Brent crude (QA) is in a major (long-term) uptrend after posting a new 4-month high of $88.10 during August. The spot-month contract extended the move to a high of $97.67, with the next target at $102.60. This price marks the 50% retracement level of the previous major downtrend from $137.00 (March 2022) through the low of $68.20 (May 2023). The market could see a seasonal selloff that would be read as Wave 2 of the 5-wave uptrend pattern. Theoretical Positions: Previous short futures were covered and new longs established as the spot-month contract took out the previous 4-month high of $87.49 during August. This has longs at roughly $87.50, with sell stops below the previous 4-month low of $68.20 (May 2023).
WTI crude oil (CL) is in a major (long-term) uptrend with the spot-month contract extending the move to a high of $95.03 during September. Seasonally (using the 10-year index), WTI crude oil tends to lose 12% from the first weekly close of October through the third weekly close of December. Using the end of September close of $90.79, this would put the downside target for a low weekly close near $81.70. This would be viewed as the next down wave of the major pattern. Theoretical Positions: Long positions were established on the move above the previous 4-month high of $83.53 (April 2023). This has longs at roughly $83.54 with sell stops below the previous 4-month low of $66.80 (June 2023).
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.) remains in a major uptrend with the spot-month contract extending the move to a high of $3.5092 during September. The next upside target is $3.6859, the 50% retracement level of the previous downtrend from $5.2217 (April 2022) through the low of $2.15 (May 2023). Theoretical Positions: Traders could be long just above the previous 4-month high of $2.9198. Additionally, those needing to cover diesel needs could do so near the July close of $2.9855 or wait for a Wave 2 selloff.
RBOB gasoline (RB) remains in a major 5-wave uptrend with the upside target area between $2.9011 and $3.1732. The spot-month contract closed lower for a second consecutive month, a move that looks to be Wave 4 of the 5-wave uptrend. Based on the Benjamin Franklin Fish Similarity (Like guests and fish, markets start to stink after 3 months of moving against the trend) RBOB gasoline could move lower again in October. Support is at the previous 4-month low of $2.3925 (September). Theoretical Positions: Longs could’ve been established near the December 2022 close of $2.4783, based on a bullish spike reversal. Sell stops would be below the 4-month low of $2.3925 (September 2023).
Natural gas (NG) looks to have moved into a major uptrend during August as it posted a new 4-month high beyond $2.878. The spot-month contract posted an inside month during September. Theoretical Positions: With monthly stochastics still below the oversold level of 20%, the logical move is to see a bullish breakout. It’s possible traders established long futures positions near the April close of $2.41. Additional longs might have been established during August with the move to a new 4-month high beyond $2.878. If so, the average long position would be $2.645. Sell stops would be below the previous 4-month low of $2.136 (June 2023).
