Brent crude (QA) extended its major (long-term) 3-wave downtrend to a low of $83.63 during September. The next downside target is $76.50, the 50% retracement level of the previous uptrend from $16.00 (April 2020) through the high of $137.00 (March 2022). Given the market’s forward curve remains inverted, indicating long-term fundamentals remain bullish, the market would be expected to retrace no more than 50%. Monthly stochastics remain well above the oversold level of 20% indicating there is still plenty of time and space for the market to move lower.
WTI crude oil (CL) also extended its major downtrend to a low of $76.25 during September, putting it within sight of key support at $74.27. This price marks the 50% retracement level of the previous major uptrend from $18.05 (May 2020) through the high of $130.50 (March 2022). The WTI forward curve is inverted out roughly 10 years, meaning long-term fundamentals remain bullish and indicating the 50% retirement level should hold. Given that, and with the the rally off the monthly low to close at $84.45, it would not be surprising to see a recovery wave with an upside target between $103.37 and $109.79, with an outside chance of extending to $118.89.
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.) still look to be in a major downtrend as well as the spot-month contract moved to a new 4-month low of $3.1084 during September. The next downside target is the 50% retracement level near $2.90, while monthly stochastics hold well above the oversold level of 20%. As with WTI, it would not be surprising to see distillates post an intermediate-term uptrend, what would be viewed as a Wave B (second wave) of its major 3-wave downtrend pattern.
RBOB gasoline (RB) extended its major 3-wave downtrend to a low of $2.2890 during September before rallying to close higher for the month. This completed a bullish spike reversal, indicating the market is set to see a Wave B rally with an upside target area of $3.3075 to $3.5479. Note the market hit its 50% retracement target of $2.3510 before rallying.
Natural gas (NG) remains a wild market with the August rally offset by an equally volatile selloff during September. I’m still not getting a good read off the long-term monthly chart, so would prefer to leave this market alone.
