Oil Prices Mixed
Crude oil futures were mixed Wednesday, with the West Texas Intermediate (WTI) benchmark erasing a portion of its recent gains and the Brent edging slightly upward.
June WTI futures lost 41 cents Wednesday to settle at $65.89 per barrel. The U.S. benchmark traded within a range from $65.66 to $66.43.
“For the last two weeks we had been discussing the fact that WTI futures had been trading within a horizontal congestion range for almost two weeks,” said Steve Blair, senior account executive with the RCG Division of Marex Spectron. “Well, as we know will always occur, the market finally broke out of that congestion range. This was based on the news that the Trump administration would not review the waivers for those eight nations to be able to continue to purchase Iranian crude oil.”
Blair noted that June WTI futures – now the spot month – from a technical basis closed above the major resistance at the $64.75 level and has yet to look back.
“Currently, the old resistance at $64.75 becomes the support with major resistance now at $66.54, as seen on the daily chart,” said Blair. “Should the market penetrate and close above the $66.54 resistance, there is further major resistance seen on the daily continuation chart at the $67.95 level.”
Brent crude oil for June delivery gained six cents to end the day at $74.57 per barrel. Blair observed that the Brent charts show a scenario akin to what the WTI data reveal.
“The June contract broke through and closed above the major resistance at the $73.75 level this past Monday,” said Blair. “The daily continuation chart shows major resistance at the $75.05 level and further resistance seen at the top of the congestion range on the daily chart at the $75.40 level. A break through and close above these major resistance levels would propel prices to higher levels.”
The price of reformulated gasoline (RBOB) got slightly lower Wednesday. The May RBOB contract fell three-tenths of a cent to settle at $2.13 per gallon.
“Gasoline prices spiked higher on the Iranian announcement,” said Blair. “June futures closed at $2.0325 last Friday and traded as high as $2.0969 on Monday before settling for the day at the $2.0765 level. The daily chart shows current resistance around the $2.0995 level and at the $2.1167 level. Major support seen at the breakout level at $2.0325.”
Henry Hub natural gas futures posted a slight gain Wednesday. The May contract price added less than one cent to settle at $2.46.
Over the past week or so, natural gas futures have broken down through many of the major support levels that the market had witnessed over the past four to six months, Blair said. He added that May futures also penetrated and closed below the $2.528 major support that is from early May 2018 lows and appears on the daily chart. Moreover, he said the market even closed below the $2.478 major support on the daily continuation chart.
“We now must look at the more macro charts to find where the next major support levels lie,” said Blair. “The weekly chart shows support at the $2.399 level (which is from levels seen in May 2016) and the monthly chart shows major support at the $2.422 level (levels seen in June 2016). Closes below these levels could propel prices much lower and shows the propensity to break below the $2.000 level.”
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