12102018 Weekly Big Picture

09 Dec 12102018 Weekly Big Picture

12102018 Week­ly Big Picture

This is part of my week­ly prepa­ra­tion of my trad­ing week to give me an idea on where I think the mar­ket stands. 

The Big Picture

• WTI
  • What hap­pened last week?
    • Last week was dif­fer­ent because there was an OPEC= meet­ing sched­uled on Thurs­day that was unde­cid­ed in the out­come till Friday. 
    • Obvi­ous­ly the big news was that they decid­ed to cut more than they ini­tial­ly said. Ini­tial­ly was said that they would cut 900.000 — 1 mil­lion bpd but that got upped to 1.2 mil­lion bpd. The cut was 800.000 even­ly divid­ed by the OPEC mem­bers, with exemp­tions for Libya, Iran and Venezuela. The oth­er 400.000 is being filled by the non-OPEC mem­ber allies led by Russia. 
    • The Per­mi­an basin may have twice as much sup­ply as ini­tial­ly thought so that would put the US on the map as a a huge oil sup­pli­er next to Sau­di Ara­bia and Rus­sia. Just this week the US had their first net export of oil.
      • The US is def­i­nite­ly ‘step­ping up’ their oil-game
    • On the oth­er side of the pond we have Chi­na buy­ing more Iran­ian oil now that waivers are in place
    • Pres­i­dent Maduro of Venezuela has said to put in place a sys­tem where Venezue­lan oil will only be bought by Petro cryptocurrencies
      • That would mean it will be the first state-backed oil-backed dig­i­tal currency
      • Cryp­tos mov­ing a step clos­er to world-accep­tance on a glob­al scale
    • On a tech­ni­cal note
      • On the high­er time frame we can see that we are just under the 52.75 level
      • The week­ly shows an inde­ci­sion doji which makes sense with the OPEC meet­ing and all
        • The bull­ish out­come of the meet­ing could put more buy­ing pres­sure in the mar­ket but we shall see how the mar­ket will react to this news
          • After the news we did shoot up about 250 pips break­ing through the 4H 50MA dur­ing the NY ses­sion on Friday
          • Then we had some inde­ci­sive PA before we dropped back down dur­ing the late hours of the NY ses­sion to return to the same 50MA to CAS
          • We are also at the same lev­el on the 30M chart where we might be CAS the 30M 50MA
          • So based on this it does look bull­ish if we can hold this 52.25 level
          • But it would be more bull­ish is if we broke through the 52.75 lev­el so let’s wait and look for signs on an effort to do so
  • What is the sup­ply and demand balance?
    • When look­ing at the oil inven­to­ries report by the EIA, it was fore­cast a fall of ‑0.942M but the “actu­al” num­ber was ‑7.323M so heav­i­ly over the amount that was expect­ed mean­ing extra bullish
    • And then on top of that there was the OPEC+ meet­ing with the more than expect­ed cuts so that screams more bull­ish­ness into the mar­ket by rebal­anc­ing oil production
  • What is the mar­ket sentiment?
    • What does Retail Sen­ti­ment state?
      • There is def­i­nite­ly a high­er bull­ish sen­ti­ment by retail­ers accord­ing to https://bluegoldresearch.com/retail-sentiment-crude-oil
        • Which would be in line with the news and what we can see on the charts but let’s see how that actu­al­ly trans­lates into PA trad­ing next week
    • What does investing.com state?
      • Last week’s sen­ti­ment numbers
        • All sen­ti­ments is 58% bullish
        • Last week 60% bullish
        • Last 3 days 65% bullish
      • This week’s
        • All sen­ti­ments is 58% bullish
        • Last week 63% bullish
        • Last 3 days 61% bullish
      • We increased over the course of the week but then pulled back on sentiment
  • What was in the reports?
    • When look­ing at the oil inven­to­ries report by the EIA, it was fore­cast a fall of ‑0.942M but the “actu­al” num­ber was ‑7.323M so heav­i­ly over the amount that was expect­ed mean­ing extra bullish
  • What is the Tick Vol­ume showing?

