19 Oct Daily take on WTI crude oil

Daily take on WTI crude oil

This is my dai­ly take on the WTI crude oil mar­ket. I will keep these post short and to the point. The pur­pose of these posts is for me to set up my bias for the day and look for sig­nals to start tak­ing positions. 

Sources will be list­ed at the end.

DISCLAIMER

Click here for my dis­claimer. It basi­cal­ly says that I am on my path to becom­ing a trad­er and these are just my opin­ions on how to approach learn­ing to trade. Feel free to check it out and com­ment on it.

Here it goes…

WTI has pos­i­tive and neg­a­tive cor­re­la­tions to oth­er finan­cial instru­ments and I will list these here to show the rea­son for my bias. I have three cat­e­gories: Down­ward, neu­tral and upward pres­sure. Down­ward pres­sure means that the items list­ed have a neg­a­tive effect on WTI crude oil and is cause for a short-bias and vice versa.

Related Financial Markets

The com­modi­ties that have a pos­i­tive cor­re­la­tion with WTI show an upward pres­sure ten­den­cy. Look at me, mak­ing up terms and stuff as I go along. Let’s look at the neg­a­tive cor­re­lat­ed finan­cial assets. 

The neg­a­tive cor­re­lat­ed finan­cial assets show one up and one down so neu­tral I’d say. 

News

Investing.com — Crude oil prices gained in Asia on Thurs­day, sup­port­ed by sol­id GDP fig­ures for the third quar­ter in Chi­na, the world’s sec­ond largest crude importer, and soar­ing demand by the nation’s refineries.

Chi­na on Thurs­day report­ed third quar­ter GDP came in as expect­ed to show a gain of 1.7% on quar­ter and 6.8% rise on year, while indus­tri­al pro­duc­tion rose 6.6%, more than the 6.2% increase seen in Sep­tem­ber and fixed asset invest­ment gained 7.5%, below the 7.7% gain seen. Retail sales in Chi­na rose 10.3%, beat­ing the expect­ed up 10.2% increase.

Chi­na’s Sep­tem­ber domes­tic crude oil pro­duc­tion fell 2.9% to 15.53 mil­lion met­ric tons, accord­ing to the Nation­al Sta­tis­ti­cal Bureau on Thurs­day. Nation­al crude oil through­put rose 12.7% in Sep­tem­ber over the same year-ago lev­el to 49.34 mil­lion met­ric tons and nat­ur­al gas pro­duc­tion rose 10.7% in Sep­tem­ber to 11.2 bil­lion cubic meters.

Overnight, crude oil prices set­tled high­er on Wednes­day as investors cheered data show­ing U.S. crude stock­piles fell more-than-expect­ed for the fourth straight week eas­ing con­cerns over an expect­ed uptick in domes­tic production.

Crude oil prices con­tin­ued their bull­ish to the week after a report from the Ener­gy Infor­ma­tion Admin­is­tra­tion (EIA) showed crude stock­piles fell-more-than-expect­ed but an uptick in gaso­line sup­plies lim­it­ed upside momentum.

Inven­to­ries of U.S. crude fell by rough­ly 5.7m bar­rels in the week end­ed Oct. 13, beat­ing expec­ta­tions of a draw of 4.2m barrels.

The EIA report­ed a drop of near­ly 1.1 mil­lion bar­rels a day in U.S. pro­duc­tion from the low­er 48 States, putting total out­put at 7.9 mil­lion bar­rels a day.

Else­where investors con­tin­ued to mon­i­tor the pos­si­bil­i­ty of sup­ply dis­rup­tions amid ongo­ing polit­i­cal uncer­tain­ty in Iraq fol­low­ing con­flict between Iraqi and Kur­dish forces ear­li­er in the week.

Kur­dish forces on Tues­day pulled out of dis­put­ed areas in region after Iraqi forces ceased con­trol of the oil rich city of Kirkuk. The major­i­ty Kur­dish region of North­ern Iraq exports near­ly 600,000 bar­rels of oil a day.

