24 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.

Mak­ing sense of the lines I draw

So that it is eas­i­er for you to under­stand my tech­ni­cal analy­sis I have made a stan­dard­ized list of the tools/indicators I use. Here they are:

• Week­ly
  • Week­ly sup­port and resis­tance line = magenta
  • Week­ly trend lines = red
  • Week­ly Fibonac­ci chan­nel = dodger blue
• Dai­ly
  • Dai­ly sup­port and resis­tance lines = dark turquoise
  • Dai­ly trend lines = gold
  • Dai­ly Fib. chan­nel = dark violet
• 30M
  • 30M sup­port and resis­tance lines = sandy brown
  • Trend lines = deep pink

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

1:30 pm local time

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

The neg­a­tive cor­re­lat­ed ones look down­ward press­ing. I find that there’s not much rela­tion between these finan­cial class­es and the effect on crude oil prices or it is lag­ging a lot. I’ll have to look clos­er per­haps on the weekend.

News

Investing.com — Crude oil prices gained in Asia on Tues­day as the mar­ket looked ahead to indus­try esti­mates on U.S. inventories.

Ana­lysts expect a 2.5 mil­lion bar­rels drop in crude stocks and a 1.9 mil­lion bar­rels decrease in dis­til­lates and gaso­line inven­to­ries off by 1.9 mil­lion barrels.

Ana­lysts at Com­merzbank (DE:CBKG), how­ev­er, warned that drilling activ­i­ty could pick up pace “in the com­ing months”, and expect­ed prices of both Brent and Crude Oil to “cor­rect” in the short term.

Expec­ta­tions of an increase in out­put has failed, how­ev­er, to weigh on sen­ti­ment as data showed traders increased their bull­ish bets on crude oil futures last week.

Net bull­ish bets on Crude Oil rose to 429,500, accord­ing to a report from the Com­mod­i­ty Futures Trad­ing Com­mis­sion (CFTC) on Friday.

Source:https://www.investing.com/news/commodities-news/crude-oil-gains-in-asia-as-market-looks-ahead-to-api-estimates-546213

TOKYO (Reuters) — Oil prices inched up on Tues­day, get­ting sup­port from a decline in oil exports from OPEC’s sec­ond-biggest pro­duc­er Iraq and a pro­ject­ed extend­ed fall in U.S. com­mer­cial oil stocks. 

Iraqi oil exports have fall­en more than 200,000 bar­rels per day (bpd) so far this month, as ship­ments from both north and south of the coun­try declined.

“The mar­ket is cur­rent­ly weigh­ing sup­port­ive mate­ri­als more, such as the Kur­dis­tan sit­u­a­tion, the slow­down in shale-relat­ed (U.S.) rig counts and the pos­si­ble exten­sion in OPEC (out­put) cuts,” said Tomomichi Aku­ta, senior econ­o­mist at Mit­subishi UFJ Research and Con­sult­ing in Tokyo.

Source: https://www.investing.com/news/commodities-news/oil-prices-inch-up-drop-in-southern-iraq-exports-supports-546195

SINGAPORE (Reuters) — South­east Asian demand for oil will keep grow­ing until at least 2040 as emerg­ing nations there rely on the fos­sil fuel to trans­port their rapid­ly grow­ing pop­u­la­tions by road, the Inter­na­tion­al Ener­gy Agency said on Tuesday.

A glob­al push to replace com­bustible engines in vehi­cles with elec­tric-pow­ered ones to fight cli­mate change has raised con­cerns in the oil indus­try that inter­na­tion­al oil demand could peak in the next 10–20 years.

But the IEA expects oil to con­tin­ue meet­ing around 90 per­cent of trans­port-relat­ed demand in South­east Asia.

“In 2040, there are about 4 mil­lion elec­tric cars in a total pas­sen­ger vehi­cle stock of 62 mil­lion, but elec­tric­i­ty accounts for only 1 per­cent of trans­port ener­gy demand,” the IEA said.

Oil, togeth­er with coal, will lead growth in south­east Asi­a’s pow­er and trans­port sec­tors as the region’s ener­gy demand is expect­ed to climb near­ly 60 per­cent by 2040 from now, the agency said.

Source: https://www.investing.com/news/commodities-news/southeast-asian-oil-demand-to-keep-growing-until-at-least-2040-iea-546227

Technical Analysis

Dai­ly

On the dai­ly chart we can see that prices have returned to the 52.30 ver­ti­cal resis­tance line. Indi­cat­ing this is a good resis­tance lev­el. At about the same area where the Fibonac­ci chan­nel has indi­cat­ed its range. After­wards it went back to the pre­vi­ous Fibonac­ci chan­nel line to only return to the 52.30 ver­ti­cal resis­tance line and con­sol­i­date at that point. Now we would have to wait to see which way it breaks out. Will it return or will it break out to the upside and explore ‘new’ territories?

So what can we expect? If it breaks to the upside, mean­ing it breaks the 52.30 lev­el, I think it will test the 52.70 (resis­tance lev­el of the 30-minute chart lev­el) first before try­ing to test the 53.79 resis­tance lev­el of the dai­ly chart.

How about the down­side? Here I believe that prices break the 51.10 sup­port we’ll see a move down till the 50.25 sup­port mark. If we break that we could see a play towards the 49.23 mark. As always we’ll have to see and wait. The Amer­i­can oil indus­try needs oil prices to be over the 50 dol­lar mark for the to flour­ish so let’s see what plays are going to hap­pen in the market.

Now that we have estab­lished some para­me­ters on the dai­ly chart, let’s have a look at the 30-minute chart. I focus my trad­ing on the 5‑minute chart but look at the 30-minute chart for cer­tain ‘plays’ to hap­pen. Then I look at the 1‑minute chart to time my entries and exits. 

30M

On the 30-minute chart we can see that we are hov­er­ing under the 51.97 and rang­ing between the 52.14 and 51.81 lev­els. Here I’d say that if we break the 51.97 we’ll go towards the 52.14. I think the more crit­i­cal point are the 52.14 and 52.30 lev­els for the upside. Let’s have a look at the downside. 

For a down­side play we have the 51.81 lev­el we need to break. If we do break that lev­el I believe we can go all the way down to 51.48 via 51.68 since that showed sup­port before. In all cas­es we need to wait for what play will actu­al­ly present itself. 

Let’s see what will hap­pen today. 

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.