Oil Price Forecast Archives - Page 21 of 24

RBOB gasoline prices are weak after stalling at 218.58. This was an important confluence point because it was the 50 percent retracement of the decline from 315.2 and the 0.618 target for the wave up from 122.65. The move up was exhausted once it reached 218.58 and negative factors like a bearish KasePO divergence have shifted near-term odds in favor of a pullback to 199.7 and 188.1 over the next few weeks.

That said, the pullback is most likely corrective.

Our studies show that nearly 80 percent of waves that meet the 0.618 target extend to at least the 1.00 target, which is 244.39 for the wave up from 122.65. This is also near the 62 percent retracement from 315.2. The only way to negate a wave’s projections is to take out the swing low of its correction, in this case, 169.25. Therefore, while 169.25 holds the longer-term outlook for gasoline is positive and favors an extension to 244.39.

Taking out the 244.39 swing low would be extremely bearish for gasoline prices. Right now we don’t that will be the case, but closing below 188.1 support will go a long way to increasing the odds of ultimately taking out 169.25.

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.

The crude oil market as a whole has continued to be dominated by stale and conflicting fundamental, technical, and geopolitical factors. These factors have brought about as much balance to the crude oil markets as Anakin Skywalker brought to the force. The most interesting factor is that many market participants seem to forget that markets have three direction: up, down, and sideways. Right now, WTI is stuck in a mind numbing sideways range. I say this because it is almost as exciting as watching the grass in my backyard grow.

During times like this we tend to grow impatient and frustrated. The easiest way to deal with a range bound market is to walk away, take a few deep breaths, work on our short game, and come back to play another day. However, we don’t all have that luxury, and have no choice but to participate and be driven insane by the constant change of direction and endless supply of chalky antacids we are popping like candy.

Luckily, technical analysis can help us to clarify the crucial breakout points for this range. Our models, which are based upon a combination of many different technical factors, show crucial resistance at $62.0 and support at $57.5. In addition, the line on close chart shown below confirms that these are the clear boundaries of the trading range. A break out of this range will help determine the direction for the next few months.

The challenge is that it is nearly a toss-up as to which direction the market will break.

Our weekly Crude Oil Commentary goes into great detail about the implications of a break higher or lower out of this range. We break down the wave formations, retracements, candlesticks, momentum, and other factors. The bottom line is that the range may be corrective, which means prices should break higher. However, our models show that that $57.5 will be tested at least once more before WTI closes over $62.0.

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 WTI and Brent crude oil price forecast. If you are interested, please sign up for a complimentary four week trial.

As expected, OPEC is not changing their output, or their strategy of retaining market share, because their strategy is working. Greece may default, pull-out of the European Union, strike some new deal, or do nothing, all of which could send waves through the Eurozone. The dollar is up and then down from day to day. The list could go on and on and on, but the point is that all of these are conflicting factors, most of which have already been priced into the market, and none of which give any clarification of a long-term crude oil price direction.

Prices on a chart are the reflection of what information traders have and the information that they are acting upon. When prices go up, a majority of traders, at that moment, have a reason to buy. If the information, or a series of events, are strong enough to sustain a move a trend develops. However, when prices chop around, like they have for the past few weeks, it is a result of a lack of information, or an abundance of too much inconsequential information. Right now, the market suffers from the latter. The market lacks definition and clarity, and because of this we expect more mind numbing choppiness and range bound trading until the market can get its teeth into factors that can sustain a directional move for the longer-term.

Last week, Brent failed to break the upper trendline of the downward sloping channel that it has been trading in since May 6th. From a technical standpoint, Brent looks more negative than WTI, though its move down today was marginal. Nonetheless, Brent met confluent support around $61.0 last week, and upon a close below that level we expect to see $59.9 and then $58.5.

The retracement to $63.43 has held the 50 percent retracement so far, but a close over this would push prices to $64.7 and then to retest the $65.88 swing high.

WTI crude oil prices have been oscillating in a downward sloping channel for the past few weeks and the decline has formed a bullish continuation pattern. Although the formation is not a perfect flag, pennant, wedge, or triangle, it does appear to be corrective. More often than not corrective patterns like this ultimately break higher and the original up trend extends.

Crucial support at $57.0 held on a closing basis last week and Friday’s move up and the attempt to close over the upper trend line of the formation on Monday indicates prices should rise to at least $61.6 over the next few days.

Monday’s hanging man is negative, but so far Friday’s $59.13 midpoint has held. This is also the 38 percent retracement of the move up. A close below this would complete the hanging man and call for another oscillation lower to test support and possibly the lower trend line of the corrective formation.

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 WTI and Bret crude oil price forecast. If you are interested, please sign up for a complimentary four week trial.

Gasoline futures formed a double top at approximately 209.5 after attempting to overcome this crucial area of resistance in early trading Tuesday. The double top and confirmed dark cloud cover call for at least 195.0. This is a crucial decision point for an extended correction because 195.0 is in line with the 196.21 swing low and 38 percent retracement from 169.25. A close below 195.0 will confirm the double top and open the way for its target near 183.7, which is also near the 62 percent retracement.

