wti Archives - Page 14 of 18 - Kase and Company, Inc.

The highly anticipated and headline grabbing April 17 meeting between OPEC and non-OPEC nations has set the stage for crude oil’s rally. However, some traders and pundits still think the world is awash in oil and an out-put freeze has already been priced in. They anticipate an agreement to freeze production—if reached—would have little near-term impact.

Others believe slipping U.S. oil production is the most likely and more logical culprit for the price rise and could continue to lead the way higher. In addition, the sliding U.S. dollar and Federal Reserve officials’ optimistic statements on Friday morning regarding the U.S. economy and flat interest rates have also been interpreted as bullish.

From a technical standpoint the move up is poised to continue. Last week, WTI held the 62 percent retracement of the move up from $30.67 to $42.49 when prices fell to $35.24. This was important because the move up from $30.67 forms Wave III of a potential five-wave pattern. WTI is now forming a potential Wave V, but must overcome key resistance at $42.8 to prove that is the case. $42.8 is a confluent projection for Waves I and III, so a close over this would shed a much more bullish light on WTI.

Look for initial resistance at $40.9 and $41.6. These are important projections for the wave up from $35.24 and potential stalling points. We expect to see at least a small pullback (21 to 38 percent retracement) once $41.6 is met. A close over $41.6 will significantly increase the odds of challenging $42.8,

Look for support at $38.7 and $37.3. A close below $37.3 would indicate the move up has likely failed, and that another test of $35.2 will take place.

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.

WTI’s move up has been resilient for the past few weeks. The waves up from $29.85 may be interpreted as either a five-wave trend that is still forming Wave III or a three wave correction that has nearly completed Wave C. Technical factors indicate May WTI is approaching a decision point at $43.1.

In either case, whether the move is five waves or three waves, Wave A or I should meet the 1.618 projection at $43.1. A correction should then take place. The correction will determine whether or not the move up is a five-wave trend.

Key support will be $38.0. This is the 38 percent retracement and is in line with the $37.52 swing high of Wave A or I.

A close below $38.0 would indicate the move up from $29.85 was a three wave correction. There is no evidence yet that prices will plummet to new lows. Therefore, upon a close below $38.0, a trading range in the mid-$30 is the most likely scenario.

Should prices hold above $38.0 and subsequently close over $43.1, the move up is most likely a five-wave pattern that will extend toward the 2.764 projection of $51.9. A move of this magnitude will take time, and should form another sub five-wave count like Wave III has. It will also likely be backed by a positive shift in underlying fundamentals.

Crude oil continued to rise on Monday as traders anticipate a production freeze that will be discussed by major producers at a meeting later this month. In addition, US production has started showing signs that it is declining. Caution is warranted because the prices rise has become asymptotic, but most technical factors are positive and call for higher prices over at least the next few days.

April WTI confirmed its $28.75 double bottom with the close over $36.28 on Monday. The double bottom’s target is $43.81. This is now a key objective for the relief rally. However, April must overcome a very important $39.2 target before it can make a serious run at $43.8. Most importantly, $39.2 is in line with the 1.618 projection of the wave $28.74 – 34.21 – 30.56. This is a confluent and crucial target because it protects the psychologically important $40.0 level.

CLJ6 20160307

Tomorrow odds are 75 percent for $38.7 and 65 percent for $39.2. We expect to see a pullback once $39.2 is met. Without further help from underlying fundamentals, WTI may be hard pressed to overcome $39.2 over the next few days.

CLJ6 Table 20160307

Look for support at $37.1 and $36.2. These are Monday’s midpoint and open. $36.2 should hold tomorrow. A close below this has 25 percent odds. This would indicate the move up may be in trouble and that a more significant correction to $35.2 and lower is underway.

By Dean Rogers

March WTI pulled back from its $31.53 swing high made in early trading Tuesday after several nations, including Saudi Arabia and Russia, agreed to freeze production at current levels.

While this might be a step in the direction of a long-term recovery, halting output at current levels would do little for a market that is already oversupplied.

In addition, and most importantly, the deal is strapped with a major caveat: Iraq, Iran, and other large producers would also have to halt production increases. Reports indicate that Iran has balked at the idea of halting production levels as they aim to return their output to presanctions levels.

Regardless of the reasons for the move up, from a technical standpoint, the outlook for oil remains weak. WTI was due for a correction when the 1.382 projection of the wave $34.82 – 29.4 – 33.6 was met at $26.05. There were also plenty of positive technical factors leading into the correction. However, the move up stalled at $31.53 when several intraday momentum indicators, including KaseX, triggered overbought signals. In addition, $31.53 was near the 62 percent retracement of the decline from $34.82 to $26.05.

Prompt month March futures have already retraced 50 percent of the move from $26.05 to $31.53. March is now poised to test support at $28.3. This is Friday’s midpoint and near the 62 percent retracement. A close below $28.3 would call for $27.3, Friday’s open, and then $26.7, the last target protecting the $26.05 low.

There is an outside chance that the move up could continue, and corrections of such a swift decline are bound to take place. Prices must overcome at least $30.5 to show the upward correction will possibly extend to $32.1 and higher.

By Dean Rogers

Fears of a persistent supply glut still weigh heavily on the minds of traders. In addition, media reports stated that last week Saudi Arabia slashed prices on its highest-quality crude oil destined for Europe and Asia. Some are interpreting this as a signal that Saudi Arabia is still willing to deal with low prices, therefore, production cuts will not take place any time soon. A weaker U.S. dollar could support WTI, but the charts tend to indicate key support will be tested in coming days.

