Analyst, Darin Newsom, shared his quarterly outlook in a recent webinar. Attached are the highlights from this presentation.
Several factors have the energy and commodity markets looking more bullish, including a solid downtrend for the dollar with no interest rate hike in sight. But is long-term growth on the horizon?
Fundamentally, the market remains bearish, with records continuing to be set in production volume and no hint of a dramatic slowdown. However, seasonally, the market looks to have a sideways to upward trend. This quarter should see the market extend its rally to near $47.00. A more bullish seasonal fundamental picture could eventually lead to a possible test of the next target near $60.00. Although there’s nothing to show that it will be a breakout market, we do know that money is coming back into crude oil. Entering the U.S. driving season with record gasoline demand should cause a seasonal decrease in U.S. stocks. And, copper looks like it may be at the very early stages of turning higher and could play some part in some support for crude oil as well.
Seasonally, the market trends sideways. Fundamentally the market is growing less bearish. Despite a neutral seasonal pattern, the market looks like it could extend its young long-term uptrend toward the initial target of $1.44, particularly if futures spreads continue to trend up.
As usual, natural gas is a more difficult market to read. Like the rest of the complex, its long-term monthly chart looks to have turned bullish, though continued noncommercial short covering will need to be seen. Fundamentals could continue to weigh on the market. Natural gas likes to turn quickly and turn wildly, although the market does not appear to be particularly strong as we move into late spring and early summer quarter.
Like the oil markets, RBOB gasoline trends sideways over the second quarter. The market moves into this quarter in a consolidation pattern on its long-term monthly chart. A bullish breakout based on seasonal increases in demand could lead to a test of the $1.75 mark.
While there are certain indicators that definitely show a seasonal rise, the fundamentals for all of these different markets don’t suggest we’ll see significant long-term growth.
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