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On Again, Off Again Gaza Truce Talks Roils Oil Pits

Henry Marchell

The energy markets were roiled Tuesday with reports of on again/off again truce negotiations. However, the energy markets are higher this morning on the to and fro nature of the talks. The Foreign Minister of Israel stated that there was not going to be an invasion until after the Israel elections. But if voted for it will be a full invasion.

The leaders of the European Union failed again yesterday in solving the Greek debt crisis. It is coming to light in a 15-page document that Greece’s debt to GDP ratio is at 170%. There is just no way, no how that Greece can be at the 120% level by 2020. We understand this. The Germans have already signaled their responsibility to shoulder the Greeks’ largess is not likely without verification of the Greek details. Somehow, we think that this has been going on for three years. Shouldn’t it be done by now? … Just wondering.

But by far the shocking surprise was the report by the API that showed an aggregate draw in stocks of over 11.0 MB. This is a combination of the shutdown of the Keystone pipeline and the effects of hurricane Sandy on the products. Needless to say the oil market is sharply higher on the news. Nat Gas traders are looking to see if Dec can manage to sustain a move above 3.85.

CRUDE : Hi: 87.60; Low: 86.65

This is a strengthening pattern for Jan. It is likely to hit pattern resistance at 87.90. Moving above that level will signal; a rise to trend resistance at 88.58. This market will be buffeted by a plethora of data points and headline risk from Israel. It is a two-way market. There will be initial support at 87.15 to 87.00. The minor downside pivot is 86.65. The key downside pivot to the intraday picture is 86.00. Our early morning view is that Jan will hit resistance at 88.50 and retreat waiting for inventories. Buy the sharp dips sell the sharp rips.
BRENT: Hi: 111.189; Low: 109.74
Jan appears as if it will have another leg to the upside for this pattern. This is based on Jan finding support at 110.65 to 110.50. The minor downside pivot is 110.35. The key downside pivot to the intraday pattern is 109.00. Our model suggests that Jan will rise to the 111.50 to 111.80 zone. It is with a break of 112.20 that Jan takes on a much more bullish short-term air. This event will signal a rise to 113.00. This will be a two way market. Be sure to sure to use stops. Headlines may be risky.

RBOB: Hi: 2.7442; Low: 2.7168

This remains a tricky pattern. We are not sure how the market will treat the DOE if it proves as robust a draw as the API's would have us believe. There may be a fade the news reaction, but that will depend on the rest of the complex's strength. Dec has a minor downside pivot to the very short-term intraday pattern of 2.7150. Breaking that level will give Dec a look at important trend support at 2.6920. This is a must hold for the bulls on a daily settlement basis. We also need to remember that this week is one of the two heaviest driving weeks of the year. We look at both sides for the trading Wednesday.

HEAT: Hi: 3.0797; Low: 3.0442

This is a strengthening formation. It is likely to punch to a new high in the Wednesday session. There will be minor downside pivot at 3.0440.There will be minor support at 3.0650 to 3.0600. The pivot to this support is 3.0550.The key downside pivot to the structure is 3.02. The key upside pivot to the intraday chart is 3.0900. Upon busting that level Dec is to stretch to the 3.1050 to 3.11 zone. The key upside pivot is 3.1225. This will be a two-way market for Wednesday.

NAT: Hi: 3.838; Low: 3.786

This is a market that the bulls want to press higher. Their objective is to get Dec above 3.85 is a sustained manner. If this occurs Dec will run to 3.97 to 4.00. The minor support hits that chart at 3.755. This is a trend that will need be protected to give Dec a chance at breaking the key upside pivot. Breaking the downside pivot will signal a drop to the key downside pivot to the short-term pattern at 3.66. The inventory report Wednesday will be delayed until 12:00. The weather reports have picked up a more substantive outbreak of the chilly weather this upcoming weekend. This will motivate those that favor the bullish express to $4.00.

GASOIL: Hi: 954.50; Low: 942.75

This choppy pattern appears to have more upside to come. This model is abased on Dec finding support at 947.50 to 947.00. The minor downside pivot is 942.00. the upside objective will be 55 DMA resistance at 960.00. If the bulls want this market to "take" off will require a daily settle above 960. We are a cautious buyer of the dip. With a stop below 942.00.