Wednesday, February 20, 2013

WTI holds range support....Brent bears take the advantage

With Brent breaking below it's upward trend line it's time to check in with Dominick Chirichella at the CME Group......

The spot WTI contract held range support and has now moved back to the middle of its trading range on the last day of trading for the March Nymex WTI contract. The soon to be spot April contract has been in a trading range (since the middle of January) of about $99/bbl on the upside and $95.40/bbl on the lower end. At the moment the contract is trading in the middle of its trading range. Both range support and resistance have been successfully defended several times since January. For now I would expect more of the same unless a strong directional catalyst emerges.

On the other hand the spot Brent contract has broken below its upward trending channel that was in play since mid-January. It is trading below the key technical level of $118/bbl with the possibility of the contract moving to test the next support level of about $115/bbl. It has now been trading below the $118/bbl level for five trading sessions and barring a surprise upside price direction catalyst emerging Brent should remain biased to the bearish side.

As I discussed in yesterday's newsletter the April Brent/WTI spread failed to breach the upside range resistance level and has traded down toward the $19.70/bbl support level. For those who entered the spread from the short side the market is close to the original objective and if the $19.70/bbl support level holds we could get another move back to the upside. If support is breached the next support level for the spread will be around the $18.25/bbl level.

The Seaway Pipeline operator indicated in a FERC filing that they expect to be able to average about 295,000 bpd flow through the line for the period February through May. They also went on to say that they hope to raise the throughput to 335,000 bpd but it is not expected to increase above that level due to the anticipated mix of light and heavy crude oil. This is slightly bearish for the Brent/WTI spread as it is an increase of movement of oil out of Cushing over January's levels.....Read Dominicks entire article.

Enrollment opens today in our "PowerStocks 2.0 Mentoring" program

No comments: