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Corrective Action in Energy to Extend


With a downside extension below the psychologically significant $90.00 level early today, a higher US dollar, talk of aggressive activity in more expensive US shale basins, and higher US treasury yields the bear camp starts the Tuesday trade with the edge. A logical corrective target is seen at a recent consolidation low zone between $87.10 and $86.34. The markets are disappointed with the potential for a conclusion to Iranian nuclear talks and to arrest the slide probably requires a contraction in API crude stocks after the close today.

Like the crude oil market, the gasoline market has also moderately damaged its charts with a range down move overnight. With the product markets seeing mixed results yesterday and RBOB continuing to outperform ULSD and crude oil, (it reached a new 7-year high) gasoline prices could have the furthest to fall. However, reports of refinery outages may help to draw down US gasoline supply which have posted a pattern of increases since mid-December.


While March natural gas has managed to hold above yesterday’s spike low, short-term technical and fundamental forces remain in favor of the bear camp. Updated weather forecasts have a shift towards warmer temperatures across large areas of the continental US, and that weighed on the natural gas market yesterday as that will diminish late winter heating and power plant supply fears.

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