27 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 used to be to set me up with a bias for the day and look for sig­nals to start tak­ing posi­tions. How­ev­er, I learned that it doesn’t mean much. Espe­cial­ly the fun­da­men­tals don’t make much sense. When there’s an over­sup­ply you’d think prices will go down, but it’s a 50/50 chance the way I see it at this point. So what do we do? Cry and give up? HELL NO! We adapt and adjust. Evolve as a trad­er. THe mar­ket is always right. So what does that mean for me? That means I will focus more on cru­cial parts of the tech­ni­cal analy­sis that gives me the lev­els I can play at when the mar­ket choos­es to go in that direc­tion. In addi­tion to this… I will still track the fun­da­men­tals besides the tech­ni­cals. I’ll just won’t draw any con­clu­sions from it at this point. At a lat­er stage I want to ana­lyze these find­ings with what the mar­ket pre­sent­ed to me but I need to gath­er more infor­ma­tion first. So let’s get on with it. 

Graph­i­cal data is from www.investing.com and Meta­trad­er 4.

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

TA charts

On the dai­ly chart look­ing a year back we can see that we are near­ing the highs from the begin­ning of 2017. 

Relat­ed ETFs

We can see that the relat­ed ETFs are look­ing pre­dom­i­nant­ly positive.

The pos­i­tive cor­re­lat­ed finan­cial mar­kets look bear­ish this morn­ing. As always we’ll have to see what hap­pens in the market. 

The neg­a­tive cor­re­lat­ed ones look indecisive.

News

HOUSTON/RIO DE JANEIRO (Reuters) — Brazil and Mex­i­co are com­pet­ing for a dimin­ish­ing resource: the invest­ment dol­lars of oil majors beat­ing a retreat from the big-tick­et off­shore projects they once coveted.

Gov­ern­ments through­out the con­ti­nent are enact­ing reforms and chang­ing con­tract terms to lure oil firms that have slashed spend­ing as they adapt to low­er crude prices. Glob­al pol­i­cy changes to address cli­mate change have giv­en an added sense of urgency to gov­ern­ments in the region and world­wide that are sit­ting on oil and gas reserves. They want to pump it before it becomes less valuable.

Low crude prices have made oil firms choose care­ful­ly where they invest, but they need the sub­stan­tial reserves Brazil and Mex­i­co are offer­ing. The rate that ener­gy com­pa­nies replace the bar­rels they pro­duce is a key met­ric for share­hold­ers, and off­shore blocks such as those in Mex­i­co and Brazil come with bil­lions of bar­rels in avail­able reserves. 

For many oil majors, the Mex­i­can side of the Gulf offers a famil­iar geol­o­gy: the for­ma­tions below the seabed are sim­i­lar to those they have drilled for decades in the near­by U.S. waters. But unlike Brazil, there has been no deep­wa­ter devel­op­ment in Mex­i­co, so more infra­struc­ture needs to be built.

Source: https://www.investing.com/news/commodities-news/brazil-vs-mexico-latin-americas-fight-for-big-oils-money-548915

UNITED NATIONS (Reuters) — The Syr­i­an gov­ern­ment of Bashar al-Assad is to blame for a chem­i­cal attack on the oppo­si­tion-held town of Khan Sheikhoun that killed dozens of peo­ple last April, accord­ing to a report sent to the Unit­ed Nations Secu­ri­ty Coun­cil on Thursday.

Source: https://www.investing.com/news/commodities-news/un-report-finds-syria-government-to-blame-for-april-sarin-attack-548860

Investing.com — Gold prices fell in Asia on Fri­day as the dol­lar showed con­tin­ued gains and demand for safe-haven assets is on the wane for now.

Overnight, gold prices fell on Thurs­day after the dol­lar hit three-month highs fol­low­ing a slump in euro as the Euro­pean Cen­tral Bank pared its bond pur­chas­es while extend­ing its mon­e­tary stim­u­lus pro­gramme for a peri­od of nine-months.

Source: https://www.investing.com/news/commodities-news/gold-prices-dip-in-asia-on-stronger-dollar-safehaven-demand-ebbs-548956

Investing.com — Crude oil prices fell in Asia on Fri­day with the mar­ket cau­tious as OPEC mem­ber and major pro­duc­er Venezuela report­ed­ly faces prob­lems mak­ing pay­ments on bonds issued to the state oil com­pa­ny PDVSA and with U.S. rig count data ahead.

Pay­ments on bonds issued by Petroleos de Venezuela SA, or PDVSA, and the Venezue­lan gov­ern­ment remain a ques­tion mark two days after the state-owned refin­er and pro­duc­er made good on two over­due bond pay­ments and approved a $985 mil­lion debt pay­ment due Friday.

Overnight, crude oil prices set­tled high­er on Thurs­day as recent data show­ing an uptick in U.S. crude sup­plies and a surge in domes­tic pro­duc­tion was off­set by grow­ing expec­ta­tions that Opec will extend its glob­al accord to cut output.

Source: https://www.investing.com/news/commodities-news/crude-oil-prices-mixed-in-asia-with-venezuela-us-rig-count-figures-ahead-548957

SEOUL (Reuters) — Oil prices inched high­er on Fri­day, with Brent crude approach­ing $60 a bar­rel amid tight­en­ing mar­ket expec­ta­tions, buoyed by com­ments from Sau­di Ara­bi­a’s Crown Prince back­ing the exten­sion of OPEC-led out­put cuts.

Oil prices have hov­ered near their high­est for this year in recent weeks amid signs of a tight­en­ing mar­ket, talk of an exten­sion of the cuts, and geopo­lit­i­cal risks in Iraq and Iran. 

“Prices for both Brent and WTI are now approach­ing impor­tant recent range tops. My rhetor­i­cal self is bull­ish longer term and my sys­tem is already long,” said Greg McKen­na, chief mar­ket strate­gist at futures bro­ker­age AxiTrader. 

Source: https://www.investing.com/news/commodities-news/oil-prices-edge-up-amid-saudi-support-for-extended-supply-cut-548951

Technical Analysis

4H

Yes­ter­day I didn’t trade my plan. I was oth­er­wise occu­pied and didn’t put in the focus to just trade my plan. I revert­ed to try­ing to hunt for the rever­sal which nev­er came and now I have 4 short posi­tions open that are at a loss. I think there will be a pull­back com­ing so I’ll decide there and then how to man­age my losses. 

If we look at today’s 4‑hourly chart we can see that we broke through the resis­tance trend line. How­ev­er, we did not take over the top we formed on 26th of Sep­tem­ber. This could indi­cate a pull­back to the 52.60 lev­el before head­ing fur­ther up. Or, we drop below that same lev­el and make our way down for a while to set­tle in the mar­ket a bit. Not sure what that means but I make up things as I go along and it has helped me so far so I’m stick­ing with it 🙂

Let’s see how we are clos­ing the week 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.