Brent crude (QA) still looks to be in a major (long-term) 3-wave downtrend despite the higher close to October. The spot-month contract finished at $92.81 as compared to September’s settlement of $85.14. Given the market is still showing bullish fundamentals, its forward curve remains inverted, the downside target range has been and remains $90.78 to $76.50. Note the spot-month contract did dip into this area during both September and October. However, with monthly stochastics still above the oversold level of 20% there looks to be time and space for the market to move lower.
WTI crude oil (CL) is similar to Brent in that most ways the argument could be made the market has completed its major (long-term) 3-wave downtrend. The market’s bullish fundamentals have established a downside target area between $87.54 and $74.27 with the spot-month contract falling to a low of $76.25 during September. However, monthly stochastics are holding above the overbought level of 20% meaning the market could have one more move lower. Key prices going forward will be the 4-month low posted during September and the 4-month high. For November, that’s all the way up at $111.45 indicating the market could spend a couple months consolidating.
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.) has a difficult continuous monthly chart. While we could argue the market remains in a major downtrend, the spot-month contract posted a new 4-month high of $4.6841 during October. As with crude oil markets the downside target area of distillates was limited by its inverted forward curve (bullish fundamentals), with the range between $3.4486 and $2.9009. The last three months have seen the spot-month contract drop Ito the range before closing above in both August and October. To complicate maters more, monthly stochastics are holding in neutral territory with the latest signal a bearish crossover above the overbought level of 80% at the end of October 2021. It might be best to be careful with distillates at this time.
RBOB gasoline (RB) looks to be in Wave B (second wave) of its 3-wave downtrend. The spot-month contract rallied to a high of $3.0221 during October, just short of the target at $3.0671 before falling back to close the month at $2.5257. The inverse in RBOB’s forward curve isn’t as strong, leaving the door open to a seasonal selloff taking the market back to the next downside target of $1.8849. This would likely be enough to pull monthly stochastics below the oversold level of 20%.
Natural gas (NG) remains untouchable, at least to me if I were an investor. It should be noted the spot-month contract touched support at $4.721 during October, sparking a sizable rally to close out the month. For what it’s worth, the market’s secondary (intermediate-term) trend turned up in late October with an initial target area between $6.766 and $7.389.
