20 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 pos­i­tive cor­re­lat­ed finan­cial mar­kets look pos­i­tive putting upward pres­sure on crude oil.

The neg­a­tive cor­re­lat­ed ones look neu­tral. One up, one down. The dol­lar is up though, mean­ing it usu­al­ly puts some down­ward pres­sure on crude oil. Let’s have a look at the relat­ed news.

News

SINGAPORE (Reuters) — Oil prices edged up on Fri­day, sup­port­ed by signs of tight­en­ing sup­ply and demand fun­da­men­tals, although a warn­ing about exces­sive Chi­na eco­nom­ic opti­mism still weighed some­what on markets.

The sta­ble prices came after a more than 1 per­cent fall in prices the pre­vi­ous day.

This was put down to prof­it-tak­ing fol­low­ing four days of straight gains, but also to a sud­den mar­ket slump which spooked traders after the vet­er­an but out­go­ing gov­er­nor of Chi­na’s cen­tral bank warned of a “Min­sky moment”, a ref­er­ence to exces­sive opti­mism about eco­nom­ic growth fueled by vast debt and spec­u­la­tive investment.

“Oil mar­ket has moved into mod­est under-sup­ply and we expect this will per­sist at least through the end of the year,” U.S. invest­ment bank Jef­feries said.

RBC Cap­i­tal Mar­kets said, “a strong indi­ca­tor that glob­al inven­to­ries are being run down will be when the mar­ket starts rely­ing on U.S. exports to fill deficits.”

Ship­ping data in Thom­son Reuters Eikon shows that over­seas U.S. crude oil ship­ments have soared from vir­tu­al­ly zero before the gov­ern­ment loos­ened export restric­tions in late 2015 to around 2.6 mil­lion bar­rels per day (bpd) in October.

“Phys­i­cal bot­tle­necks are unlike­ly to kick in until water­borne (U.S.) exports approach 3.2 mil­lion bpd,” RBC Cap­i­tal Mar­kets said.

Exports have been boost­ed since a pro­duc­tion cut led by the Orga­ni­za­tion of the Petro­le­um Export­ing Coun­tries (OPEC) has been in place since Jan­u­ary this year, and which OPEC wants to expand beyond its cur­rent expiry date at the end of March 2018.

“Our expec­ta­tion is that OPEC (and part­ners includ­ing Rus­sia) will extend pro­duc­tion cuts through the end of 2018,” Jef­feries bank said.

Source: https://www.investing.com/news/commodities-news/oil-prices-edge-up-on-signs-of-tightening-market-544627

Investing.com — Gold prices drift­ed low­er in Asia on Fri­day with sup­port from phys­i­cal demand dur­ing Indi­a’s fes­tive sea­son fail­ing to aid sen­ti­ment and polit­i­cal risk on the back burner.

Overnight, gold prices rose on the Thurs­day as an uptick in polit­i­cal uncer­tain­ty in Spain weighed on risk sen­ti­ment while ongo­ing dol­lar weak­ness added to upside momen­tum in the pre­cious metal.

Sen­ti­ment on the gold, how­ev­er, remained neg­a­tive as mar­ket par­tic­i­pants said the pre­cious met­al could come under pres­sure amid signs of sol­id U.S. eco­nom­ic growth and expec­ta­tions for a year-end inter­est rate hike.

Gold is sen­si­tive to moves high­er in U.S. rates, which lift the oppor­tu­ni­ty cost of hold­ing non-yield­ing assets such as bullion.

Source:

https://www.investing.com/news/commodities-news/gold-prices-dip-in-asia-with-india-support-absent-japan-polls-eyed-544657

Investing.com - Crude oil was nar­row­ly mixed in Asia on Fri­day as the mar­ket looked ahead to U.S. rig count fig­ures from Bak­er Hugh­es for direc­tion on shale oil.

Crude oil prices set­tled low­er on Thurs­day as data show­ing a larg­er than expect­ed build-up of prod­uct inven­to­ries con­tin­ued to weigh on sentiment.

Crude oil prices fell as signs that Opec would extend the glob­al sup­ply-cut agree­ment deal failed to off­set ongo­ing investor con­cerns over data show­ing a sharp rise in gaso­line and diesel supplies.

A week­ly report from the Ener­gy Infor­ma­tion Admin­is­tra­tion released Wednes­day showed U.S. gaso­line stock­piles rose for a fourth straight week while sup­plies of dis­til­lates — the class of fuels that includes diesel and heat­ing oil – increased for the first time since August.

The uptick in sup­plies of refin­ery prod­ucts such as gaso­line comes amid a tra­di­tion­al slow­down in refin­ery activ­i­ty as refin­ers under­go sea­son­al maintenance.

Source:

https://www.investing.com/news/commodities-news/crude-oil-narrowly-mixed-in-asia-with-us-rig-count-ahead-544654

Technical Analysis

4H

On the 4‑hourly chart we can see that prices have halt­ed at the resis­tance lev­els put on by months of big­ger time­frame trends. It went back to pre­vi­ous sup­port lev­els and is now con­sol­i­dat­ing at this point look­ing to break again up or down we don’t know. Definitely 

As I am writ­ing this prices have gone even more south.

I think prices will stay between the two turquoise sup­port and resis­tance lines for now. We’d have to see if this is going to be the new sup­port area or if it’s going to break down more. Let’s see if sup­port holds up 50.80.

Adjust and Adapt (evolve)

In the ear­li­er dai­ly takes I did I would go down in time­frames to look for more clues and give you my bias on what direc­tion I think it’s going to go. How­ev­er, I have come to the real­iza­tion that it doesn’t real­ly mat­ter. Just stick to your plan on the time frames that you want to trade and trade your plan. Regard­less. That’s the main thing you need to learn.

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.