Oiltrading
Oil: Can you guess what this pattern is called?Looks like an inverse H&S. Expecting a move up to the $80-85 region
CRUDE OIL PRICE TO HIT $75 PER BARRELThe crude price has been on steady rise since on the 23rd of June after the lowest of the previous @ $67 per barrel,
According to DANCOLNATION CAPITAL TRADING STRATEGY, we shall on the SWING perceptive trail the moves till it $75 as our partial swing TP before a retrace that may take the price high further or not
OILU an ETF for OIL - Leveraged and LongOILU is a risky high volatility ETF on oil exploration and production. Where there are risk
and volatility there can also be plentiful profits. On the 4H chart,OILU can be seen breaking
up through long-term anchored VWAP bands in a trend that began in mid-May. Price is
now approaching the mean VWAP lines. The POC line validates those VWAP lines coming in
at nearly an identical price level. On the MACD, negative amplitudes have gradually decreased
in a fashion consistent with bullish divergence. The RSI indicator shows the MTF RSIs to be
in mid-range suitable for taking an entry without evidence of oversold or overbought
parameters. Fundamentally, a variety of factors including
OPEC the re-emergence of the Chinese economy, Russia's war fear of a recession causing a
decrease in demand for oil all have contributed to a mixed picture. The chart is suggesting
a long trade to me and so I will take up the suggestion. I will set a stop loss at the recent
pivot low of $32 while targeting the highest VWAP band at $47. I will raise the stop loss
to break-even when price hits $38 while respecting the ATR and volatility. I see this as
a safe trade with a potential upside of about 33%
WTI CRUDE OIL: First time since April on the 1D MA100WTI Crude Oil reached the 1D MA100 for the first time since April 28th. The 1D technicals turned green (RSI = 59.140, MACD = 0.550, ADX = 29.727) and if the 1D candle closes over the 1D MA100, then an emerging Channel Up will lead it to the 1D MA200 and consequently we will target a HH (TP = 76.50).
We will take the loss if the price crosses under the Channel Up and the 4H MA50, where we will go short and target the S1 (TP = 66.80) on the long term.
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Analyzing the 50 EMA's Impact on Oil Price Amidst Selling PressuI am reaching out today to discuss a concerning trend in the oil market, specifically related to the 50 Exponential Moving Average (EMA) and the subsequent selling pressure it has exerted on oil prices. As traders, we must remain cautious and vigilant in light of these developments.
Over the past few weeks, we have witnessed a significant decline in oil prices, primarily influenced by the bearish impact of the 50 EMA. This technical indicator, representing the average oil price over the past 50 days, has been a critical resistance level, putting downward pressure on prices. The sustained selling pressure has raised concerns among experts and traders alike.
Given the importance of oil prices as a leading indicator for the broader market, we must carefully monitor and analyze this situation. The downward trajectory of oil prices, influenced by the 50 EMA, may have far-reaching implications for various sectors of the economy, including our energy market.
Considering the potential ramifications, I encourage you to join me in closely observing the developments in the oil market. By staying informed and proactive, we can better assess the impact on our gold trading strategies and make well-informed decisions.
In light of this, I kindly request you to spare some time to review the current oil market conditions and evaluate the potential consequences for our gold trading activities. Let us remain cautious and consider implementing risk management strategies to mitigate possible adverse effects.
I would greatly appreciate your input if you have any insights, observations, or concerns regarding the recent oil price decline and its implications for our trading. Together, we can navigate this challenging landscape and make informed decisions to protect our investments.
Thank you for your attention to this matter. I look forward to hearing your thoughts and discussing our strategies in the comments section.
NRGD - bullishNRGD price reached a support level and its RSI reached a support ptichfork line. Expecting it to go up tomorrow.
bullish NRGU (OIL) based on pitchfork analysisNRGU reached support pitchfork lines both on daily and weekly and is likely to bounce up.
Potential Cautious Impact of US Slowing Economy on Oil PricesAs an astute investor in the oil industry, I wanted to bring to your attention a recent development that could potentially affect the price of oil. The current state of the US economy, which has been exhibiting signs of slowing down, has the potential to cast a shadow over the oil market.
Over the past few years, the US economy has been a driving force behind the global oil demand, contributing significantly to the increase in oil prices. However, recent economic indicators, such as declining consumer spending and a manufacturing activity slowdown, suggest a potential downturn in the US economy. This, in turn, may have a dampening effect on oil prices.
