Henry Marchell
Managing Director Stanton Analytics

Energy futures were narrowly mixed as queasiness over the ECB’s interest rate decision supported the euro. However, the move to keep interest rates unchanged in the weakening economic outlook was viewed by traders as a negative for their economy. This initially put pressure on crude and the products. There was also concern over the FedEx warning that a sharp slowdown in global activity is forecast.

The DOE inventories will be released on Thursday with expectations as follows: crude -5.6M, mogas -3.6M, dist -1.9M, natgas +36 bcf.

The API reported the following inventories: Crude: -7.2 mb; Mogas: -2.3 mb; Dist -132 kb.

All markets are primed and waiting for the ECB announcement on Thursday. There is already talk that any decision made by Draghi may be less than what the market is looking for, or has already been priced in.

Our report is a little shorter than usual due to the opening night of football where we will be attending the game of our beloved Giants.

 

DATA POINTS

ADP Employment Report

Released On 9/6/2012 8:15:00 AM For Aug, 2012   Prior Consensus Consensus Range ADP employment 163,000 149,000 90,000  to 165,000

Market Consensus before announcement ADP private payroll employment rose 163,000 in July, following a revised 172,000 total for June. In comparison, the BLS figure for private nonfarm payrolls was 172,000 for July and 73,000 for June.

Jobless Claims

Released On 9/6/2012 8:30:00 AM For wk9/1, 2012   Prior Consensus Consensus Range New Claims – Level 374 K 370 K 365 K to 380 K

Market Consensus before announcement Initial jobless claims were unchanged in the August 25 week at 374,000 (prior week revised slightly higher). The 4-week average was 370,250 which was slightly higher than the prior week but slightly lower than the month-ago trend. Continuing claims are also little changed, down 5,000 in data for the August 18 week to 3.316 million.

ISM Non-Mfg Index

Released On 9/6/2012 10:00:00 AM For Aug, 2012   Prior Consensus Consensus Range Composite Index – Level 52.6 53.0 51.5  to 53.5

Market Consensus before announcement The composite index from the ISM non-manufacturing survey for July rose 5 tenths to 52.6. This level is not especially strong but details in the report are encouraging. Forward momentum improved a bit as the new orders index rose 1 full point to 54.3. Business activity, which is an indication on output of goods and services in the sample, really took off, up 5.5 points from a depressed June level to 57.2 in July for the best rate of monthly growth since March.

The DOE inventories will be released on Thursday with expectations as follows: crude -5.6M, mogas -3.6M, dist -1.9M, natgas +36 bcf.

WTI

WTI	S2	S1	CLOSE	R1	R2	TREND
DAILY	9300	9462	9536	9721	9829	UP
WEEKLY	8365	9295	9647	10043	10325	UP

Daily Moving Averages: 21, 55, & 100:95.22, 89.93, 91.22

Weekly Moving Averages: 21, 55, & 100: 91.88, 94.37, 94.24

October appears to want to head higher at least early in the session.

• That will be in expectation of a market friendly ECB announcement. It is likely that October will move up to the 96.70 to 96.85 area.
• While the minor upside pivot is 96.80, the key pivot is just above that level at 97.15. this represents trend resistance on the daily chart.
• It is with a break of that level that October is suggesting a rise to test 98.15 to 98.30.
• The key upside pivot is 98.30.
• Oct will have trend support just below unchanged at 94.65 The downside pivot is 94.20.We view this as a two -way market for Thursday.

 

 

 

BRENT

BRENT	S2	S1	CLOSE	R1	R2	TREND
DAILY	11150	11270	11309	11438	11650	UP
WEEKLY	10838	11150	11457	12195	12595	UP

Daily Moving Averages: 21, 55, & 100: 113.93, 106.21, 106.97

Weekly Moving Averages: 21, 55, & 100: 107.70, 111.12, 108.38

This market is waiting for Monti and the details of the ECB announcement on interest rates and things stimulative.

• However, it does appear poised to move higher early Thursday.
• It will have an initial objective of 114.20 to 114.30.
• the minor upside pivot is 114.45.
• Penetration and removal of that level will spur the bulls unto the 115.50 area.
• The minor support for this pattern is 112.70. This is also the minor downside pivot. Breaking below 112.50, to give it breath, will signal a drop to the key downside pivot at 111.50.
• There is a head and shoulders top formation on the daily chart. That has a neckline at the above mentioned support. A daily settlement below that level will argue for another downside leg.
• It’s a two way market of rThursday, but likely to be quiet until 8:30 EDT.

 

 

WTI-BRENT

WTI-BRENT	S2	S1	CLOSE	R1	R2	TREND
DAILY	-1905	-1833	-1773	-1750	-1625	PEAK
WEEKLY	–2200	–2040	-1810	-1571	-1075	DOWN

Daily Moving Averages: 21, 55, & 100:-18.32, -17.87, -18.07

Weekly Moving Averages: 55, 100, & 200: -14.77, -13.86, -12.00

The waiting for the ECB announcement and an implication of a softer economy has provided Oct with a rebound.

