ENERGY PRICES WERE MIXED ON MONDAY…as natural gas closed lower in impressive fashion and the liquids did not. Thus, whereas natural gas futures are now trading at seven-year lows and appear to be en route to a $2-handle, you get the queasy feeling that the bears in the liquids are already running out of steam in the mid $60s.
We are unimpressed and therefore unconvinced the bears have what it takes to impart their will on this market. As we noted last month apropos the last technical correction after a failed run to $75 in spot WTI…
Meantime on the NYMEX it is do-or-die for the bulls. Quite frankly, the selloff to this point was the easy part for the bears. Now they have to man-up and play the varsity. To wit, last night the market closed inside the 50/62% retracements (ratio scale) from 61.25 to 58.59. 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.
The Schork Report – July 9, 2009
In this vein, the weakness on the NYMEX since Thursday is nothing but noise inside a well defined range between the high $50s and low $70s. Therefore, we will update our statement from July 09th…We can see this market falling further into the 50/62% retracement. In the September contract that means a pullback towards 62.31 and 59.70. Should the bears succeed in breaking this support, we will look for a flush into the mid $50s and a run at a $40-handle. Should the bears fail there (or fail here in the mid $60s for that matter) we will look for a third attempt at $75.
Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.