Given the interdependence between the US economy and the oil market, it is crucial to approach the situation cautiously. While it is impossible to predict the exact impact on oil prices, it is reasonable to expect that the slowdown in the US economy could lead to a tighter range-bound movement in oil prices.
In light of this, I encourage you to closely monitor the developments in the US economy and their potential implications on the oil market. Consider diversifying your investment portfolio and exploring strategies to help mitigate potential risks associated with the current economic climate.
It is important to note that various factors influence the oil market, and the US economy is just one of them. Geopolitical tensions, supply-demand dynamics, and global economic conditions also significantly shape oil prices. Therefore, maintaining a well-informed and balanced perspective is essential when making investment decisions.
As always, I recommend consulting with your financial advisor or conducting thorough research before investing. By staying informed and proactive, you can position yourself to navigate the potential challenges and capitalize on the opportunities that may arise in the oil market.
WTI CRUDE OIL Over the 1day MA50. Bullish break out.WTI Crude Oil closed yesterday over the 1day MA50 for the first time since April 28th. The 1day MA50 was a Resistance with 3 clear rejections since.
This is a technical bullish breakout, targeting the 1day MA100 at 73.50.
If rejected there, sell and target the Support Zone at 67.50.
If it closes a candle over the 1day MA100 too, buy again and target the 1day MA200 at 76.50.
The 1day RSI is on a Rising Support, which can be used as a sell target and buy entry.
Previous chart:
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Oil Price Plummets Below Moving Averages - Exercise Caution!It has come to my notice that the price of oil has continued to drop below the crucial moving averages of both the 50-day and 200-day periods, indicating a potentially worrisome trend.
As seasoned oil traders, we know moving averages impact market sentiment and price action. The fact that oil prices have fallen below these key indicators indicates the growing bearish sentiment surrounding the commodity. Therefore, it is crucial that we exercise caution and closely monitor the situation to protect our investments.
The ongoing decline in oil prices below these moving averages suggests that the market faces significant challenges. Factors such as global economic uncertainties, geopolitical tensions, and the persistent oversupply of oil have contributed to this downward trend. We must consider these factors and their potential impact on our trading decisions.
Considering these developments, I strongly recommend refraining from making substantial investments in oil until we witness a clear and established return in demand. While taking advantage of lower prices is tempting, it is equally important to remember that the current market conditions are volatile and unpredictable. We must prioritize capital preservation and avoid unnecessary risks.
As fellow oil traders, it is our best interest to stay informed and make informed decisions based on reliable market indicators and trends. I encourage you to closely monitor the market and seek expert opinions before significant trading moves. By doing so, we can mitigate potential losses and position ourselves for better opportunities when the market stabilizes.
Please remember that this is a cautionary note, not financial advice. Each trader should evaluate their risk tolerance and make decisions accordingly. I am confident we can successfully navigate this challenging period with careful analysis and prudent decision-making.
Let us stay connected and support each other during these testing times.
CRUDE OIL PRICE FALL TO HIT $64The continued fall of oil price will continue as
its likely going to hit $64 per barrel within this month of july and will continue to fall more,
According to DANCOLNATION CAPITAL TRADING STRATEGY,
It will continue to fall on intra day and swing perceptive
CRUDEOIL - KeyLevels for next WeekIf you wanna take a trade on Crude Oil, maybe, before that, you need to conisder this KeyLevels of support and resistance areas.
Careful with longs until on daily is still bearish / downtrend
Oil Prices Has Bear Channel and SMA So Wait It Out I wanted to draw your attention to an essential development in the oil market that warrants caution and careful consideration.
As you may be aware, oil prices have recently entered a bearish channel, indicating a downward trend in the market. Furthermore, the simple moving average (SMA) for oil prices has declined steadily over the past few weeks. When taken together, these two indicators suggest a potentially prolonged period of price decline in the oil market.
While it is understandable that such news may raise concerns and prompt immediate action, I encourage you to adopt a patient approach and wait it out before making any hasty decisions regarding your oil positions. It is crucial to remember that the oil market is highly volatile, often influenced by a multitude of factors, both geopolitical and economic.
Instead of succumbing to panic or being swayed by short-term fluctuations, taking a step back and assessing the broader picture is essential. Consider the long-term prospects of the oil industry, the potential impact of global events, and the evolving energy landscape. By doing so, you will be better equipped to make informed decisions that align with your investment goals.
In light of these recent developments, I urge you to take the following actions:
1. Evaluate your current oil positions: Carefully review your portfolio and assess the potential risks associated with your oil investments. Consider diversifying your holdings to mitigate potential losses and protect your overall investment strategy.