Take a trial of Kase’s weekly energy forecasts.

The WTI-Brent spread has been fluctuating in a range for the past few weeks after narrowing to an intraday high of (3.34) on April 15. The narrowing spread has supported rising WTI and Brent price, and the wave formations indicate the spread will most likely continue to narrow. However, it must overcome (5.50) to make the connection to a (4.30) decision point. A close over (4.30) would open the way for a confluent (2.30) target, which connects to (1.30). That said, a close below (8.40) would call for the spread to wide again to at least (10.3).

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For the past few weeks WTI crude oil prices have risen significantly, and for the first time since early December 2014 prices closed above $60.0 last week. However, many traders are questioning the long-term validity of the price rise continuing due to concerns of a persistent supply glut, and the technical factors show that the market reached a crucial decision point at $62.58 last week.

The June WTI futures contract met crucial resistance at $62.58 on Wednesday, May 6, and as called for in our weekly Kase Crude Oil Commentary, prices have begun to pullback in a corrective manner. The correction is taking place after a blow-off high and evening star setup formed that same day. The evening star (some might say shooting star) was both completed and confirmed on Thursday when prices closed below the midpoint and open of Tuesday’s Harami bar. In addition, bearish divergences on the KaseCD and KasePO were confirmed on Friday. The combination of negative short term technical factors indicates the downward correction should extend and will likely form Wave IV of a longer-term five wave formation that projects to target in the mid-to upper $60s and even the low $70s.

We expect the pullback to challenge at least $56.2. This is the 38 percent retracement of the move up from $45.93 and is near the bottom of the sub-wave 4 of III. If prices are going to extend to new highs in the next week or so, $56.2 must hold. Otherwise, a close below $56.2 would call for the 50 and 62 percent retracements at $54.3 and $52.3. For now, it looks as though $56.2 will hold. The long-term outlook would only shift back to being bearish upon a close below $52.3. We do not expect to see a decline of that magnitude.

Today’s decline was nominal, so the next few days will be crucial for the near-term direction. A close over last Thursday’s $59.82 midpoint would shift the near-term outlook back to positive, call for another test of $62.5, and likely open the way for the five-wave pattern to unfold to upper targets of $66.8 and $71.5 over the course of the next few months.

Take a trial of Kase’s weekly crude oil forecasts to receive more in-depth analysis every week.

Brent crude oil prices will likely test a key decision point at $68.0 this week. This is the 1.00 projection for the wave up from $50.1, and a confluent projection for the sub-waves up from $53.63. A close over $68.0 would confirm that a long-term bullish recovery is underway. Narrowing calendar spreads support the move up, but are still wide by historic standards. First class long permissions (blue dots) on the KEES indicator also confirm the positive tone.

That said, momentum is waning on the KaseCD and is setup for a bearish divergence (higher high in price with lower high in momentum). The KasePO is quickly nearing overbought territory. There are also a daily bearish hanging man and evening star setup. These and a few other negative factors tell us that Brent will likely stall at $68.0. We expect to see a significant correction take place to test the mettle of the market before the move up extends much higher than $68.0.

To learn more, take a trial of Kase’s weekly crude oil forecast.

June WTI crude oil has oscillated in the range of a broadening wedge over the last eight trading days. The pattern is bullish, but the euphoria of WTI’s recent price surge is waning. Mixed technical and fundamental factors indicate the pattern will fail if the $58.41 swing high is not overcome soon.

Key technical support for the near term is $55.3 because it is the 1.00 target for the wave down from $58.82, and intersects with the lower trend line of the expanding wedge. This wave stalled at its 0.618 projection of $56.5, so the market is sitting on the teetering edge of a decline to $55.3 or push higher to overcome $58.41. A close over $58.41 would confirm a break higher out of the wedge and would open the way for an extended upward correction. A move below $56.5 would open the way for $55.3 to be challenged. Overall, odds are still slightly in favor of the move up and a break higher out of the wedge, but a close below $55.3 would indicate the pattern has failed.

For more detailed weekly analyses of WTI, Brent, and Natural Gas please take a trial of the Kase Energy Forecasts.

NY Harbor ULSD May futures fell to 187.35 on Monday, but the decline is corrective and forms an intraday bullish pennant (not shown). Support at 182.7, the 38 percent retracement from 166.53 should hold, though an extended correction to the 62 percent retracement at 176.5 would not be out of the ordinary at this point. A close over 190.9, the 1.618 projection from 164.9 would confirm the short-term positive tone and call for a split target at 205.0. This is the 2.764 projection from 164.9 and the 1.00 target from the 155.66 low, and is the most likely stalling point.

Take a trial of Kase’s weekly energy forecasts.

RBOB Gasoline Pullback Likely Corrective

Category: Oil Price Forecast