Crude oil futures continue to test the $100 per barrel level, following the U.S. equity markets closely. Reformulated gasoline blendstock for oxygen blending (RBOB) futures are following crude oil closely, waiting for the driving season to begin after what seems like a never-ending winter. Natural gas continues to show strength, as another winter storm blankets the Midwest.
The market has broken above $100 three times in the past week, but has not closed above this critical level as of Tuesday morning. The market seems to be looking for reasons to rally, although the fundamentally bullish news is waning. Turkish troops invaded the northern part of Iraq to try to root out Kurdish rebels. Though the market reacted bullishly at first, it seems the incursion will be rather quiet and that it will be supported by both the U.S. and Baghdad. Analysts forecast another increase in crude stocks and inventories for the seventh week in a row. Additionally, the U.S. producer price index came out much higher than expected, indicating inflationary risks. Federal banks around the world are facing weaker economies, which in turn should indicate falling crude oil prices. But if the market manages a close above $100, look for continued strength near term.
RBOB is trading similarly to crude oil-and interestingly, the volume increases as the market drops and volume drops as the market price increases. This is typically an indication of a trend lower. But in this case, the long-term trend lines still point upward. This market may be ready for a correction, although it is following closely to the crude.
Natural gas left a textbook inverse head and shoulders, and has continued to trade higher since breaking through the neckline. The endless winter weather in the Midwestern U.S. lends support to this market, and forecasts are for continued colder weather. Another draw in stocks this week is expected, which should boost the market as well. The market looks to be overbought and ready for correction. But until the cold weather subsides, it will be difficult for this market to trade lower.
Support/Resistance:
| Apr Crude | -- | 9575, 9913 / 10302, 10439 |
| Apr RBOB | -- | 26832, 26347 / 27433, 27649 |
| Apr Nat Gas | -- | 90955, 83653 / 93951, 95319 |
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