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Energy Report 1.24.13

K. Tanner

The high was 18 below normal, the low was 16 below normal which means its 17 below normal. What gives you the right to round the mean down but the average up? you have the average at 15.5 for today, the mean at 32.5. They are playing the even number game… something that may have been fun in 5th grade math class ( always round to the even number) but when we are looking at actual data that is not the way to do things if it leads to a degree difference in the report.

CRUDE Hi: 95.69; Low: 95.12

The duration of the Jones Creek shutdown will determine prices for the day following inventories. It will also be interesting to see if the equities follow the downward path of Apple. The correlation is very high between WTI and the S&P. It is our view that March completed a wave to the upside Wednesday. March is appearing to be consolidating before moving lower anew. There should at least be a test of the Wednesday low. However, a five minute settle below will spill it to the 94.00 area. We are a seller of the rally. A weakening market will fail to muscle above the 95.80 to 95.90 zone. The minor upside pivot is 96.20. We are a seller of the rally with a stop above 96.20.

BRENT Hi: 112.86; Low: 112.40

It does appear that March completed a leg to the upside Wednesday. This is likely to set up a mild retracement unless the pipeline reopens.It has fallen to where a strengthening market would hold, but the pattern does not appear supportive of an immediate move higher. March has a minor downside pivot at 112.00. Removal of that level will signal an address of the key downside pivot to the intraday chart at 111.35. We will play this market from the top down as long as March does not remove the minor upside pivot of 112.90. the key u pside pivot remains a daily settle above 113.30.

RBOB: 2.8432; Low: 2.8263

It is our view that Feb completed its leg to the upside. It is likely to retrench to 2.81 to 2.8050. A strengthening market will hold that level. It will give rise to an alternate model that does see an equal to new high from Wednesday. The minor upside pivot to this model is 2.8435. A break over 2.86 will tag 2.87 to 2.8750. This will be a two way market for the day.

DIST: Hi: 3.0835; Low: 3.0730

With the coldest weather since 2004 due to hit the East Coast one would assume an upward bias for Thursday. However, Feb will slip from the Wednesday high in a correction of the move up from 2.9858. The minor downside pivot is 3.0540. Ratio support hits the chart at 3.0250 to 3.02. The downside pivot is 3.01. The key upside pivot is 3.1140. The minor upside pivot, 3.0915, if creased will provide sufficient momentum to seek the key pivot. This too will be a two-way market for Thursday.

NAT: Hi: 3.592; Low: 3.559

At this time of the morning the market, thin though it is, is more focused on the inventory outlook than any cold weather. The question of weather is the duration. This pattern does allow for a move substantively higher, but the caveat is for a break above 3.60. In this event a trek to the key upside pivot of 3.74 will be attempted. The minor downside pivot is 3.50. The key downside pivot is a daily settle below 3.38.

WTI-BRENT: Hi: -17.02; Low: -17.69

Our model for Thursday is that the arb has another downside leg coming. It is currently at the minor resistance zone of -16.90 to -16.80. However, a weak market will fail here. The moving average resistance at -16.50 would be an ideal place to probe a short. The upside pivot to that level is -16.20. The objective is for a drop to -18.25 to -18.50. We are a seller of the rally at -16.50.

GASOIL: Hi: 972.00; Low: 968.00

Feb completed its wave higher with the marginal new high Thursday at 973.50. The downside pivot to a drop to 959.00 to 958.00 is a bust of 965.00. The minor upside pivot to this model is 972.00.We are a seller of the rally with a stop above 973.50.