23 Oct Weekly take on WTI crude oil
Weekly take on WTI crude oil
This is my weekly 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 week and look for signals to start taking positions.
Sources will be listed at the end.
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.
Investing.com — Oil prices settled higher in see-saw trade on Friday, as political tensions in the Kurdistan region continued to disrupt crude supplies.
Oil exports from Iraq’s Kurdistan towards the Turkish port of Ceyhan were flowing at average rates of 216,000 barrels per day versus the usual flows of 600,000 bpd, a shipping source said.
Meanwhile, in the U.S., investors mulled over data showing oil drilling activity fell for a third week in a row, extending a two-month drilling decline.
The weekly rig count is an important barometer for the drilling industry and serves as a proxy for domestic oil production.
Despite the bullish signals, analysts warned that OPEC needs to extend its agreement to reduce oil output beyond its current March 2018 expiry date in order to rebalance the market.
Tuesday, October 24
The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.
Wednesday, October 25
The U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles.
Thursday, October 26
The U.S. government is set to produce a weekly report on natural gas supplies in storage.
Friday, October 27
Baker Hughes will release weekly data on the U.S. oil rig count.
Investing.com — Gold prices fell on Friday, pressured lower by the stronger U.S. dollar which was boosted after President Donald Trump’s plans to overhaul the tax code cleared a critical hurdle.
Gold futures for December delivery settled down 0.59% at $1,282.42 on the Comex division of the New York Mercantile Exchange. For the week, the precious metal was down 1.86%, which means it has fallen in five of the past six weeks.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.61% at 93.57 in late trade. It was its largest one day gain since October 2.
The index ended the week up 0.69%, its fifth weekly increase in six weeks.
SINGAPORE (Reuters) — Oil prices rose on Monday over supply concerns in the Middle East and as the U.S. market showed further signs of tightening while demand in Asia keeps rising.
“Oil prices are holding comfortably above $50 as possible supply disruptions in the Kurdish region of Iraq support prices,” said William O’Loughlin, investment analyst at Rivkin Securities.
“U.S. production was also recently impacted by a hurricane for the second time in as many months and the number of U.S. drilling rigs declined for the third week in a row,” O’Loughlin said.
In the main growth areas of Asia, consumption remains strong especially in China and India, the world’s number one and three importers.
“Three main factors are driving China’s insatiable appetite for crude: declining domestic production, increased access to imports and exports for independent refiners, and building up the strategic petroleum reserve,” Britain’s Barclays (LON:BARC) bank said.
India’s fuel thirst is also increasing. India imported a record 4.83 million barrels per day (bpd) of oil in September as several refiners resumed operations after extensive maintenance to meet rising local fuel demand.
Given the tightening oil market conditions, many analysts expect prices to rise further.
“We will see oil prices higher by 10 percent by the end of the year.
On the weekly chart we can see the support and resistance lines outlined in the color Magenta. Overall we can see it is following a triangle pattern although the bottom of the triangle has only been twice so in my opinion the bottom hasn’t been confirmed yet. But when we look at the resistance line we can see that prices have followed that line quite a bit. Indicating a confirmed resistance line. Furthermore we can see that right now prices are retesting this same resistance line. Let’s see if it breaks resistance and we’ll probably see a big move to around the 55 dollar mark but potentially towards the 60 dollar mark. Something tells me that won’t happen though but we’ll just have to wait and see.
Adjust and Adapt (evolve)
In the earlier 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 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.