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. With monthly stochastics still above the oversold level of 20% there looks to be time and space for the market to move lower. Theoretical Positions: Short from the June close of $114.81 possibly. If not, shorts could’ve been established at the July close of $103.97 after the spot-month contract posted a new 4-month low below $96.95.
WTI crude oil (CL) remains in a major 3-wave downtrend. November saw the spot-month contract extend this trend to a low of $73.60 before rallying to close at $80.55. Support is theoretically at $73.57, though we continue to deal with the anomaly of the April 2020 move to (-$40.32). Theoretical Positions: Short from the June close of 105.76 based on a bearish 2-month reversal. New or additional short positions could be near the July close of $98.62 based on the spot-month contract posting a new 4-month low below $92.93. Stops during December would be above the previous 4-month high of $98.65.
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.) remains in a major downtrend, though the pattern is not as clear as with other markets. November saw the spot-month contract hold above support at the previous 4-month low of $3.1084, though early December has already seen a low of $3.1475. Given monthly stochastics remain above the oversold level of 20% there looks to be time and space for the market to move lower, with next support at $2.9009. Theoretical Positions: None at this time. Previous short positions at the June close of $3.8305 (based on a bearish spike reversal) were likely stopped out when the 4-month high of $4.6444 was taken out during October.
RBOB gasoline (RB) extended Wave C of its 3-wave major downtrend to a low of $2.2701 during early December. This has it just below the target price of $2.3510, with the next target near $1.8850. Monthly stochastics are at or near the oversold level of 20%, possibly limiting the extension of the downtrend. Theoretical Positions: Short from the June close of $3.5363 based on a bearish spike reversal. Stops for December would be above the previous 4-month high of $3.1427.
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 that extended through the November high of $7.604. Theoretical Positions: None.
