Daily Spot: Energies
A weekly summary of one complex, including daily updates of other developments elsewhere.[pay]
Crude Oil Feb (CLG) Having delayed for so long the retest of the three-week old gap open, higher highs are likely. The narrow consolidation probing fresh highs does not reflect pessimism that might otherwise launch a more durable upleg. So, a fresh high that fails would be credible for launching a downleg.
Wednesday’s gap down spent the entire session in negative territory without extending (circled). This is “ineffectual pessimism” that all but ensures resolving up, at least temporarily. A lower low Thursday would be suspicious, and likely recovered.
Natural Gas Feb (NGG) [Rolling coverage forward from Jan to Feb, which trades at a 5-cent premium.] Nothing new Wednesday, except that there was nothing new Wednesday. And that all but requires Thursday to resume the rally. EIA is a likely catalyst, but the big reason is to extend above last Monday’s prior high (circled green).
Closing almost any higher Thursday would essentially confirm the three-week old Head & Shoulders (highlighted red) was no longer influential. Wednesday’s ranging around last Monday’s high confirms the area’s relevance. But its first trending attempt would be vulnerable to reversing.
Dollar Basket Mar (DXH) Unnecessarily neutralizing so much pent-up buying pressure Tuesday, without gaining traction, made a retest of its lows likely. The immediate drop Wednesday closed the day while still probing Tuesday’s low. The 79.85 pullback target remains in-play.
Gold Feb (GCG) Tuesday’s narrow ranging around its 1407.00 target and the sizable gap up getting there were optimistic. Higher highs Wednesday – the highest levels in three weeks – are excessively optimistic since there was no interim pullback to refuel buyers. The rally’s purpose is to retest 1427.40, and not to form a new upleg.
30-year Treasury Mar (USH) Wednesday did exactly what it needed to do, and what could have been Tuesday, by rallying sharply after filling the gap back down to 119’18. The ~2-point intraday rally recovered all the way back to Tuesday’s high. It’s still a corrective rally, and it’s still at risk of failing – more so now since buyers just expended a lot of energy on Wednesday’s ~2-point rally.
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Daily Spot coverage schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).