Last week’s brief rally on Wednesday was reportedly fueled by the declining dollar. However, the move stalled on Thursday and prompt month WTI futures have fallen to $29.57 so far. This is just above crucial support at $29.4, and the near-term outlook hinges on whether or not this objective holds.

A move below $29.4 would take out the wave $27.56 – 34.82 – 29.4 and its potential to extend to $33.9 and higher. In addition, a close below $29.4 would call for at least $28.2, the last support level protecting the $27.56 contract low. Odds favor a decline to $28.2 because prices have already closed below the 0.618 projection of the wave down from $34.82.

That said, the move down will continue to be a grind. Resistance at $30.8 and $31.4 may be challenged before prices fall below $29.4 and extend to $28.2. We expect the latter to hold. A close over $31.4 would call for $32.8, which then connects to key resistance at $33.9.

By Dean Rogers

Last week, speculation that a possible meeting next month between Russia and OPEC to discuss production cuts fueled WTI’s price rise. This would be the type of transition that needs to take place for oil prices to recover over the course of the long-term. However, many are skeptical, and some reports indicate that this may be nothing more than verbal attempts to keep prices from aggressively sliding lower.

The market’s hesitance to push higher became evident on Thursday when March WTI stalled just above the $34.4 projection of the wave $27.56 – 32.74 – 29.25. The pullback from $34.82 formed a blow-off high and Friday’s evening star setup was confirmed by Monday’s decline. WTI has already retraced nearly 50 percent of the move up, and is poised to continue its decline.

The move down has been confirmed by KaseX sell signals (purple diamonds), and WTI is now sitting just above crucial support at $31.1. This is a highly confluent wave projection and retracement. A close below $31.1 would call for $30.3, and at best, would indicate prices are going to settle into a trading range while the market sorts itself out. Given the magnitude of Monday’s decline, WTI could be hard pressed to hold $31.1 and $30.3.

Trading has been erratic over the past two weeks, and last week prices also pulled back significantly to test support at $29.25 early in the week. There is an outside chance that the move up will continue, but for now, we expect that Monday’s $32.7 midpoint will hold. A close over $32.7 would call for $33.5 and possibly $34.4 again.

By Dean Rogers

WTI’s rally from $27.56 late last week was sparked by a few positive technical factors such as a daily bullish engulfing line and momentum divergence. These are factors that would normally accompany a major turn. The move up was a bit over exuberant though, and has stalled at $32.74. Major support at $29.6 is already being tested, and it looks like the rally might be short lived.

Technicals will generally lead the way when a turn is taking place. However, markets, especially the energy markets, have a propensity to overcorrect after being so deeply oversold. To sustain the move higher a shift in the underlying fundamentals must take place. Given today’s pullback, it looks like the market is doubtful that will be the case. The move up is not doomed (yet), but major support is being already being challenged.

The rise from $27.56 unfolded as five-waves that stalled at $32.74, the trend terminus (Y^3/X^2) of Wave I. The decline from $32.47 might be a three-wave correction. However, prices are testing major support at $29.6. A close below $29.6 would call for $28.6 and then a retest of the $27.56 low.

Give the confluence of support at $29.6 a test of resistance could take place early tomorrow. First resistance is $31.1. However, WTI will need to close over $31.8 to have a shot at moving higher again later this week.

By Dean Rogers

China’s stock market plunge wreaked havoc on stock and commodity prices around the world last week. Fears of a further slowing economy in the world’s largest energy consumer along with weak manufacturing demand and the deepening global supply glut have recast a negative outlook on oil prices. The negative sentiment has been reflected in the technicals too as prices continue to fall.

February WTI fell to $30.88 on Monday and came close to meeting a crucial confluence point at $30.6. This is near the 0.618 projection of the wave $38.39 – 32.1 – 34.34, and is the last support protecting against a decline into the $20s. A close below $30.6 would call for at least $29.0 and likely $28.1. The latter is the 1.00 projection for the wave down from $38.39.

The KasePO PeakOut (green P) indicates Monday’s $32.2 midpoint might be tested early Tuesday, but we expect this level to hold. Other than the intraday PeakOut there is little to no technical evidence that the decline is going to stall. Therefore, without some type of unexpected shift in the underlying fundamentals and/or technicals we expect to see prices fall into the $20s soon.

By Dean Rogers

Tension between Saudi Arabia and Iran have the oil markets on edge. The global supply glut still hangs heavy and will reportedly last through 2016. However, recent the geopolitical tensions could push prices higher on fear and greed alone.

The indecisiveness is being reflected on the charts. WTI’s recent move up from $35.35 has been choppy, and is most likely corrective. However, it did form an intraday bullish flag last week. We do not put much weight into the flag though because its $36.22 swing low is only $0.87 higher than the $35.35 contract low.

WTI broke higher out of the flag early Monday, but failed to close above the upper trendline of the formation. This was negative, and the move down was preceded by a bearish KasePO divergence. Another test of support at $36.5 took place, but has held so far on a closing basis. $36.5 is the 62 percent retracement of the move up from $35.35 to $38.39. A KCDpeak (oversold) signal formed at $36.33.

The price action has now given us a clearly defined range between $36.5 and $38.0. Odds favor a close below $36.5. This would call for $35.7, which then connects to $34.91. Trading will remain choppy though, and external factors combined with the KCDpeak could still push prices higher. A close over $38.0 would call for the correction to extend to $39.2. For now, we do not see WTI rising much higher than $39.2.

Crude Oil Forecast: WTI Setup for Potential Five-Wave Trend

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