Monthly Analysis: Energies

2022-06-04T09:30:54-05:00June 4th, 2022|Monthly|

WTI Crude Oil remains in a major (long-term) uptrend, though still holding well below its March 2022 high of $130.50. Initial support during June is at the previous 4-month low of $86.55. I consider the market to still be in a major uptrend due to now technical reversal pattern has been completed at this point. Fundamentally the market remains bullish, with its forward curve inverted (in backwardation) as far out as one wants to look. At some point this should bring noncommercial buying interest back to the market, setting up a possible test of the March 2022 high.

Brent Crude Oil still looks to be in a major uptrend, having not completed a bearish reversal pattern through the end of June. That being said, it’s still possible the March 2022 high of $137.00 turns out to be the Wave 5 peak. The month of May saw the market continue to rebound from its March selloff, hitting a high of $120.81 before closing at $115.60, up $8.46 for the month. Note this was the highest monthly close since $119.47 from April 2012. Initial support during June is at the previous 4-month low, all the way down at $87.81 (February 2022). Early June has seen the spot-month contract extend its rally to a high of $121.44.

Distillates (heating oil, jet fuel, diesel fuel, etc.) are in a major uptrend, despite consolidation seen during May. The spot-month contract actually closed lower for the month, down 8.22 cents, before starting to rally again in early June. The market remains fundamentally bullish, as indicated by its inverted forward curve, though could start to get top-heavy as it approaches its April 2022 high of $5.2217. Initial support during June is at the previous 4-month low of $2.6626 from February 2022.

RBOB gasoline is also in a major uptrend, but unlike the oil markets has already posted a new high during June. After closing May at $3.9162 (up 47.38 cents for the month) the spot-month contract extended the uptrend to $4.3096 this past week. This does open the door to a possible bearish reversal pattern, possible a bearish spike reversal if the market posts a lower monthly close at the end of June. Something will have to change fundamentally, though, as strong demand and tight supplies have the market’s forward curve inverted.

Natural Gas extended Wave 5 of its 5-wave major uptrend to a high of $9.447 during May. While the market is sharply overbought, it is showing no sign of establishing a bearish reversal pattern, at least not through early June. The most likely possibility is a bearish spike reversal meaning the spot-month contract would need to post a new high for the move before closing June below the May settlement of $8.145. While it doesn’t seem probable, it’s natural gas so anything is possible.

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