• We had the biggest intra­day swing on Fri­day, which could be because of the ini­tial inde­ci­sion and then deci­sive move up dur­ing the ear­ly hours of the NY ses­sion when more liq­uid­i­ty came into the market
• What are the most impor­tant tech­ni­cal lev­els in the market?
  • The week­ly piv­ot point shows us that most week we have been trad­ing around this point after we gapped up last Mon­day mov­ing away from the 50.80 lev­el of the pre­vi­ous week
  • With high­est and low­est lev­els respec­tive­ly being 54.40 and 50
    • How far is the mar­ket from impor­tant tech­ni­cal levels?
      • When we look at his­tor­i­cal lev­els of sup­port and resis­tance we can see that 53.75 is a resis­tance lev­el to keep an eye on
        • On the sup­port side we have the 50.50 level
      • On the 4H chart we can see that 52.50 is a lev­el of poten­tial resis­tance as well since we ducked back under­neath it at the end of the NY session
      • Since we just closed the week at 52.21 we are very close to the 4H resis­tance lev­el of 52.50 so on Mon­day we could be first rang­ing at these lev­els since we are only 30 ticks away from this resis­tance level
      • But on the down­side we are 200 ticks away so more space to the down­side which could mean we will first make a move down­wards before load­ing up for a poten­tial BO, if any
• Is the mar­ket trend­ing up or down?
  • As men­tioned ear­li­er, we can see on the dai­ly chart that we are range bound between the 50.50 and 53.75 lev­els and thus we haven’t ini­ti­at­ed an up- or down­trend yet unless we break these lev­els. At least not on the high­er time frames
  • On the 30M chart we can see that when price ducked under the 52.50 lev­el we have hit a short­er term sup­port area of the 30M VWAP 1.5 SD which could mean that we can see a short-term rever­sal at this lev­el to con­firm 52.50 as resis­tance or per­haps this could be the bat­tle­ground to decide to BO from this lev­el. We will see how we open on Monday.
• Is there an OPEC meeting?
  • OPEC meet­ing has just been held. The next one will be April 2019, the 176th ordi­nary meeting.
• Ener­gy sector
  • How is the sec­tor as a whole doing?
    • US
      • 1 month
        • -10.45%
      • 3 months
        • -13.46%
      • YTD
        • -12.93%
      • In com­par­i­son to last week’s review we can see that in the last month we went from ‑4.77% to now ‑10.45% so that’s a sig­nif­i­cant drop for the US ener­gy sec­tor as a whole. 3 month mark hasn’t changed much and the YTD dropped 2 more points
    • The Amer­i­c­as
      • 1 month
        • -10.19
      • 3 months
        • -12.74
      • YTD
        • -13.72%
      • Same can be said for the Amer­i­c­as ener­gy sec­tor with their num­ber fol­low­ing the US ener­gy sec­tor closely
    • Europe
      • 1 month
        • -6.85%
      • 3 months
        • -5.23%
      • YTD
        • -3.54%
      • The Europe ener­gy sec­tor went in the last month from ‑1.94% to ‑6.85%, with 3 month stay­ing near­ly the same and YTD drop­ping 2 points from ‑1.20%
    • Asia
      • 1 month
        • -6.39%
      • 3 months
        • -10.07%
      • YTD
        • -8.72%
      • It looks like the Asian ener­gy sec­tor is fol­low­ing suit with a drop of 5% in the last month as well just like the oth­er mar­kets. In con­trast, the last 3 months the Asian mar­ket dropped an addi­tion­al 2.5 points from 7.49%. The YTD dropped 4 more points.
    • Mid­dle East / Africa
      • 1 month
        • -11.47%
      • 3 months
        • -5.35%
      • YTD
        • -7.23%
      • The MId­dle-East /Africa ener­gy sec­tor dropped 2.5 points in the last month and only 1.5 in the last 3 months. YTD we dropped only 2 points from 5.03%
• EURUSD
  • What is last week’s price range?
    • 1.131 to 1.142 so we went up a lit­tle in our range in com­par­i­son to the pri­or week
  • What is the mar­ket sentiment?
    • Accord­ing to IG the sen­ti­ment dropped from 60% last week to 57.5% and shows a mixed bull­ish bear­ish sentiment
• Gold
  • What is last week’s price range?
    • We had a sig­nif­i­cant move up in gold rang­ing last week from 1221 to 1248 
      • Due to more geopo­lit­i­cal instability?
  • What is the mar­ket sentiment?
    • Last week accord­ing to investing.com
      • All sen­ti­ments 68% bullish
      • Last week 64% bullish
      • Last 3 days 63 % bullish
    • This week:
      • All sen­ti­ments 68% bullish
      • Last week 65% bullish
      • Last 3 days 67 % bullish
    • Longer term sen­ti­ment has stayed the same how­ev­er sen­ti­ment of the last 3 days increased by 4 points.
• Geopol­i­tics
  • What are the main dri­vers in geopolitics?
    • The Mueller inves­ti­ga­tion is still ongoing
    • The US strong­ly oppos­es dis­con­tin­u­ing sup­port to the Sau­di-led coali­tion in Yemen’s war and will remain engaged in efforts to com­bat Iran­ian influ­ence and Islamist mil­i­tan­cy in the Arab state
    • Sau­di Ara­bia, the UAE, Bahrain and non-GCC mem­ber Egypt cut diplo­mat­ic and eco­nom­ic ties with Qatar in June 2017 over alle­ga­tions of sup­port­ing terrorism
      • The Gulf Coop­er­a­tion Coun­cil GCC annu­al sum­mit was set to open in Riyadh on Sun­day, with region­al uni­ty imper­iled by a bit­ter row with Qatar and the host, Sau­di Ara­bia, fac­ing a diplo­mat­ic cri­sis over the mur­der of jour­nal­ist Jamal Khashog­gi investing.com reports
    • Iran’s Rouhani says sanc­tions may lead to drugs, refugee, bomb ‘del­uge’ in speech car­ried live on state television

Feed­back?

Any ques­tions or feed­back you might have please feel free to leave a com­ment or con­tact me directly. 

Sources:

• https://www.investing.com/commodities/crude-oil-scoreboard
• https://bluegoldresearch.com/retail-sentiment-crude-oil
• https://www.investing.com/commodities/gold-scoreboard
• https://www.bloomberg.com/research/sectorandindustry/sectors/sectordetail.asp?region=US
• https://www.investing.com/commodities/crude-oil-scoreboard
• https://www.investing.com/economic-calendar/eia-crude-oil-inventories-75
• https://www.dailyfx.com/sentiment
• https://www.bloomberg.com/energy