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
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.
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:
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:
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