Technical & Fundamental Oil Reports Specialists

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Range-bound and uncertain market with some upside potential

Published Friday, February 27th, 2015

Tuesday’s closes were nearly bearish and the market rallied. A day later bulls had their hopes up high based on the settlements but this optimism proved to be unjustified as the contracts closed significantly lower. This morning we are experiencing some kind of upside correction after yesterday’s slump. It was pointed out in yesterday’s report that after the energy complex bottomed out in the first half of January it started to climb higher in the second half of last month and this uptrend turned into a sideways market this month. Judging by this week’s price movements this range-bound nature is still very much in place. Under these technical circumstances only a break over the higher end is bullish or a close below the lower end is bearish. The daily short-term M/As are losing relevance under these conditions but can still provide us with a helping hand as to the top or bottom end of the range is more likely to be put under pressure. Since they are between 49.37 and 51.01 on WTI it is the bottom end on this contract that is likely to be tested again. It is 48.20 and was closed 3 points below last night but the contract has popped above it this morning. Another close below this support would push the price down to the recent low at 44.37 next week. Should the daily M/As be settled above then the top end at 54.92/55.05 will be in sight sometime next week. The latter is the more unlikely scenario.

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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.