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Increasingly range-bound

Published Tuesday, January 27th, 2015

Supports came under pressure yesterday but bears were disappointed to see that they were not closed below. The market is getting increasingly range-bound as it has been moving sideways for the better part of the last two weeks. As a matter of fact one can identify two ranges, a narrower and a wider one. The narrower one is capped by the highest of the daily short-term M/As. These are the 13-day M/As on WTI, Brent and Heating Oil. The numbers currently are 47.12, 48.87 and 165.25. On RBOB and Gasoil the highest ones are the 5-day M/As at 132.65 and 474.25 respectively. On closing over these immediate resistances the complex is likely to head towards the top end of the wider range. This is made up by the highs reached on January 15. These figures are 51.73 WTI, 52.42 Brent, 171.70 Heating Oil, 141.49 RBOB and 480.75 Gasoil. An eventual close over the higher of these resistances would possibly trigger some fierce short covering that could easily push the market up to the 34-day M/A resistances which are currently some way above the price action. Given yesterday’s dismal price action the nearest supports are expected to come under pressure today again and in some cases they have already been broken below.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.