Brent crude (QA) still looks to be in a major (long-term) 3-wave downtrend. The spot-month contract posted a low of 75.11 during December, a test of the target at $76.50. This price marks the 50% retraecment level of the previous major uptrend from $16.00 (April 2020) through the high of $137.00 (March 2022). A secondary (intermediate-term) uptrend could now be seen with a target area between $98.75 and $106.05. Eventually I’m looking for the market to finish off its major downtrend, and with fundamentals still bullish the 50% retracement level should hold. 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. Buy orders could be placed near the 50% retracement level of $76.50.
WTI crude oil (CL) looks to be nearing the end of its major 3-wave downtrend. December saw the spot-month contract fall to a low of $70.08, taking out the next downside target of $74.28 before rallying to close the month at $76.09. Fundamentals remain bullish, just not as bullish as before, meaning the 50% retracement level of $74.28 should continue to hold. Still, monthly stochastics have not dropped below the oversold level of 20% meaning there is space for the market to move lower again. 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. Buy orders could be placed near the target of $74.28.
Distillates (HO, heating oil, diesel fuel, jet fuel, etc.) is still showing signs of a major 3-wave downtrend despite the strong rally seen late in December. However, seasonally the market has turned bullish meaning a move to a short-term downtrend within the secondary uptrend could create a long-term buying opportunity. Theoretical Positions: If not already long based on secondary trend signals and seasonality, buy orders could be placed just above $2.90.
RBOB gasoline (RB) posted a bullish spike reversal during December meaning the major trend looks to have turned up. Theoretical Positions: Short positions from the June close of $3.5363 should be covered near the December close of $2.4783 for a gain of $1.058. New longs could be established at the same price, with stops below the December low of $2.0204.
Natural gas (NG) looks to be in a major 3-wave downtrend with the spot-month contract extending the move to a low of $4.378 during December. Theoretical Positions: None.