USOIL FREE SIGNALI recommend you to Buy USOIL at this levels as we can see we have a strong level also we have a demand zone that make price continue pushing up
Opec
USOIL | Downward to $73.50 before touching $80The price of WTI oil maintains an upward direction after Israel rejected Hamas' ceasefire agreement. West Texas Intermediate (WTI), the benchmark for U.S. crude oil, rose by 0.25% towards the end of the North American session, while the conflict between Israel and Hamas intensified with Israel rejecting a ceasefire offer. On Friday, the Israeli army continued its offensive in the Gaza Strip, resulting in a 3% increase in oil prices compared to the previous day. Additionally, refinery closures in the United States led to higher gasoline and diesel prices. Ukraine's attacks on two oil refineries in southern Russia, and the latter exceeding its plans for crude oil exports in February compared to the agreement with OPEC+, favored the increase in WTI prices.
WTI Price Analysis: Technical Outlook
Oil prices are expected to remain within a range but tilted downwards, as the 200-day moving average (DMA) at $77.29 remains the first resistance level for prices. A breach of the latter could pave the way for further gains towards $80.00 per barrel. However, despite the bullish trend, the Relative Strength Index (RSI) has maintained a flat slope, and strong resistance could lead to challenging the 20-day DMA at $74.53. A breach of the latter will expose the recent swing low at $71.46. Currently, with the daily closure of a bearish candle, specifically a doji at the 0.70% Fibonacci level, a downturn is expected to the $73.30 level, where the price could find support and then continue the bullish trend with the goal of reaching the $80 level, i.e., surpassing the buying liquidity level at $79.78. Greetings and have a good start to the week everyone.
USD/CAD: Upsurge with US CPI Data and Canadian EmploymentThe USD/CAD exchange rate is gaining momentum for the second consecutive day during the early Asian session on Wednesday. This increase is supported by the US January Consumer Price Index (CPI) inflation data, which is boosting the US Dollar and government bond yields. The Core CPI, which excludes volatile food and energy prices, rose by 3.9%, surpassing the market consensus of 3.7%. On a monthly basis, both the CPI and the Core CPI increased by 0.3% and 0.4% respectively. Canadian labor market data was surprisingly strong, with an increase of 37,000 jobs that more than doubled forecasts. A healthier labor market outlook could persuade the Bank of Canada (BoC) to delay interest rate cuts until June rather than April. Governor Tiff Macklem stated that the central bank has shifted its focus from debating whether interest rates are high enough to how long the central bank should keep rates at current levels. Retail Sales and Producer Price Index (PPI) data are scheduled for Thursday and Friday respectively. These data could provide a clear direction for the USD/CAD exchange rate. On a daily basis, the price is approaching a reversal zone marked on the chart. On February 12th, the market retraced to a very physiological level at 1.3427 before starting a rally. Today, the price may dip slightly before continuing its bullish run, breaking out of the reversal zone and subsequently retesting it, with a target at 1.3740. Best regards and happy trading to everyone.
USDCAD Ready for a new high to 1.3650?The USD/CAD exchange rate continues its decline from around the mid-1.3500s, reaching its highest level in almost two months and remaining under selling pressure for the second consecutive day on Wednesday. The reduction in the forecast for domestic oil production growth for 2024 by the US Energy Information Administration (EIA) in the February Short-Term Energy Outlook report released on Tuesday helped alleviate concerns about oversupply. This, along with recent attacks on ships by Iranian-backed Houthi rebels in the crucial Red Sea, which accounts for nearly 12% of global oil trade, supported oil prices, thereby favoring the commodity-linked Canadian dollar. The overnight decline in US Treasury bond yields prompted some profit-taking in USD, especially after the post-NFP rally, although expectations of a hawkish stance from the Federal Reserve (Fed) should help limit deeper losses. Incoming US macroeconomic data suggests a strong economy, giving the Fed more room to maintain higher interest rates for longer. On the daily chart, a price movement above the psychological level of 1.3540 followed by a retracement towards the demand zone is observed, where a technical rebound around the 1.3420 level is expected, potentially offering a long entry opportunity with a target at 1.3630. The M15 timeframe will be crucial for entry evaluation, awaiting any good market entry signals. Patience and proper capital management are key. Greetings and have a good day to everyone.