Source: https://www.investing.com/news/commodities-news/us-crude-oil-edges-up-in-asia-as-china-gdp-supports-demand-views-543888

SINGAPORE (Reuters) — Oil prices were sta­ble on Thurs­day, sup­port­ed by ongo­ing OPEC-led sup­ply cuts, ten­sions in the Mid­dle East and low­er U.S. pro­duc­tion due to hur­ri­cane-enforced closures.

U.S. out­put slumped by 11 per­cent from the pre­vi­ous week to 8.4 mil­lion bar­rels per day (bpd), its low­est since June 2014 as pro­duc­tion had to be shut because of trop­i­cal storm Nate, which hit the U.S. Gulf coast ear­li­er in October.

Ana­lysts said there was also a risk to sup­ply from polit­i­cal insta­bil­i­ty in areas rang­ing from the Mid­dle East to South America.

“The ‘Frag­ile Five’ pet­rostates — Iran, Iraq, Libya, Nige­ria and Venezuela — con­tin­ue to see sup­ply dis­rup­tion poten­tial, with north­ern Iraq crude exports at risk due to an esca­la­tion of ten­sions between the (Kur­dis­tan Region­al Gov­ern­ment), Bagh­dad and Turkey, while the U.S. has decer­ti­fied the 2015 Iran nuclear deal,” said U.S. bank Citi.

Polit­i­cal risk con­sul­tan­cy Eura­sia Group said Sau­di Ara­bi­a’s plans to list state-owned oil giant Aram­co would increase pres­sure for extend­ed pro­duc­tion cuts.

“Sau­di Ara­bia will seek a pro­duc­tion shar­ing agree­ment exten­sion … as an IPO (of Sau­di Aram­co) remains part of the long-term plan,” the con­sul­tan­cy said.

“Price sta­bil­i­ty will remain a core part of the strat­e­gy … The gov­ern­ment still needs high­er oil rev­enue to sup­port its spend­ing needs and reform program.”

Source:

https://www.investing.com/news/commodities-news/oil-markets-firm-on-tighter-us-market-expected-extension-of-opec-supply-cuts-543861

Technical Analysis

4H

On the 4‑hourly we can see that prices have moved close to the apex of the orange tri­an­gle now, So anoth­er burt is upon us. Let’s see which way it goes. It’s fun­ny how the fun­da­men­tals keep show­ing upward pres­sure but the burst hap­pen the oth­er way only then to go back to where it was. Per­haps this is because we are back at the highs of from a month ago. Per­haps peo­ple and insti­tutes sell­ing off their long posi­tions? I think here we can prob­a­bly see a burst upwards through the dai­ly chart resis­tance trend line indi­cat­ed by the red diag­o­nal line. That would mean we will be going into ‘new’ ter­ri­to­ries for WTI crude oil. Let’s have a clos­er look at the 30-minute chart.

30M

On the 30-minute chart we can see that I drew a pink tri­an­gle next to the orange big­ger tri­an­gle. This pink tri­an­gle was formed through the price action from the last two days. I believe it will call in anoth­er burst of move­ment pret­ty soon. Prob­a­bly lat­er this after­noon. With most times I try to not to ‘pre­dict’ which way a direc­tion is going but more have a bias. This bias will be con­firmed or thrown out when i see that burst happen.

Entry and Exit on the 5M

If the tri­an­gle breaks to the upside I will start tak­ing long posi­tions at 52.26 and put my exit at 52.36 and then at 52.60. If we go short I will put my entry at 52.14 and exit at 51.95.

Bias

The fun­da­men­tals look very bull­ish how­ev­er I have been wrong many times. So I will wait and see which way it will burst into. My own tech­ni­cal analy­sis shows me a neu­tral stance so I have no real bias based on that.

Thank you

Thank you as always for being a part of my jour­ney into becom­ing a trad­er. Please feel free to com­ment or ask ques­tions. Let me know what you think. 

Sources:

https://www.investing.com/news/commodities-news/oil-markets-firm-on-tighter-us-market-expected-extension-of-opec-supply-cuts-543861

https://www.investing.com/news/commodities-news/us-crude-oil-edges-up-in-asia-as-china-gdp-supports-demand-views-543888