Meridian’s Energy Insights
For the week ending June 30th
Crude Oil – Long Term
My Long Term view of Oil is predicated on the monthly continuous chart going back several years. Since 2003 Crude Oil has been rising in what I call a linear regression channel. Very little has changed on this long term chart since my last writing. We are still very much in a long term uptrend. As I have said in the past, however, what concerns me is that this price action is not due to a fundamental supply shortage but rather to geo-political concerns. A growing militant attitude has been observed around the world over the past few years. This militant attitude is being fueled by leftist leaders who have a decidedly anti-western stance. Where it ends nobody knows at this point. How it ends is also a wild card. Should US troops gain the upper hand in the Middle East and should Iran back away from its nuclear enrichment program we could see a dramatic turn of fortune in Oil prices. But for the moment, all technical indicators continue to point to higher prices. Only a break below the $61 mark would put the Long Term linear regression channel to the test.
Natural Gas – Long Term
My Long Term view of Natural Gas is centered around a monthly continuous chart going back several years. One would not know it right now, but we are still in a long term uptrend on Natural Gas prices. We are, however, perched rather precariously on this trend line and we dare not break it in a significant way. The indicator in the first pane beneath the price chart shows DMI still in POSITIVE mode. The second pane shows the 9 period RSI. Momentum has a bearish slant to it which bears close watching. So from here, the long term trend is still positive but by the smallest of margins.
Crude Oil – Intermediate Term
My Intermediate Term view of Crude Oil is determined by looking at a daily price chart going back about 1 year. This Intermediate Chart argues that we are still in a bull market for crude Oil with higher bottoms and higher tops being recorded.
So far this year Crude Oil pricing has been dominated largely by Iran and its efforts to press ahead with a nuclear enrichment scheme. Success in this endeavor would signal to the world that the Middle East is now a power-broker in its own right and no longer a pushover. Not exactly the outcome that energy dependent America is looking for.
Last week I specifically noted…“The 14 bar RSI, which I use when evaluating the intermediate trend on all Futures contracts, seems to be hooking up. A cross over the “50” mark will signal that momentum has regained its positive footing…”
In fact this week we did record a positive crossover on the RSI. For my regular subscribers, I go into considerable detail as to why this happened this week and offer a shorter term synopsis to assist them with their trading activities going forward. To explore how to become a regular subscriber to Merv’s Energy Central with Meridian, visit www.themarkettraders.com for details.
At this juncture, the only caveat I can offer is to watch the bottom of the rising channel. Any violation of the $68 price point would severely put the intermediate bullish thesis under scrutiny.
Natural Gas – Intermediate Term
As with Crude Oil, my Intermediate Term view is derived from price action on a daily chart going back about 1 year.
Last week I expressed concerns that the price gains caused by Tropical Storm “Alberto” had all been given back. This week we managed to hold our own and Natural Gas prices traded in a very tight range.
My message this week is much the same. To keep the Long Term and Intermediate Term outlooks on Natural Gas on positive footing we must have price action hold in this range. Any violation of the bottom segment of the wedge pattern depicted on the above chart would signal trouble – real big trouble !!
For a “close-up”, short term, detailed synopsis of what is happening with Nat. Gas, including the latest inventory storage data consider subscribing to Merv’s Energy Central with Meridian. Visit www.themarkettraders.com for details.
To Subscribe to the Meridian Report, please be sure to visit www.themarkettraders.comThe information contained in this report represents an opinion on the market and is a reflection of conditions at the time of its publication. Readers entering into positions based on information outlined in this report should make certain these recommendations meet with their personal risk tolerance levels and investment objectives. This report is derived from information from sources believed to be reliable but no independent verification has been made as to its accuracy or completeness. Any reproduction of this report in part or in whole without the express consent of Meridian is strictly prohibited.
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January 24th, 2020
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