AUDUSD is ready for a reversal with target 0.631The AUD/USD indicates a slight uptick, trading around 0.6580 on Tuesday after registering losses in the previous session. The improvement in NAB's Business Confidence may have contributed to supporting the Australian Dollar. The evident resumption of the downward trend around the Australian dollar led the AUS/USD to leave behind a two-day recovery, remaining under pressure in the sub-0.6600 zone at the beginning of a new trading week. So far, dollar dynamics, coupled with the still-lacking convincing signs of an economic recovery in post-pandemic China, are expected to continue dictating the mood around the spot and keeping its price action subdued, all in combination with an anticipated steady hand by the RBA in its February meeting. Returning to the RBA, it is widely expected to leave its official cash rate unchanged at 4.35% next month. The downtick in inflation figures recorded in December, along with further cooling of the (still tight) labor market, have underpinned that consensus among market participants for the time being. That said, the near-term outlook for the AUD remains tilted to the dovish side, a view that could gain further traction if the Federal Reserve continues to push back bets for an interest rate cut in the next few months. On the daily chart, I have highlighted a possible short scenario likely to unfold if confirmation is received around the 0.66-0.6650 level, with a final target of 0.63 and the recapture of all sell-side liquidity. Greetings and have a good day of trading to everyone.
Advanced Forex Trading Strategy M15The trading strategy under examination is tailored for the M15 timeframe in the forex market, focusing on identifying supply and demand zones to make well-informed trading decisions. Let's delve into the key steps to successfully implement this strategy.
Step 1: M15 Chart Analysis
Position yourself on an M15 timeframe chart to gain a more detailed view of the market. This shorter time frame allows for capturing swift movements and identifying potential trading opportunities.
Step 2: Identification of Supply and Demand Zones
Utilize technical analysis tools such as supports, resistances, and volume indicators to clearly pinpoint supply and demand zones. Demand areas represent points where price is expected to rise, while supply zones indicate potential downward reversal points.
Step 3: Confirmation of Demand Zone Breakout
Wait for the breakout of a demand zone, accompanied by a bounce. This confirms the strength of the movement and suggests a potential change in the price direction.
Step 4: Waiting for Price Bounce Above the Broken Zone
After the demand zone breakout, observe price behavior and wait for it to return above the same zone. This confirms the effectiveness of the breakout and suggests a potential entry opportunity.
Step 5: Identification of Supply Zone
Once the price has surpassed the demand zone, identify a possible supply zone. This is the level where price is expected to encounter resistance.
Step 6: Market Entry and Goal Planning
Enter the market when the price reaches the identified supply zone, aiming to capture the downward movement. Set the target corresponding to the minimum that led to the last uptrend, intending to capitalize on the potential downward movement.
Conclusions:
This advanced forex trading strategy on the M15 timeframe is based on analyzing supply and demand dynamics. Always remember to manage risk carefully and adapt the strategy to evolving market conditions.
USOIL | How will geopolitical tensions influence the price?The West Texas Intermediate (WTI) price stands at around $72.70 per barrel during Thursday's Asian session, highlighting an upward trend supported by optimism generated by the Organization of the Petroleum Exporting Countries (OPEC). OPEC's monthly report anticipates robust growth in oil demand for 2024 and 2025, forecasting an increase of 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025. From a geopolitical perspective, disruptions in the supply chain in the Red Sea are preventing a more significant decline in crude oil prices, with attacks by Houthi forces in the area. The United States responded with strikes against the Houthi, and tensions escalated when the Houthi rebels targeted a U.S. ship. Internally, the American Petroleum Institute (API) reported an unexpected increase in weekly crude oil stocks, while the market awaits the upcoming Energy Information Administration (EIA) report, expected to show a decrease of 0.313 million barrels compared to the previous reading of 1.338 million barrels.
