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WTI crude oil: On December 1, January and February 2017 WTI crude oil generated short and intermediate term buy signals.

January WTI crude oil advanced $1.62 on heavy volume of 2,045,657 contracts. Volume traded on December 1 was the second highest in exchange history. Surprisingly, total open interest declined by 5,771 contracts and the fact that it declined it all took us aback. The January contract, which accounted for nearly half the volume traded (946,813), lost 32,603 of open interest. In summary, as the January contract rose to its high of $51.80,the highest level since 51.83 made on October 20, market participants were liquidating in droves.

As this report is being compiled on December 2, the January contract is trading 31 cents above yesterday’s close and has made a high of 51.50, 30 cents below yesterday’s print. The market is massively overbought and yesterday’s decline of total open interest indicates that new buyers have gone on strike. As a consequence, we recommend a stand aside posture and would like to see a correction lasting a couple of days before approaching the market on the long side.  Typically, after our buy signals, markets have a tendency to decline for 1-3 days before resuming the uptrend.

Brent crude oil: On December 1, February and March 2017 Brent crude oil generated short and intermediate term buy signals.

February 2017 Brent crude oil advanced $2.10 on volume of 1,406,979 contracts. Volume fell from the previous day when 1,963,147 contracts were traded and the February contract gained $4.52 and total open interest increased by a massive 86,513. On December 1, total open interest increased massively again, this time by 43,287 contracts, which relative to volume is approximately 15% above average as buyers continued to flood into Brent crude oil and drive prices to a new high for the move of 54.52.

Remarkably, the February Brent crude contract has advanced to $6.62 during the past two days and total open interest has skyrocketed by an amazing 129,800. This contrasts with the advance in WTI of $5.83 during two days while total open interest increase by only 48,221.

Gasoline: On December 1, January and February 2017 gasoline generated short term buy signals.

January gasoline advanced 6.45 cents on heavy volume of 234,387 contracts. Total open interest exploded higher, up 11,169 contracts, which relative to volume is approximately 75% above average. As this report is being compiled on December 2, the January contract is trading 1.31 cents higher and has made a daily high of 1.5693, which is below yesterday’s print of 1.5732. We recommend a stand aside posture in gasoline.

Heating oil: On December 1, January and February 2017 heating oil generated intermediate term buy signals after generating short term buy signals on November 22.

January heating oil advanced 7.16 cents on heavy volume of 234,923 contracts. However, total open interest increased only 2,871 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on December 2, the January contract is trading 1.02 cents above yesterday’s close and has made a daily high of 1.6610, which is slightly below yesterday’s print of 1.6634. Stand aside.

Natural gas:

January natural gas advanced by 15.3 cents on very heavy volume of 631,331 contracts. Volume increased substantially from the day before, November 30 when the January contract gained 3.7 cents on volume of 430,222 contracts and total open interest increased by only 2,196, approximately 75% below average. On December 1, total open interest exploded higher, up 19,070 contracts, which relative to volume is approximately 15% above average. The January contract accounted for a loss of 1,875 of open interest. As this report is being compiled on December 2. the January contract is trading down 7.5 cents or – 2.14% lower on the day. Continue to stand aside, the market is massively overbought.

10 Year Treasury Note:

The March 10 year treasury note lost 17 points on volume of 1,985,672 contracts. Total open interest increased by 33,538 contracts, which relative to volume is approximately 35% below average, but a total open interest increase on yesterday’s steep decline indicated that short-sellers continued to enter positions at the lowest prices since September 2014. The market is massively oversold and due for a counter trend rally. On December 2, the March contract is trading 18 points above yesterday’s close. Continue to stand aside, the rally is likely to continue.