Energy prices were firm on Thursday, with the notable exception of NYMEX heating oil, bearish momentum in the other liquids markets consolidated inside the corresponding 50/62% retracements (ratio scale). At the same time NYMEX Henry Hub bulls gave a somewhat limp response to yesterday’s reported “small” EIA report.
Next Thursday’s EIA report marks the start of the second (of three) phase or bucket of the natural gas refill season.
As such, beginning with this report, injections will begin trending lower.
In this vein, the typical injection is 76 Bcf. Last year the EIA reported a large 104 Bcf injection for the corresponding week (11-Jul-08).
Outside of the Gulf Coast market areas, nationwide implied weather demand through the first half of this EIA week is below normal. Therefore, when combined with residual slack demand from the 04th of July holiday, we could be in store for a true-up to yesterday’s report.
Crude oil bulls are hanging in there, albeit by the thinnest of margins, but hanging in nonetheless. Yesterday’s price path on the NYMEX had something for both bears (a break below the $60 critical point of reference) and bulls (a close above the $60 critical point of reference). As such, the market is in a consolidation pattern inside the 50/62% retracements (ratio scale) from 61.25 to 58.59.
Therefore, we repeat...if the bulls are going to put up a defense, this is where it will occur. If they succeed, then this support will act as a springboard for a second run at $75. If they fail, the path towards a $40-handle will be wide open.
As far as today goes, a rebound through yesterday’s 61.62 high print alerts to further corrective momentum towards our 61.90 inflection point. Above here, analysts at The will look for bids towards our 63.12 intraday. On the other hand, offers through trendline support at 59.44 alerts to follow through momentum towards our 58.92 inflection point and the 62% retracement at 58.59. We will look for further weakness below here towards our 57.707 intraday.
Stephen Schork is the Editor of, and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.