USOIL long: Market dynamics and Future outlookThe analysis of the US oil market (West Texas Intermediate, WTI) presents an intriguing scenario. Currently, the WTI price is recovering from recent losses, trading around $72.33 per barrel. This rise in oil prices is driven by concerns about potential supply disruptions following recent events, where Yemen's Houthis have questioned the UN resolution on Red Sea navigation. Meanwhile, the USD/CAD pair has fallen close to 1.3360, failing to stay above the crucial resistance of 1.3400. The Canadian dollar continues to struggle as the demand for safe-haven assets decreases due to an improved risk appetite among market participants.
In the oil sector, prices are showing a moderate recovery as tensions in the Middle East deepen. Attacks on commercial oil tankers passing through the Red Sea are causing shipment delays and supply shortages. It is noteworthy that Canada is the leading exporter of oil to the United States, and higher oil prices support the Canadian dollar. My forecast, also backed by the rally of the USD/CAD pair, is for a long entry at the December low. Following the five-year seasonal trend, the pair should start rising from January until March. I will continue to provide updates on this position. Greetings from Nicola.
USDJPY | After the CPI : It goes up!The analysis of the USD/JPY (US Dollar/Japanese Yen) exchange rate is based on several key aspects:
US Inflation and CPI: The increase in US inflation in December (3.4% against the expected 3.2%) signals a strong economy and reduces the likelihood of interest rate cuts by the Federal Reserve, favoring the US dollar.
US Unemployment Insurance Claims: Lower-than-expected claims (202K against 210K expected) indicate a strong US labor market, supporting the dollar.
Market Expectations and Interest Rates: Expectations for a rate cut in March have decreased due to rising inflation. Higher interest rates tend to strengthen a currency, in this case, the US dollar.
Japanese Economic Indicators: Upcoming data on Japan's trade balance and current account will impact the JPY. Weak data could further weaken the yen.
Technical Analysis of USD/JPY: Technically, USD/JPY has shown an uptrend, reaching a short-term high of 146.41. The 200-hour Simple Moving Average (SMA) and the congestion area between the 50-day and 200-day SMAs are key technical indicators to monitor. Breaking these thresholds could indicate further upward movements.
In conclusion, recent US economic data and monetary policy expectations favor the strengthening of the dollar against the yen. However, future economic data from Japan and the US, including PPI data, will be crucial in determining USD/JPY's future direction. After the CPI, the trend seems clearly outlined towards an upward move, targeting the supply zone at 147.15. Moreover, the price is breaking a supply zone that could serve as support for an imminent bullish rebound. Happy trading to all from Nicola.
USOIL: Route map 71.50-79 awaiting the FED!Observing the price of West Texas Intermediate (WTI), I notice an upward trend, with the price having retested the bullish trendline after breaking through the $74 level. Now, I expect a slight pullback towards $71.50 before a significant rebound towards $79 per barrel. However, from a macroeconomic perspective, I've also detected growing concerns about the stability of demand due to an increase in U.S. gasoline and distillate inventories, leading to a decrease in prices. I am particularly mindful of the impact of Middle East tensions on energy markets. These conflicts directly influence logistics and shipping, so much so that I've observed companies diverting their ships from the Suez Canal route to avoid waters infested with Houthi rebels, significantly changing commercial routes between Europe and Asia. The arrival of an Iranian warship further complicates the situation. Additionally, I am monitoring the ongoing conflict between Israel and Hamas, aware of the risk that it might involve neighboring countries. I've noticed that Iran has suspended crude shipments to China to secure higher prices. This move is particularly interesting as it follows China's advance purchase of a significant portion of its annual oil demand, enjoying a discount on imports from sanction-hit Iran. In conclusion, my personal analysis describes a complex WTI oil market influenced by a variety of geopolitical and technical factors. I am closely monitoring how Middle East tensions, Iran's strategies, and technical indicators affect the direction of WTI prices. Best regards and have a great weekend, from Nicola.
