Not much has changed over the weekend. The world is still fearful of the Fiscal Cliff being tripped over. On Sunday John Boehner made a proposal for more taxes on those making $1 mm per year. This was flatly rejected by the President. But the gesture of the Republicans was seen as a bridging of their stances closer, Closer is better, but it is not there yet.
In Japan, a new government has been elected. This has weakened the yen relative to the dollar. It has been the stated intention of the Abe government to reflate the Japanese economy following twenty years of moribund growth. This development is likely to support the energy markets in the short term.
However, the exodus to the Brent market has been in full swing by the hedge funds. it was reported by the CFTC that they have dropped their long positions by 25%. The move to Europe is picking up steam Mr. Gensler. Don’t look now, but you may not have much to do once Dodd-Frank run the business away from the shores of the U.S.
Unrest in MENA has seen police clash with protestors in Bahrain. This is still part of the Sunni-Shia sectarian violence that erupted in Syria and is moving further afield. Moreover, there was a Nigerian helicopter shot down. It was fired on in the south of Nigeria where the oil is and where MEND operates as a terrorist organization. The helicopter was carrying dignitaries such as a governor and a security chief. The Arab spring may be gearing up for some more protests.
CRUDE: Hi: 87.25; Low: 86.54
Jan needed to better 87.00 for five minutes to give it enough momentum to work up to the key upside pivot of 87.70. It failed in that regard and is retreating. Although the arb is favoring the Brent for the time being. This arb will be moving erratically as there is likely to be more abandonment of the WTI in favor of its European cousin. Jan has a weakening look to it early this morning. We were looking for a little pop to the upside before the bulls ran out of steam. Jan is likely to test trend support at the 86.00 to 85.90 area. The minor downside pivot to this support is 85.80. The key downside pivot for the intermediate term chart is 84.05. The pattern today supports two way price action. However, we favor the selling of rallies to the buying of dips in early trading.
BRENT: Hi: 108.50; Low: 107.73
Jan has met our initial upside pivot of 108.50, but has yet been unable to break through. Success in that regard will enable Feb to test 109.25 to 109.50. The key upside pivot is 109.50 to the intraday chart, but the key upside pivot to the intermediate term chart is 110.50 on a daily settlement basis. Feb appears to have another thrust higher for the very short-term. If this model is correct, Feb will want to hold the 107.60 to 107.40 zone. The minor downside pivot is 107.30. The key downside pivot to the intraday chart is 106.65. This will be a two way market for Monday.
RBOB: Hi: 2.6674; Low:
Jan appears as if it is a congestion pattern from hitting the 2.67 level. It is likely to have minor support at 2.6525 to 2.6475. The minor downside pivot is 2.6425. The key downside pivot to the intraday picture is 2.6230. The key downside pivot to the short-term graph is 2.5950. However, with Jan looking higher, a break of 2.67 on a 5 minute basis will signal an advance to the 2.6950 to 2.70 level. The key upside pivot is 2.7050. That will lead to trend resistance at 2.7350. This is a two way market that will probably favor the upside early in the day.
DIST: Hi: 2.9910; Low: 2.9743
Jan still has the potential to work higher, but will need to break the key upside pivot of 3.00 to gain momentum. If Jan is to satisfy that requirement will necessitate her holding 2.9650 to 2.96. The minor downside pivot is 2.9575. the key downside pivot for the intraday pattern is 2.94. The key downside pivot to the intermediate term outlook is a break and daily settle below 2.89. Although 3.00 will be formidable resistance especially in light of the recent weather situation in the Northeast, but if it is removed a jump to the 3.0450 to 3.05 zone can be the potential. We will treat this market as a two way vehicle.
NAT: Hi: 3.346; Low: 3.277
Jan has tested the Friday low and it has held thus far. Jan has moved back to the minor upside pivot striking distance at 3.36 . We are calling for a buy of the dip with a protective stop below 3.25. The support we wish to try is 3.29. The breaking of the minor up[side pivot listed above will give Jan a shot at seeing the key upside pivot at 3.48. It is all about the weather and the models agreeing on cold or lack thereof. It is likely that the 3.43 to 3.44 area will provide resistance for a relatively strong bounce.
GASOIL: Hi: 926.75; Low: 921.50
Jan appears as if it wishes to go higher early in the session. This will be predicated on her holding 921.50 to 921.00. The minor downside pivot is 919.50. The key downside pivot to the short-term picture is 911.50. Assuming that support holds, Jan will be eying the 931.00 to 932.00 area. This will be seen with a break of 927.00. The key downbside pivot to the intermediate term forecast is 901.00.