2. Stay informed: Closely on market trends, industry news, and expert analysis. You can make better-informed decisions and adjust your investment strategy accordingly by staying informed.
3. Consult with a financial advisor: Seek guidance from a qualified financial advisor specializing in the energy sector. Their expertise and insights can prove invaluable in navigating the complexities of the oil market and making strategic investment decisions.
Remember, investing in oil requires a cautious approach, especially during times of uncertainty. While the current bearish channel and declining SMA may appear discouraging, keeping a long-term perspective and not letting short-term fluctuations dictate your actions is crucial.
WTI CRUDE OIL: Sell opportunity on the LH trendline and 4H MA200WTI Crude Oil hit today the 4H MA200 after more than a week flipping the 1D chart neutral and the 4H bullish (RSI = 61.440, MACD = 0.100, ADX = 44.090). This is however approaching the RSI's R1 Zone, holding since April, while the LH trendline looms right ahead. Also this is where the 0.5 Fibonacci level is. Technically this is the most optimal sell entry for the short term and we will take full advantage of it targeting the S1 (TP = 66.80). On the contrary, a crossing over the LH trendline, will be a buy entry targeting the 1D MA100 and 0.786 Fibonacci level (TP = 73.00).
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Join the Excitement - Add Oil to Your Trading Watchlist!As you may be aware, recent market conditions have created a tight physical market for oil, presenting a promising landscape for traders like us.
The sentiment surrounding oil has been significantly impacted by various factors, including the slow growth of the Chinese economy and the aggressive rate increases implemented by the Federal Reserve. These developments have pushed oil prices down, making it an ideal time for us to consider adding oil to our trading watchlist.
Now, I know what you might be thinking - with all the uncertainties and challenges in the market, why should I consider oil? Well, my fellow traders, it is precisely during times like these that intelligent traders can seize the opportunity to make significant gains. By closely monitoring oil and its movements, we can position ourselves to benefit from potential price fluctuations and capitalize on market trends.
So, I encourage you to put oil on your trading watchlist. Keep a close eye on the latest news, market reports, and geopolitical developments influencing oil prices. By staying informed and proactive, we can make well-informed trading decisions and maximize our potential profits.
Remember, trading is not just about taking risks; it's about calculated risks. By carefully analyzing market conditions, understanding the factors impacting oil prices, and utilizing effective trading strategies, we can confidently navigate the market and increase our chances of success.
To assist your trading journey, I recommend exploring reliable sources of information, such as industry publications, financial news outlets, and market analysis reports Collaborating and learning from others can be invaluable in refining your trading approach.
Oil has the potential to offer us substantial gains, and by putting it on your trading watchlist, you'll be well-positioned to seize these opportunities.
I encourage you to take action now and add oil to your trading watchlist. Stay informed, stay focused, and let's make the most of this tight physical market!
OIL SHORT// TARGET AROUND 60 USDHi,
On next days we expect USOIL will be going down.
Us target is around 60-62 USD for next week.
TP1: 64 USD
TP2: 62 USD
.
Oil continues to decline or go range boundI wanted to bring to your attention the recent news from China regarding their lending standards. It has been reported that China is cutting lending standards to shore up growth, but easing was not seen as a priority while inflation continues to be elevated.
I would caution against making any hasty investment decisions at this time. With inflation still a concern, it is important to consider any investment opportunities and their potential risks carefully.
Therefore, I encourage you to pause on oil investing and take a step back to assess the current market conditions. This will allow you to make informed decisions and avoid any unnecessary risks.
The Downward Trajectory: Understanding Weak Oil Market DynamicsOil looks weak. It seems extremely weak, mainly because production hasn't come down. Chinese demand is still low and might never reach its ATHs, but this, along with the US refilling its SPR, can potentially send higher oil prices.
However, this is unlikely to happen before the market takes out this quadruple bottom. Until all the lows are swept, and potentially until the market trades at 43-55$, it's unlikely to see oil go up. Only those prices will make OPEC+ cut production and have 80+ as its target. Until many of these member countries feel pain, it's unlikely that oil will trade above 80$ without some other geopolitical shock.
Again, oil can trade higher, but for now, the target is 60.6$, and potentially 54.2$ is next. We can look for potential longs toward 85-100$.
WTI waiting to leapOn 4H, we are on the uptrend.
On 1H, Price is now at lower BB.
Wait for reversal pattern on 1H then enter long.