USOIL Crude Oil WTI Price Prediction for Winter The potential for an increase in oil prices looms as supply disruptions in Libya unfold. Additionally, heightened tensions in the Middle East, fueled by another attack on a container ship in the Red Sea and explosions in Iran, contribute to the uncertainty. Shipping giants temporarily halted Red Sea shipments last month due to attacks by Houthi rebels, who were influenced by the conflict between Hamas and Israel.
On a recent Wednesday, the Yemeni militant group, supported by Iran, claimed responsibility for targeting a container ship en route to Israel.
Concurrently, OPEC announced its members' commitment to unity and cohesion within the organization, emphasizing their dedication to shared objectives.
Adding to the complex landscape, last month saw Angola, a member of OPEC for 16 years, decide to exit the cartel due to disputes over quotas. In light of these developments, my forecast for oil prices is set at $80 by March 2024.
WTI → Oil prices drop as the USD recovers, OPEC cutsThe outlook has turned bearish for the WTI. This is mainly because the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) reside deep in negative territory and as the price is seen below its 20,100 and 200-day Simple Moving Averages (SMA). This indicates that on the shorter and broader scales, the sellers are dominating.
Resistance Levels: $75.00, $76.15 (20-day SMA), $77.00
Support Levels: $72.80, $72.30, $71.00
WTI BULLISH OUTLOOKOil prices surged during the latest OPEC+ meeting discussions, showcasing a 1.2% rise in U.S. crude futures at $78.77 per barrel and a 1.1% climb in Brent crude to $83.78 per barrel. The market buzzed with expectations of deeper output cuts, despite existing pledges from OPEC+ members to cut global oil output by about 5 million barrels per day. The delay in the meeting, prompted by African nations contesting their 2024 production targets, fueled speculations of potential additional cuts.
Amidst bearish U.S. crude inventory data and concerns over China's slowing economic growth affecting oil demand, the market maintained a positive outlook. Analysts hinted at the possibility of expanded supply reductions beyond existing voluntary measures, with the potential of an added 1.0 million barrel-a-day cut to stabilize oil prices. However, caution lingered about a "buy the rumor-sell the fact" scenario, and technical indicators pointed towards a trend reversal, indicating a potential retreat to $73.91 if the current bullish trend eases.
Overall, the oil market remained buoyant on prospects of increased output cuts by OPEC+ members, brushing aside bearish inventory reports and economic slowdown worries. The discussions continue to shape the market trajectory, showcasing a delicate balance between supply and demand dynamics in the energy sector.
Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
Evaluating OPEC+ Compliance Levels for Cautious Oil TradingAs you are aware, the upcoming OPEC+ member countries to implement potential oil-supply cuts has sparked considerable interest and speculation within the trading community. Today, I would like to draw your attention to the importance of evaluating the compliance levels of these member countries and how it presents a potential opportunity for cautious oil trading.
The proposed oil-supply cuts have been designed to stabilize oil prices amidst the ongoing global economic uncertainties. However, it is crucial to assess the actual compliance of OPEC+ member countries with these agreed-upon cuts. By doing so, we can gain valuable insights into the potential impact on global oil supply and demand dynamics.
To effectively evaluate compliance levels, it is recommended to closely monitor official statements, production data, and any relevant news updates from OPEC and non-OPEC countries. Analyzing these factors will provide a clearer understanding of how closely member countries are adhering to their commitments.
While evaluating compliance levels, it is important to maintain a cautious approach towards trading oil. The current market conditions are highly volatile and unpredictable, influenced by various geopolitical and economic factors. It is advisable to exercise prudence and carefully assess the potential risks associated with any trading decisions.
In light of the potential opportunities arising from the evaluation of compliance levels, I encourage you to consider engaging in oil trading. However, it is crucial to approach this market with a cautious mindset, ensuring that you have a well-thought-out trading strategy in place. Diversification and risk management should be at the forefront of your decision-making process.