• October has broken the minor upside pivot at -18.50 to confirm a short-term bottom.
• However, Oct is nearing a completion of the first leg to the upside at -18.50.
• This is going to push Oct up to the upside extension pivot at -17.50.
• Although our model suggests that a turn down from that level is likely, a break of -17.30 by a daily settlement will signal a rise to -16.25.
• The minor downside pivot that will confirm a completion to this leg of the rise is -18.00.
• This will move Oct back to the 18.35 to 18.50 area. The overthrow to this support is -19.00.
• We are a seller of the arb at the -17.50 with a protective stop above -17.30.

 

RBOB

RBOB	S2	S1	CLOSE	R1	R2	TREND
DAILY
WEEKLY	28075	28900	31056/29728	31050	31975	DOWN

Daily Moving Averages: 21, 55, & 100: 3.0483, 2.8892, 2.8938

Weekly Moving Averages: 21, 55, & 100: 2.9192, 2.8758, 2.8071

Following its excursion to the 3.0050 area, Oct fell to 2.9370.

• While that pierced a key pivot for Wednesday, it also completed a leg to the downside.
• It is likely that Oct springs back to retrace the above mentioned leg down.
• This will put the initial objective at 2.99 to 2.9950 with a break of 2.9650. That is the minor upside pivot.
• For October to maintain a positive dynamic for Thursday will require the minor downside pivot at 2.9370 to remain inviolate.
• Failing in that regard will press Oct lower to test the 100 DMA at 2.8925.
• The longer term outlook is for a peak to present itself in the short-term, but this may be an equal to marginal new high from 3.0050.
• However, an intraday break of that level will signal a rise to 3.0450 to 3.0500.

 

ETHANOL

ETHANOL	S2	S1	CLOSE	R1	R2	TREND
DAILY	2445	2500	2528	2545	2580	DOWN
WEEKLY	2270	2445	2553	2720	2830	DOWN

Daily Moving Averages: 21, 55, & 100:2.594, 2.505, 2.332

Weekly Moving Averages: 21, 55, & 100: 2.321, 2.382, 2.428

This is a weakening pattern, which we have been modeling for better than a week.

• With its break of a key downside pivot at 2.525 a potential for a material move lower is greatly enhanced.
• There will be minor support at 2.505 to 2.50.
• The downside extension pivot is 2.495.
• Breaking that level has Oct moving to the 2.45 to 2.445 area in the short-term.
• Oct will have minor resistance at 2.54 to 2.545. the minor upside pivot is 2.555.
• We are a seller of the rally.

 

HEAT

HEAT	S2	S1	CLOSE	R1	R2	TREND
DAILY	30150	30950	31176	31540	31925	CONGEST HIGHER
WEEKLY	29500	30725	31696/31802	32045	33475	UP

Daily Moving Averages: 21, 55, & 100: 3.1008, 2.9011, 2.8873

Weekly Moving Averages: 21, 55, & 100: 2.9015, 2.9891, 2.8989

With its drop to 3.11 Wednesday it appears that Oct completed a leg to the downside.

• This model suggests that Oct will bounce in the early stages of Thursday.
• The immediate objective is the 315.00 to 315.30 area. The minor upside pivot is 3.1550.
• Breaking that level will show a pick up in momentum and a likely run towards 3.1850 to 3.19.
• The minor upside pivot is 3.1940. The key upside pivot is 3.2160.
• This is a market pattern that suggests that Oct may move higher initially, but the upside should be capped below the recent high at 3.2160.
• October will have a minor downside pivot at 3.1100.
• Dropping below that level will help Oct slump to 3.1000 to 3.0950. The minor downside pivot is 3.09.
• We are a seller of the sharp rally or a break of 3.09.

 

NATGAS

NATGAS	S2	S1	CLOSE	R1	R2	TREND
DAILY	2575	2695	2795	2840	3005	CONGEST LOWER
WEEKLY	2170	2620	2799	30000	3275	CONGEST

Daily Moving Averages: 21, 55, & 100: 2.771, 2.858, 2.645

Weekly Moving Averages: 21, 55, & 100: 2.590, 2.925, 3.500

The model we employed cited 2.888 as the top of a minor pattern.

• This will put the bulls on the defensive early Thursday.
• The minor downside pivot at 2.76 will be tested.
• It is with a break of that level that Oct will be tripped into falling to 2.70 to 2.69.
• The downside extension pivot is 2.68. The key downside pivot is 2.575.
• Oct will have minor resistance at 2.84 to 2.845. The minor upside pivot is 2.86. The key upside pivot is 2.89.
• With a break of that level Oct may shoot to the 3.00 level.
• We look for strong resistance in that area. The upside pivot is 3.020.
• We are a seller of the strong rally.