Weekly Price Review

NYMEX Crude Oil Daily Continuation
NYMEX Crude Oil Weekly Continuation

For the week ended Mar-5, WTI broke out higher from the pennant/flag trading seen the prior week, which is text book technical follow-through behaviour for the trading pattern set during the last half of Feb. The bull-side of the market was intent on driving prices higher, shrugging off a neutral-to-bearish EIA report on Wed, and then rallying hard on the US jobs report on Fri. The crude oil correlation to equity markets appears well entrenched.

WTI even fought off a stronger dollar early in the week and then exploited it when it weakened late in the week. The USD stalled this week when the EURO found support as the Greek situation appears to have found an equilibrium based on Greek efforts to further control their deficit; German indication of support; a successful issue of Greek bonds this week; and, efforts by the US and the EU to control speculators betting against the Greek bond and EURO markets.

This week's CFTC report implies long speculator activity is a primary driver behind the current bull run. The WTI price is well above the .618 retracement of the 8400-7100 decline. Expect a retest of the 8400 high as the next significant resistance level. A failure to push above 8400 will likely be seen as first opportunity for bears to regain control, it also may be viewed by producers as a good time to step in with hedge programs. The Percent R indicates WTI remains overbought, so the market may be setting up for a reversal near-term.

NYMEX Natural Gas Daily Continuation
NYMEX Natural Gas Weekly Continuation

The NYMEX Henry Hub front contract found little support this week; Mon opened weak, Tue and Wed found support along broad declining support line, however, Thu's EIA report came out with data below expectations and the market sold off remarkably. Shoulder season sentiment is clearly bearish as injection season looms and estimates for production, cooling degree days and hurricane forecasts begin to determine trader sentiment.

Prices may be coming into strong support level defined by the gap opened up back in early Oct-09 at 400. A break below this gap could lead to remarkably lower prices.