Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Crude oil prices display bullish short-term reversals, resulting in bullish price and RS reversals for global Energy stocks -- add exposure. From a macro perspective, despite some mild price deterioration recently on major indexes around the globe, our outlook remains unchanged and we remain neutral yet constructive overall. Market dynamics remain largely constructive and we continue to see attractive opportunities in many countries/regions such as Japan, China (Shanghai Composite), Europe, India, and Canada, to name a few.

Crude oil prices display bullish short-term reversals, resulting in bullish price and RS reversals for global Energy stocks -- add exposure. From a macro perspective, despite some mild price deterioration recently on major indexes around the globe, our outlook remains unchanged and we remain neutral yet constructive overall. Market dynamics remain largely constructive and we continue to see attractive opportunities in many countries/regions such as Japan, China (Shanghai Composite), Europe, India, and Canada, to name a few.

Global Energy Sector Improving -- Buying Reliance Industries Ltd, Several Others

Founder & CEO. Oil markets macro-analysis., Vanda Insights

Vandana Hari

Founder & CEO. Oil markets macro-analysis.

Vanda Insights

Vanda Insights is a Singapore-based boutique provider of intelligence on the global energy markets, launched in September 2016. The venture was born out of a desire to extract the signal from the noise in the complex and often volatile oil markets. Our succinct and clear macro analysis is relied upon by thousands of readers globally, including those doing business directly or indirectly in the physical commodity and derivatives markets; wealth managers; governments, regulatory bodies and think-tanks; as well as trade organizations and educational institutions.

Global Energy Markets

Commodities

Brent vaulted over $75/barrel mid-week and was held above that key psychological mark.The two key categories of drivers – fundamentals as well as sentiment in the financial markets – were pushing in the same direction this week.A second consecutive weekly slump in US oil stockpiles and the third week of a slow resumption of Gulf of Mexico oil production and Louisiana refining operations impacted by Hurricane Ida screamed “bullish”!Meanwhile, the latest monthly data suggesting that US inflation may be levelling off, coupled with a smart rebound in retail sales in the country in August, provided additional tailwinds.The US EIA, OPEC and the IEA released their monthly market outlook reports last week and the consensus view was that the Delta wave had only delayed, not derailed oil demand recovery.But are we being too sanguine about Covid keeping its claws out of the global economy and oil demand resuming a steady upward climb in the upcoming northern hemisphere winter season?

Brent vaulted over $75/barrel mid-week and was held above that key psychological mark.The two key categories of drivers – fundamentals as well as sentiment in the financial markets – were pushing in the same direction this week.A second consecutive weekly slump in US oil stockpiles and the third week of a slow resumption of Gulf of Mexico oil production and Louisiana refining operations impacted by Hurricane Ida screamed “bullish”!Meanwhile, the latest monthly data suggesting that US inflation may be levelling off, coupled with a smart rebound in retail sales in the country in August, provided additional tailwinds.The US EIA, OPEC and the IEA released their monthly market outlook reports last week and the consensus view was that the Delta wave had only delayed, not derailed oil demand recovery.But are we being too sanguine about Covid keeping its claws out of the global economy and oil demand resuming a steady upward climb in the upcoming northern hemisphere winter season?

Weekly Oil Views: Crude Hits 7-Week Highs but Q4 Optimism Misplaced

The market environment remains very mixed, with constant Sector rotations resulting in very few Sectors out- or under-performing for sustained periods. At the same time, market dynamics give us little-to-no reason to be bearish (aside from the simple fact that the S&amp;P 500 has not pulled back even 5% for over 6 months). Growth Sectors (Communications, Technology) and large-caps (S&amp;P 500) have been the primary winners and we recommend sticking with them until we see evidence of change. To that end, we are watching 1.38-1.45% on the 10-year Treasury yield; as long as the 10-year is below this level we expect to see growth and large-caps continue to outperform, however a break above 1.45% would likely signal a shift in favor of value and small-caps.Charts Highlighted: SPX, WTI Crude Oil, XOP, US Dollar, DXJ, YZCAY, BTU, HCC, ARCH, ARLP, METC, HNRG, CCJ, PALAF, DNN, UUUU, UEC, LEU, ATCO, MATX, SBLK, CMRE, GSL, GNK, NMM, EGLE, DSX, SB, and ESEA

The market environment remains very mixed, with constant Sector rotations resulting in very few Sectors out- or under-performing for sustained periods. At the same time, market dynamics give us little-to-no reason to be bearish (aside from the simple fact that the S&amp;P 500 has not pulled back even 5% for over 6 months). Growth Sectors (Communications, Technology) and large-caps (S&amp;P 500) have been the primary winners and we recommend sticking with them until we see evidence of change. To that end, we are watching 1.38-1.45% on the 10-year Treasury yield; as long as the 10-year is below this level we expect to see growth and large-caps continue to outperform, however a break above 1.45% would likely signal a shift in favor of value and small-caps.Charts Highlighted: SPX, WTI Crude Oil, XOP, US Dollar, DXJ, YZCAY, BTU, HCC, ARCH, ARLP, METC, HNRG, CCJ, PALAF, DNN, UUUU, UEC, LEU, ATCO, MATX, SBLK, CMRE, GSL, GNK, NMM, EGLE, DSX, SB, and ESEA

S&P 500 Near Support; Watching Energy For Strength; Buying Coal, Uranium Miners, & Dry-Bulk Shippers

Factors on the fundamentals front are collectively price-supportive for crude. The resumption of oil production shuttered by Hurricane Ida in the US Gulf of Mexico is far slower than expected and protestors have been disrupting export crude loadings in Libya. Meanwhile, US demand remains on a strong recovery path, Chinese appetite is back on track after the August setback of virus outbreaks and restrictions, and consumption across the globe in general is on an upward trek with the worst of the Delta wave behind us.But the mood in the broader financial markets, which has become highly sensitive to macro-economic data and prone to regular bouts of fear over the anticipation of central banks paring down monetary stimulus, remains fickle and was largely downcast through last week. It was uncertainty and fear rather than a state of equilibrium that has kept Brent rangebound around $72 and WTI around $69 over the past fortnight.Our base case is for Brent to average around $70/barrel through the rest of this year, yielding a whole-year average of around $68, or about 58% higher than 2020.