The Future of Crude Oil“We are not addicted to oil, but our cars are”, said a former CIA Chief, James Woolsey. That addiction is on the decline as we pen this paper. Love it, or hate it, but you cannot ignore it. Crude oil powers the planet. When global economy stutters, oil prices plunge.
Midway through 2023, crude oil demand appears wobbly on recession overhang and shaky economic recovery in China. Meanwhile, crude supply remains tight with OPEC+ scaling back production which has been compounded by limited investment in new exploration.
Over the long term, energy transition is set to fundamentally change the oil market. Consumers are shifting to EVs and renewable energy. In a befitting response, producers are reducing supply.
Energy transition will be anything but a straight line. It will create many risks and present many more opportunities.
This paper is set in two parts. First, we highlight key takeaways from a recent IEA report on crude oil outlook until 2028. Second, we explore hedging & trading instruments on the CME Group for participating in oil markets.
PART 1: KEY TAKEAWAYS FROM IEA CRUDE OIL OUTLOOK REPORT
The International Energy Agency (IEA) released Oil 2023 last week. This report describes in detail the changing dynamics in the oil market until 2028. It discusses key trends such as slowing demand growth, shifting producer growth, and the impact of energy transition on oil.
Recent crises have accelerated the energy transition. With COVID-19 plus rattled geopolitics, nations are increasingly more focused than ever on energy security and independence.
Ten key takeaways from Oil 2023:
1. Global oil demand to rise by 6% or 5.9M bpd between 2022 to 2028, reaching 105.7M bpd. Despite this, emissions will fall 11% with efficiency improvements.
2. Annual demand growth is expected to slow sharply in the coming years from +2.4M bpd in 2022 to just +400K bpd in 2028.
3. India and China will drive demand over the next decade while consumption among OECD countries will shrink.
4. Oil demand for gasoline will peak this year and start to reverse going forward with accelerated EV transition. Demand for transport fuels is expected to peak in 2026.
5. Jet fuel demand is still lagging 2019 levels by 13% and is expected to rise rapidly but only surpass pre-COVID levels in 2027 with expected efficiency improvements.
6. The petrochemical sector will replace the demand for transport fuels. Demand from LPG, Ethane, and Naphtha will increase by 40% from now until 2028.
7. Production growth from shale is expected to slow due to rising costs and lower prices. US shale will mature to a higher-return-lower-growth trajectory.
8. Global upstream oil and gas investment is projected to increase by 11% year-on-year in 2023, reaching USD 528 billion. This represents a rise from USD 474 billion in 2022.
9. Non-OPEC+ countries, including the United States, Brazil, and Guyana, will lead the medium-term capacity expansion plans. They are expected to contribute to a supply boost of 5.1M bpd.
10. By 2028, an additional 5.9M bpd of net production capacity will come online. The rate of new capacity building will decrease over time, aligning with projected demand growth.
Following four charts help visualise the large shifts underway in the crude oil market:
1. Price Sensitivity to Imbalance: Crude oil prices are highly sensitive to imbalances between production and consumption. Over the past 25 years, consumption has been marginally higher than production. Where deficit rises, spot prices rally.
2. Consumption between developed markets (DM) and emerging markets (EM): Consumption in EM will further outpace OECD countries. Consumption across EM overtook OECD in 2013 and this trend will be further entrenched. IEA forecasts that consumption in OECD countries will hit its apex this year.
Thereafter, it will start shrinking going forward. In sharp contrast, EM consumption will rise by 7.8M bpd between 2022-2028.
3. India to surpass China by 2027: Although both countries will continue to see demand increase, India will surpass China as the main source of growth by 2027.
4. Non-OPEC+ will be the primary source of growth in oil production: Production growth from OPEC+ will remain intact, while non-OPEC+ countries will be driving production growth.
PART 2: CRUDE OIL DERIVATIVES
CME offers a variety of instruments for producers, consumers, and investors to participate in the crude oil market. This includes WTI Futures & Options and Brent Futures & Options. Beyond these, CME also operates markets in a range of refined oil products, fuel oil, and natural gas.
In a previous paper , we highlighted the 40-year history of CME Group’s WTI crude oil derivatives. With an extensive suite of derivatives on offer, CME Group enables multiple alternatives for different market participants.
Futures
WTI Crude is a widely used global benchmark for oil prices. It is the underlying for one of the most liquid futures contracts in the world – the CME Crude Oil Futures ("CL Futures"). CL Futures is a physically delivered contract with tight correlation to the physical oil market.
