Energy Review for The Special Week: Dec 20th, 2010

[jimfutu11]

Before checking the energy review, I would like to take this change to wish you a Merry X-mas and Happy New Year. Enjoy great time with your loved ones! And now, we will turn to review the analysis by Pitguru Daniel Cronin to see what we should note in the holidays!

The Energies Review
For the week of December 20th, 2010

The energies had another stable week as Crude Oil was range bound again from $87 to $90 as there has been a tight market for the last two weeks now. It seems as though the Crude Oil market is consolidating at this huge support level of $87 and it looks to me like a bull flag is forming and ready at any time to breakout to the upside. The only problem that I foresee is the WTI spreads in the front giving some trouble to the Feb and March flatprice as these front spreads are still liquidating as Feb/Mar trades down to -85. Heating Oil has been having one leg up on the crude market with the bitter cold weather in the north as the heat cracks have gained $1.00 in the last week. In order to break to the upside the Feb flatprice needs to break the $91 area with a strong close above that number. API reports will be key to this week’s trade which comes out on Tuesday after the bell.

Natural Gas had a very subpar week with inventories coming in much weaker than expected to send the January flatprice down towards the $4.00 area. I see this as a great buying opportunity as the Natty price has sold off more than 60 cents in one week. Just on technicals, I see a nice support area at the $4.00 level.