Brent crude (QA) remains in a major (long-term) uptrend with the continued selloff during November still looking to be Wave 2 of the 5-wave pattern. Given Wave 2 could retrace as much as 80% of Wave 1, the maximum downside target is near $74.50. The market has posted two consecutive lower monthly closes, and based on the Benjamin Franklin Fish Similarity Brent crude could close lower again at the end of December. 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. Additional longs could be established when Wave 2 looks to be bottoming, possibly near $74.50.
WTI crude oil (CL) is in a major (long-term) uptrend. Similar to Brent, WTI remained in a Wave 2 selloff during November with the maximum downside target near $70.30. Theoretical Positions: Long positions were established on the move above the previous 4-month high of $83.53 (April 2023). Additional longs could be established when Wave 2 looks to be bottoming, possibly near $70.30.
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.) remain in a major 5-wave uptrend with the continued selloff durning November still looking like a Wave 2 move. This puts the maximum downside target at the 80% retracement level near $2.44. Theoretical Positions: Traders could be long just above the previous 4-month high of $2.9198. Additionally, those needing to cover diesel needs could wait for the Wave 2 selloff to bottom, possibly near $2.44.
RBOB gasoline (RB) looks to be in a sideways trend. The range is now between the December 2022 low of $2.0204 and July 2023 high of $2.9960. Theoretical Positions: None at this time.
Natural gas (NG) looks to have completed a bearish 2-month reversal during November meaning its major trend has turned down again. A couple things though: First, the market remains oversold with monthly stochastics below 20%, and second, it’s natural gas meaning it is nearly impossible to read from a technical point of view. Theoretical Positions: 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. It’s also possible those long were sold at the end of November with the spot-month contract price at $2.802.