Over one million contracts change hands daily, representing USD 7+ billion in notional value. Each lot of the CL Futures contract represents one thousand barrels of crude oil. CL Futures provide deep liquidity and high-quality market structure for hedgers and investors to participate in and protect against oil price volatility.
Monthly contracts are available over the next ten calendar years. Front month contracts are easily tradable on CME Globex electronic order book. Longer dated contracts require engagement with inter dealer brokers for price discovery and voice-based trade execution.
Alternatively, CME’s Micro Crude Oil contract (MCL) offers exposure to just 100 barrels with a maintenance margin of just USD 580 (as of 23rd June), enabling affordable participation into these markets. The micro contracts allow hedgers to manage risk exposure with greater precision.
Options
Monthly options are available on the underlying CL futures. They are deeply liquid with seamless order book-based trading on CME Globex.
Open interest on the front month contract is >300,000 lots, representing premium of more than USD 1 Billion across calls and puts. More than 20,000 contracts are traded daily.
Weekly options are used to fine-tune exposure around key events such as OPEC+ meetings and interest rate announcements. Daily options are available for CL Futures. Monthly and weekly options are also available on Micro Crude Futures.
CME provides calendar spread options and mid-curve options which can be used as tactical trading and hedging tools given the seasonality of oil markets.
Trading Strategies
There are innumerable ways of trading the crude oil market. Most popular among them include (a) taking directional position using futures and options, (b) establishing shrewd hedges or convex trading strategies using options, and (c) trading delta-neutral calendar spreads gaining from relative shifts across the futures term structure.
Previously we have covered different trading ideas in crude oil, including taking a directional position - (a) Is US Oil running low on energy? (b) Is WTI crude set to rebound? (c) Three headwinds to send crude oil into free fall , (d) Harnessing gains from mean reversion in crude oil markets , and (e) Rebounding air travel & rising China to fire up WTI crude.
In our next paper, we describe the mechanics involved and illustrate the workings of popular trading strategies.
KEY TAKEAWAYS
In conclusion,
1. The Crude oil market is at the cusp of substantial change as energy transition powers on.
2. Change will be a constant. Impact on price will be anything but a straight line, creating both risks for the uninitiated and opportunities for the astute.
3. CME Group’s deeply liquid market with broad range of instruments enables market participants to harvest gains in risk-mitigated ways and to lock in credible reward to risk ratios.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Is It Time to Follow the Oracle's Lead?You may have heard of a certain Warren Buffett, and it seems like he might be onto something...
Buffett, known as the "Oracle of Omaha," has demonstrated remarkable investment timing, or perhaps an innate ability to steer investment flows. This was clearly illustrated by his investment in Japan, which triggered a rally in the Nikkei to decade-long highs. While that window may have closed, Buffett has been discreetly bolstering his stake in another entity - Occidental Petroleum (OXY).
If we scrutinize the timing of his purchases, it's apparent that Buffett likely had a price floor in mind. Intriguingly, his first purchase occurred when Crude was trading at a 15-year high!
This leads us to examine Oil, which has been trading nearly 40% lower since mid-2022.
Since our last discussion about oil, the Strategic Petroleum Reserve (SPR) has been further depleted, reaching its lowest level since 1983. The result of this drawdown is a diminished impact on energy costs as evidenced by the energy inflation index, which has not only passed its peak but has now turned negative.
Interestingly, the Canadian dollar and the Norwegian Krone, currencies of major oil-exporting countries, have been outpacing the commodity typically correlated with them, Crude Oil.
On the whole, it seems the energy commodity sector may have bottomed out, with all types of Oil and natural gas trading on an upward trajectory.
In consideration of these factors, the outlook for oil leans towards the bullish side. The scarcity of oil in the SPR and the absence of energy inflation as a significant contributor to overall CPI make it unlikely for the U.S. to release more oil to depress energy prices. Coupled with the buoyant trend in the energy commodity space and the recent outperformance of major oil-exporting countries' currencies, it appears to be an opportune moment to consider a long position on oil. At the current price level of 72.33, risk managed trade points to setting the stops at the previous support of 66 and take profit level at 85. Each Crude Oil Future contract is equal to 1000 barrels of crude oil. Each 0.01 point increment in Crude Oil Futures is equal to 10 USD . The same view can also be expressed with greater precision using the Micro WTI Crude Oil, where each Micro contract is equal to 100 barrels of crude oil and each 0.01 point increment is equal to 1 USD.
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description.
Reference:
www.cmegroup.com
www.cmegroup.com
www.eia.gov
tradingeconomics.com