Factors on the fundamentals front are collectively price-supportive for crude. The resumption of oil production shuttered by Hurricane Ida in the US Gulf of Mexico is far slower than expected and protestors have been disrupting export crude loadings in Libya. Meanwhile, US demand remains on a strong recovery path, Chinese appetite is back on track after the August setback of virus outbreaks and restrictions, and consumption across the globe in general is on an upward trek with the worst of the Delta wave behind us.But the mood in the broader financial markets, which has become highly sensitive to macro-economic data and prone to regular bouts of fear over the anticipation of central banks paring down monetary stimulus, remains fickle and was largely downcast through last week. It was uncertainty and fear rather than a state of equilibrium that has kept Brent rangebound around $72 and WTI around $69 over the past fortnight.Our base case is for Brent to average around $70/barrel through the rest of this year, yielding a whole-year average of around $68, or about 58% higher than 2020. 

Weekly Oil Views: Uncertainty, Not Equilibrium, Keeps Crude Rangebound

OPEC+ last week agreed to stay the course on its cautious tapering plan of 400,000 b/d monthly supply boost for October, as expected. It was wise to not suspend the easing as the Delta wave is in the rear-view mirror and the world can do without higher oil prices feeding the inflation monster. Yes, there is still the risk of more nasty variants bringing new waves – the WHO is keeping a close eye on the “Mu” strain of the coronavirus, first identified in Colombia and currently found in 39 countries. But make no mistake – OPEC+ has left a wide margin between its planned production and its projected rise in global demand in the coming months, which, interestingly, it has not downgraded despite the Delta wave. OPEC+ adopting the hawkish approach and sustaining its cohesion are supportive for oil price sentiment. So is the fact that the Delta wave did not knock US oil demand recovery off its trajectory and China is gradually recovering its oil appetite with the Delta outbreaks in the country squashed and restrictions being eased. However, the pain points in the global economy are becoming obvious. Major among them is the services sector not picking up momentum even as the manufacturing sector is losing it and consumer confidence is starting to wobble.The observations confirm our mildly bullish outlook for the near-term and neutral for the next three months, as laid out in our August issue of Bulls &amp; Bears.

OPEC+ last week agreed to stay the course on its cautious tapering plan of 400,000 b/d monthly supply boost for October, as expected. It was wise to not suspend the easing as the Delta wave is in the rear-view mirror and the world can do without higher oil prices feeding the inflation monster. Yes, there is still the risk of more nasty variants bringing new waves – the WHO is keeping a close eye on the “Mu” strain of the coronavirus, first identified in Colombia and currently found in 39 countries. But make no mistake – OPEC+ has left a wide margin between its planned production and its projected rise in global demand in the coming months, which, interestingly, it has not downgraded despite the Delta wave. OPEC+ adopting the hawkish approach and sustaining its cohesion are supportive for oil price sentiment. So is the fact that the Delta wave did not knock US oil demand recovery off its trajectory and China is gradually recovering its oil appetite with the Delta outbreaks in the country squashed and restrictions being eased. However, the pain points in the global economy are becoming obvious. Major among them is the services sector not picking up momentum even as the manufacturing sector is losing it and consumer confidence is starting to wobble.The observations confirm our mildly bullish outlook for the near-term and neutral for the next three months, as laid out in our August issue of Bulls &amp; Bears.

Weekly Oil Views: Crude Confronts Economic Headwinds in Wake of Delta

United States

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Crude oil can be refined to produce usable products such as gasoline, diesel and various forms of petrochemicals. It is a nonrenewable resource, also known as a fossil fuel, which means that it can't be replaced naturally at the rate we consume it and is therefore a limited resource.

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Crude Oil (CL1 COM COMDTY)

Global Energy Sector Improving -- Buying Reliance Industries Ltd, Several Others

Crude oil prices display bullish short-term reversals, resulting in bullish price and RS reversals for global Energy stocks -- add exposure.

Vermilion Research

Weekly Oil Views: Crude Hits 7-Week Highs but Q4 Optimism Misplaced

Delta dealt a setback to global oil demand recovery in the third quarter. The hopes are now for the pace to pick up in Q4, but could that be overly...

Vandana Hari

S&P 500 Near Support; Watching Energy For Strength; Buying Coal, Uranium Miners, & Dry-Bulk Shippers

On August 31 we noted to expect some consolidation in the S&P 500 after it hit our 4535 initial target. The S&P 500 is now testing key support at...

Vermilion Research

Weekly Oil Views: Uncertainty, Not Equilibrium, Keeps Crude Rangebound

Oil fundamentals are price-supportive but jitters over inflation and tapering in the broader financial markets continue to be a drag on sentiment....

Vandana Hari

Weekly Oil Views: Crude Confronts Economic Headwinds in Wake of Delta

OPEC+ is hawkish, US oil demand growth remains strong and China is emerging from its Covid outbreaks -- all supportive. But economic deceleration...

Vandana Hari

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