As always, it is essential to stay informed and updated on the latest developments in the oil market. By leveraging reliable sources of information, you can make informed trading decisions and navigate the market with greater confidence.
In conclusion, evaluating the compliance levels of OPEC+ member countries with the proposed oil-supply cuts presents an opportunity for cautious oil trading. However, it is imperative to remain vigilant, assess the risks involved, and develop a sound trading strategy that aligns with your risk appetite.
Should you require any further information or assistance in evaluating compliance levels or refining your trading strategy, please do not hesitate to comment below.
Thank you for your attention, and I wish you successful and prudent trading in these challenging times.
GBPUSD Short Trend at 1.27 before Bailey speech!The GBP/USD pair continued to experience gains during the American session, reaching a new monthly high at 1.2715 before a modest retracement. The British Pound maintains its strength against the US Dollar, with the GBP/USD comfortably trading above the 1.2600 level after touching Monday's peak at 1.2644, the highest since last August. The Governor of the Bank of England (BoE), Andrew Bailey, stated on Monday that achieving the 2% inflation target would be a challenging task. Despite the central bank raising rates to 5.25% between 2022 and 2023, Bailey acknowledged the negative impact higher rates can have on households but added that it is still too early to consider rate cuts. Inflation in the UK, measured by the Consumer Price Index (CPI), was 4.6% year-on-year in October, more than double the central bank's comfort level. From a data perspective, the UK's macroeconomic agenda is relatively light this week. The country released the October Retail Price Index (BRC), which showed a 4.3% year-on-year increase, an improvement from the previous month's 5.2%. From a technical standpoint, the market exhibits a strong upward trend after breaking out of the bullish channel, and personally, I anticipate a pullback towards 1.2530 before further upward movement with the goal of surpassing the supply zone at 1.2970 and subsequently retesting the upper part of the daily supply zone. Wishing everyone successful trading, greetings from Gaia.
Managing Oil Risk Around OPEC MeetingsRudyard Kipling wrote in his famous poem, “If you can keep your head when others are losing theirs and blaming it on you, then you’ll be a man, my son.” Shocks from OPEC decisions can leave even the experts on the edge of their seats.
Short-dated options on crude oil are tailor made to address and manage such idiosyncratic risks helping each trader become a man of his own making.
OPEC’s 187th meeting will be held on 30th November. On 22nd November, OPEC announced that the meeting was going to be rescheduled from its original date of 25th November. This is not the first time that OPEC meeting is being postponed.
The 23-member OPEC+ alliance has competing interests which makes agreement among members difficult at times. Like last year, this time again, OPEC is rescheduling its meeting.
Such news impacts oil markets hugely. Prices tanked. Put option premiums spiked. Put volumes broke records. Implied volatilities jumped 8.5% over three days.
DISAGREEMENT OVER PRODUCTION QUOTAS ARE BREWING AT OPEC
Not only was this meeting postponed but it will be held online instead of in-person. This is not the first time. This also occurred a year ago. It shifted its meeting online after fixing production targets at an in-person session in Vienna previously.
Rescheduling of meeting is reported to be due to disagreement over production quotas. Following this announcement, Brent crude prices tanked 5% but rebounded swiftly to trade 2.3% lower. WTI fell 2.6%.
As reported by Javier Blas of Bloomberg, deferment of OPEC production meeting stems from production quota arguments.
The Financial Times reported on 17th November that OPEC was considering an incremental one million barrels per day (bpd) reduction. This is in addition to previous production cut commitments from Saudi Arabia and Russia.
2024 is looking precarious for the OPEC. Feeble demand growth compounded by a backdrop of elevated supply growth. The possibility of the OPEC+ deal of production cuts imploding is small but cannot be ruled out. A failure to come to an agreement can leave the oil market with uncertainty ahead.
IMPLICATIONS OF DEAR OIL
Equity and bond markets globally are in a celebratory mood on cooling inflation. Any shocks to the oil market could send inflation back up again. Refined fuel inventory levels look precariously low at levels unseen since 1982.
