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Energy Roundup: Waiting for the Cliff?

Henry Marchell

CRUDE: Hi: 88.23; Low: 87.59
The market is again congesting in overnight trading. It is waiting from news from the BOE and the ECB and the Jobless Claims. The administration’s cavalier attitude towards the fiscal cliff is not lost on investors. Who in their right mind would institute a large position before some kind of accord is reached or at least a hint of one? No, this will be a congested market probably. Jan will have a minor upside pivot at 88.25 that will give way to pattern resistance at 88.55to 88.70. The upside pivot is 89.05. Jan has a minor downside pivot at 87.40. With a break of this level Jan will drop to 86.65. With all news being equal that is where it is likely to stabilize. This will be a two way market.

BRENT: Hi: 109.16; Low: 108.56
Wednesday Jan broke the uptrend line on the daily continuation chart. This trend line will act as resistance4 and it rests at 109.75. However, there will be minor resistance at 109.20 to 109.35. The minor upside pivot is 109.75. Jan has a key downside pivot at 108.40. A break of that level sees a drop to 107.50 to 107.40. we prefer to be a seller of the rally. The protective stop is above 109.75. The key upside pivot is 112.30.

RBOB: Hi: 2.6589; Low: 2.6331
Sharp increases in inventories will no doubt move some of the managed funds that hold 28% of this open interest to rethink their positions. This never is a one day affair. It appears that Jan will have more downside to come. We are a seller of the rally. This will ideally be at the 2.68 to 2.6850 area. The upside pivot is 2.6950. Jan will have a minor downside extension pivot at 2.6275. With a break of that level Jan will eye 2.06950, but of far more importance is 2.5750. We think that there is a likely visit to 2.55 or below as the pattern develops. Key ratio resistance is found at 2.7150.

HEAT: Hi: 3.0062; Low: 2.9886
We see this pattern working lower following a retracement. It does appear as if Jan completed a leg to the downside at the 2.9780 area. The bounce to 3.0060 appears to be the first leg of a corrective bounce. We prefer to sell the rally. This will ideally be at the 3.020 to 3.0250 area. The protective stop placed above 3.0300. the key downside pivot is 2.9740. Busting through that line is a signal for a test of the downside pivot at 2.9345. The important ratio retracement level is the 3.05 to 3.0550 zone. The pivot to this resistance is 3.06. Despite the onslaught of colder weather, we feel the political factors will keep the bulls at bay.

NAT: Hi: 3.723; Low: 3.672
We were early last week in being bullish of this market. We paid the price. Nat can be an ugly mistress. But now things are coming together for the final leg up of the large degree pattern to be seen. We hope that the inventories are a spot negative to give us the opportunity to get long the wave three of this cycle. Indeed Jan may be backing off slightly from the 3.75 level, but we are in a buy the dip mode. There will be retracement support at the minor downside pivot of 3.67. A break of that level will set up strong support at the 3.620 to 3.60 zone. That is the prime buy zone. The minor downside pivot is 3.57. The key downside pivot is 3.50. The key upside pivot is 3.815. A daily settle above that level will suggest a foray for Jan above 4.00 briefly.

GASOIL: Hi: 931.50; Low: 925.75
The outlook we offered Wednesday called for lower prices. Jan is the focus of our attention. It will have minor resistance at 931.00 to 932.00. The minor upside pivot is 934.00. Key ratio resistance is at 940.00 to 940.5. The upside pivot is 943.00. We prefer to be a seller of the rally despite the very cold temps in Europe. Our view is that the fiscal uncertainty will keep large buyers at the margin. Jan will have minor support at 926.00 to 925.00. The key downside pivot is 914.00. A daily settle below that level will likely mean a trip below 900.00.