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