Crude Oil Slips but Gas Surges

At one point Wednesday, the January West Texas Intermediate (WTI) crude oil price was just seven cents above the $50 mark. After making a slight recovery, however, the WTI settled at $50.29 a barrel – a $1.27 day-on-day decline. The WTI peaked at $52.56 during the midweek session.

Also losing ground Wednesday was the January Brent futures price, which fell by $1.45 to settle at $58.76 a barrel.

“The weekly chart for WTI crude oil shows the market breaking our major support levels earlier this month,” said Jerry Rafferty, president and CEO of Rockville Center, N.Y.-based Rafferty Commodities Group, Inc. “The close below the 6400 area was significant and had caused us to turn bearish.”

Shortly after the sub-6400 close, Rafferty on Nov. 7 told Rigzone “it would not surprise us to see the WTI market retest the 5450 level which was the original breakout area.”

“There was a bounce from the 5450 area up to the 5800 area, and prices have since tumbled to the 5000 area where we have listed major support,” Rafferty said Wednesday. “We like buying against the 5000 area for January WTI and selling as the market approaches our resistance at 5461. If prices close below the 5000 level, there is plenty of room on the downside for prices to head lower.”

Like crude oil, reformulated gasoline (RBOB) declined Wednesday. The December RBOB contract price lost two cents to settle just under $1.40 a gallon.

December Henry Hub natural gas futures, meanwhile, posted an impressive double-digit gain. The benchmark surged 45 cents Wednesday to settle at $4.715.

Rafferty told Rigzone that his firm’s daily continuation chart for natural gas shows the series of breakouts above major resistance levels that have propelled the market to levels not seen in four years. He said the breakouts appear in the chart’s horizontal lines at the 3100, 3400, 3580 and 3860 levels.

“We had stated that if prices broke above our major resistance levels that prices could trade considerably higher,” Rafferty recalled. “While we have enjoyed the ride, the market has since been contained by a broader consolidation pattern between the 3860 to 4920 areas. We remain bullish overall. We prefer to buy pullbacks toward the 4000 area and sell as the market approaches the 5000 area.”