Oil Price Forecast Archives - Page 19 of 24

By Dean Rogers

The U.S. rig count rose by 17 last week, and according to the EIA, U.S. crude oil supplies have reached 490.7 million barrels, the highest reported level for this time of year since 1930. In addition, the U.S.’s repeal of the 40-year oil export ban could ultimately encourage more pumping from domestic crude oil producers and narrow the WTI-Brent spread closer to parity in coming weeks. This is possibly good news for domestic producers, though it will take months and perhaps years before we will truly know. Overall, it is being reported that these factors could prolong the supply glut that is projected to last through the end of 2016 and possibly beyond.

The narrowing WTI-Brent spread is a being driven by WTI’s deeper contango versus Brent. In January 2015, the two grades were trading near parity, and it looks like this will be the case again in early 2016. This is encouraging for some U.S. producers as the spread could extend into positive territory where $2.60 is a confluent projection. However, longer-term, a narrow spread would likely lead to increased U.S. production, which would be negative for WTI. Conversely, a positive spread could encourage Brent producers to cutback, thus spurring both grades higher over the course of the longer-term. The key will be seeing whether or not the spread becomes positive and remains that way for the next few months. If so, it could lead to a longer-term shift in production strategies, and ultimately prices, world-wide.

Another factor to watch right now is the calendar spreads and the cost of carry. The six-month average cost of carry narrowed a bit for WTI and Brent last week, but remains volatile. Typically, a carry above approximately ($0.50) encourages those with storage to buy oil now, store it, and then sell it at a later date when prices are higher (due to deep contango). This is fundamentally negative because supply rises. The six-month average costs of carry for WTI was ($0.93) and for Brent ($0.79) as of Friday’s settlement.

The technical agree with the negative fundamental and spread factors right now. Most momentum indicators are oversold and setup for divergence on the weekly and daily charts. Therefore, a correction might take place soon. However, until a swing low in both price and momentum are made look for the decline to continue. Over the next day or so we expect WTI to fall to $35.0 and for Brent to challenge $35.6. Both are crucial targets to connect to much lower levels as discussed in our full weekly analysis.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

By Dean Rogers

The darkest hour is just before the dawn. It is a phrase that most are familiar with that provides hope, even in the worst of circumstances. The outlook for WTI crude oil prices has been “dark” in recent weeks, and the longer-term outlook is still dim. However, December 14’s close over $36.13 provides a small shimmer of hope that a correction might finally be underway.

January WTI met a confluent and structurally crucial support target near $35.0 on December 14 and closed above December 11’s $36.13 midpoint to form a bullish piercing pattern. The piercing pattern is an early indication that a sustainable correction might finally be underway. A close over the pattern’s $36.63 confirmation point (December 11’s open) would call for at least $37.9, the 38 percent retracement from $43.46 to $34.53.

The move up will most likely be corrective, but a substantial correction is long overdue. KaseX is not showing any signs of a turn yet, and the piercing pattern’s $36.63 confirmation point was tested and held. This dampens the likelihood of a reversal, but does not wipe out the potential completely. A close below $35.4 would negate the piercing pattern and call for the decline to continue towards the December 2008 perpetual swing low of $32.4.

Therefore, if the sun is going to rise $35.4 must hold and January WTI will need to close over $36.63 and then $37.9 within the next few days.

By Dean Rogers

For the past few weeks gasoline futures rose in a dramatic fashion and lent some support to underlying WTI and Brent futures prices. However, a few bearish technical factors indicate the move up is probably complete and that a major test of support is now underway.

January gasoline futures stalled at the crucial 62 percent retracement of the decline from $1.4516 to $1.1962. In addition, Monday’s $1.3069 settle completed an evening star and hammer candlestick pattern and a moderately bearish overbought signal on KaseX (gray arrow). All three factors indicate the decline should continue.

The pullback has retraced 38 percent of the move up from $1.1962 to $1.3731 so far. A close below $1.2972 will confirm the evening star and hammer and call for at least $1.285 and very likely $1.264, the 50 and 62 percent retracements, respectively. These are also confluent intraday wave projections.

From a technical standpoint, the move down is corrective of the move up until there is a close below $1.264. Odds for a move of this magnitude over the next week or so are 65 percent.

Look for resistance at $1.33 to hold. A close over $1.354 would be positive and open the way for $1.412 and higher.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

January WTI futures met crucial support at $40.41 early Monday. This was the 1.00 projection for the wave $52.02 – 43.52 – 49.23. The subsequent move up was initially promising for bulls, but stalled at $42.75 before it could overcome $43.2 resistance.

It is a tight call tomorrow, but we expect a test of $40.9 before the move up continues. This is confirmed on the intraday charts by the latest KaseX weak short signal (pink triangle). Support at $40.9 is near the 0.618 projection of the wave $42.75 – 41.09 – 42.62 and the $41.09 swing low. A close below $40.9 would call for $40.0 and possibly lower.

