Oil futures still in contango after today’s drop

The NYMEX WTI crude futures chain prices immediate forward months below the April contract, which rolls over into May on Thusday.
DUG, an ultrashort oil and gas ETF, gained over 5% today while crude fell 4%.
OIH, the oil services ETF, lost nearly 5%.
Demand for oil services with oil at $106 is no lower today than it was on Friday with oil over $110.

Technically, however, the oil service names look vulnerable to continued pressure.
Tomorrow is a pivotal day. The OIH plunged below the 50-dma, which is now below the 200-dma.


National Oilwell Varco (NOV) has a similar trend-line setup. The oil rig manufacturer has a $9 billion backlog and clear forward visibility. Past dips into the mid-$50’s have been buying opportunities. A drop under $50 would be even more so.


Transocean (RIG) is still even with its 50-dma. If the OIH continues to falter, a pullback to the 200-dma might be possible and would present an entry point.