought August along for the ride.

  • But there is another factor and that is rising gasoline prices and demand.
  • The price structure is supportive for higher prices.
  • There is still the key upside pivot of 2.48 that will need to be bettered.
  • But once that is accomplished August will rise to the 100 DMA on the continuation chart at 2.509.
  • A daily settle above that mark has it leaping to 2.58 to 2.60.
  • The support for this pattern hits at 2.45 to 2.445.
  • Holding that zone will show a strengthening market and increased momentum.
  • The  key downside pivot ot the intraday chart is 2.415.
  • We are a buyer of the dip.

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ETHANOL 071213

 

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ethanol wkly 070813

DISTILLATE
HEAT S2 S1 CLOSE R1 R2 TREND
DAILY 29300 29660 29950 30240 30470 DOWN
WEEKLY 27950 28900 29897 30600 31044 PEAK

Daily Moving Averages: 21, 55, & 100: 2.9247 , 2.8982 , 2.9177

Weekly Moving Averages: 21, 55, & 100: 2.8310 , 2.9865 , 2 .9970

This has been the laggard to the upside, but it managed to eke out a new high for the move.

  • But it does appear as if August completed the pattern and is ripe for a correction.
  • August will be correcting the move up from 2.8500 on the continuation chart.
  • This will be signaled with a break of 2.98.
  • In this case, a drop to 2.970 to 2.9650 is expected.
  • However, the key downside pivot to the intraday chart is 2.9625.
  • With its removal August will test the 100 DMA at 2.93.
  • We are a seller of the rally.
  • This will be at 3.0050. The protective stop placed above 3.0170.
  • The levels posted in the price matrix represent an alternate view of the pattern.

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heat 071213

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HEaT WKLY 070813

NATGAS
NATGAS S2 S1 CLOSE R1 R2 TREND
DAILY 3405 3540 3613 3700 3790 DOWN
WEEKLY 3050 3470 3617 3905 4375 BOTTOM

Daily Moving Averages: 21, 55, & 100: 3.723 , 3.929 , 3.887

Weekly Moving Averages: 21, 55, & 100: 3.857 , 3.458, 3.241

The fundamental analysts hit the nail on the head with a build of 82 BCF.

  • The bulls were hoping that the hot weather would have created a bigger draw.
  • They were disappointed and the prices related that.
  • There is likely to be more downside to come.
  • The weather has moderated and wells are coming on fast and furious. Moreover, we hear they are cheaper to drill.
  • Fracking is a wonderful thing for consumers, but it is hell for bulls.
  • August is seen moving down to the 3.54 to 3.53 area Friday.
  • The key pivot is 3.525.
  • Busting this level will spill the contract to 3.42 to 3.40.
  • we are a seller of the rally. This will be at the 3.67 with a protective stop above 3.70.

 

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NAT 071213

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