Conversely, not all hope is lost for the upward correction to extend. The daily chart’s Kase Easy Entry System (KEES) permissions shifted from first class short (pink dots) to second class long (light blue dot). Therefore, there is still a reasonable chance for a close over $43.2 and an upward correction to $43.8, the 38 percent retracement from $49.23 to $40.41. A close over $43.8 would significantly increase the probability for an extended move to test major resistance levels.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil forecast is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

WTI stalled near $48.0 as we expected in our weekly Crude Oil Commentary and the sustained close below $44.7 calls for a test of key support at $43.2. This is a confluence area that is near the 0.618 projection of the wave $51.42 – 42.58 – 48.36. A close below $43.2 would confirm the negative outlook and open the way for a continued decline.

The Kase Easy Entry System (KEES) confirms the negative bias. Today’s pink dot indicates that the majority of momentum indicators are permissioned short on the daily chart and that the synthetic three-day filter is also permissioned short.

That said, the shorter intraday bar lengths are showing that the decline from $48.36 is a bit overextended, exhausted, and due for a correction. The correction will most likely take place once $43.2 is met. First resistance is $44.5. Key resistance is $45.4, the 38 percent retracement from $48.36 to $43.64. Both levels are in line with the opening prices of the last few days. A close over $45.4 would call for an extended upward correction and a likely trading range for the near-term.

This is a brief analysis and crude oil forecast for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested, please sign up for a complimentary four week trial.

By Dean Rogers

Last week several top refiners reported a jump in their third quarter earnings compared to a year ago. Attractive crack spreads and refining margins due to lower oil prices and healthy demand for gasoline have helped refiners pump in profits. In addition, last week’s rise in oil prices, which was partially attributed to a quick turnaround in the refinery maintenance season, has helped to stabilize gasoline futures and open the way for a test of key resistance near $1.43.

December gasoline futures have oscillated in a trading range bound between approximately $1.26 and $1.43 since early September. The most recent move up from $1.26 overcame resistance at $1.36 and is now poised to test the upper boundary of the range at $1.43. This is the 2.764 projection for the small wave $1.2621 – 1.323 – 1.2627, the 0.618 projection for the wave $1.1756 – 1.4604 – 1.2621, and the 38 percent retracement of the decline from $1.8392 to $1.1756. There is a good chance that $1.43 will hold, but a close over this would open the way for at least $1.55.

The Kase Easy Entry System (KEES), which is based upon a sophisticated algorithm that accounts for multiple momentum indicators, bar lengths, swings, and bar structure, confirms the positive bias in the near term. The blue dot indicates that the underlying indicators and bar lengths are permissioned for long trades to be taken.

Prices are expected to reach at least $1.43 before another turn lower to test support takes place. For now, look for immediate support at $1.31 and for key support at $1.26. A close below the latter would call for the late August low of $1.1756 to be challenged.

By Dean Rogers

December WTI’s wave $39.22 – 50.89 – 44.31, which met its 0.618 projection at $51.42, has been taken out by the $43.64 swing low. Consequently a technical failure of the move up has taken place and odds have shifted in favor of a continued decline. Look for $43.0 tomorrow and very likely $42.5 over the next few days. A close below $42.5 would confirm the negative outlook and technical failure. There is an outside chance that the support trend line will hold. Look for resistance at $45.4 and $46.5.

By Dean Rogers

December WTI’s wave $39.22 – 50.89 – 44.31 met its 0.618 projection at $51.42. This was positive, especially due to the break higher out of the bullish pennant formation. We anticipated the pullback from $51.42, but so far it has been stronger than expected and is poised to test major support levels at $46.0 and $44.3.

Kase’s studies show that waves that meet the 0.618 projection extend to the 1.00 projection 80 percent of the time. This would have pushed prices to $56.0. However, the pullback from $51.42 has been strong and closed below $47.0 support on Monday. Therefore, this may be 20 percent of the time that a wave fails to meet its 1.00 projection.

First support is $46.0, and a close below this would open the way for $44.31. This is the swing low of the wave up from $39.22 and is in line with the 0.618 projection of the wave down from $51.42. Taking out $44.31 would result in a technical failure of the move up and call an extremely bearish outlook for foreseeable future.

Look for immediate resistance at $46.9, $47.6, and then $48.4.

By Dean Rogers

Last week’s break higher out of the bullish pennant was positive and the move up extended to meet the 0.618 projection of the wave $38.51 – $50.04 – 43.71. However the move stalled there, formed a bearish evening star and blow-off high, and then proceeded to test $46.4, the 62 percent retracement of the move up from $43.71.

The market is telling us that it needs more time to sort itself out as it awaits more data. We have stated that the move up would likely be a grind higher, and so far that has been the case.

For now, another trading range will likely form between $46.4 and $50.0. Look for resistance at $47.4 and $48.2.

Should prices fall below the $43.71 swing low the outlook will shift back to negative for the longer-term.

By Dean Rogers

For the past few weeks each bit of positive crude oil news or fundamental data has seemingly been offset by something negative. As a result, November Brent has settled into a rectangle formation with boundaries between $47.0 and $50.3.

The upper boundary of the rectangle is poised to be challenged after Monday’s move up to $49.87. The pullback at the end of the day indicates another oscillation lower might take place first, but for now, odds still favor a break higher. A close over $50.3 would call for at least $51.7.

Conversely, Brent’s move up has already failed once after breaking higher out of a bullish pennant on September 15. Since then the rectangle has formed. Should the rectangle fail, and prices close below $47.0, look for at least $45.3.

WTI-Brent Spread Nearing Parity

Category: Oil Price Forecast