Diesel and Heating Oil Inventory Levels are precariously low (Source: Bloomberg )
Compounding low refined fuel inventory is the continued low levels of US Strategic Petroleum Reserves which are at a forty-year low.
US Strategic Petroleum Reserves continue to languish at 40-year lows
BEARS ARE CHARGING OIL PRICES LOWER
Crude prices are down about 20% from its September peak. Solid output from the US, and feeble indicators from China have sent oil prices cooling despite elevated geopolitical threats.
Since touching a high of USD 95/barrel on 28th September, prices have steadily declined with spurts of bear market rallies.
US West Texas Intermediate first continuous futures contract has traded exhibiting strong mean reversion for much of this year
Technicals point to near term overall weakness. Momentum indicators point to sharp sell down risks. Mean reversion indicators point to ambivalence with a neutral direction signal.
US West Texas Intermediate second continuous futures contract has traded exhibiting strong mean reversion for much of this year
Global oil markets are expected to move into surplus early next year, according to the International Energy Agency on slowing demand growth.
OPTIONS MARKET SIGNALS NEAR TERM BEARISHNESS AND LONGER-TERM BULLISHNESS
Pricing of options expressed by way of implied volatilities shows that puts have been more expensive than calls. As a result, the skews are supressed and hovering at 7-month lows.
Cost of options expressed in implied volatilities have shot up for puts relative to calls pushing skews down (Source: CME CVOL )
Inline with the behaviour observed in implied volatilities, charts below summarise the change in open interest between close of markets on 23rd November and 17th November.
Participants have been ramping up puts relative to calls except for options expiring on 29th November and 1st December .
Notwithstanding the positioning of traders and portfolio managers on near term options, options traders have a strong bullish position in longer term (going into latter part of December and next year) with put-call ratio at 0.63 implying five calls (bullish trades) for every three puts (bearish trades).
Open Interest across the forward curve shows higher number of calls relative to puts (Source: CME QuikStrike )
The brewing disagreements among OPEC members are impacting implied volatility on crude oil options. CVol index on crude oil jumped 15% over merely 3 days on the announcement of OPEC meeting postponement.
Volatility has been on the rise amid the ongoing lack of co-operation within the OPEC cartel (Source: CME QuikStrike )
HYPOTHETICAL TRADE SET UP
The path ahead for oil prices looks uncertain. Volatility has spiked and could rise even higher on growing disagreement among OPEC members. If OPEC members go for deeper cuts, oil prices could rally. However, if the prisoner’s dilemma prevails, where OPEC majors continue pumping even more to flood the market, prices could tank.
Amid such ambivalence, CME’s short dated crude oil options are tailored to manage price risks. Benefits of these short-dated options were described in a paper previously published.
This paper posits an options strategy using the weekly crude oil option. OPEC is scheduled to meet on 30th November. A hypothetical trade is illustrated below using options expiring on 1st December.
A long strangle involves holding a long-call and a long-put option at different strikes but with the same expiry and underlying. Strangle on crude oil delivers gains when prices swing wildly. However, the strangle loses money if price moves remain muted. Pay-off from this hypothetical options strategy is illustrated below.
The long strangle requires USD 2.88/barrel (USD 1.47/barrel for long call at 75.5 and USD 1.41/barrel for long put at 74.5). CME Options Calculator can be used to arrive at the latest premium values at the specified strikes. The overall premium for the strangle represents approximately 3.8% of current oil price at $75 (indicative) and the trade breaks even at expiry when oil is either at $71.62/barrel or $78.38/barrel.
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
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OPEC+ meeting incomingInitially postponed due to member disagreements, the OPEC+ meeting is now set for Thursday. Discussions are poised to delve into the consideration of deeper oil production cuts. Analysts foresee the potential extension or intensification of supply reductions into the coming year to stabilise oil prices, which currently hover around $80 a barrel. While the possibility of a collective reduction in output exists, specific details remain undisclosed.
The delay stemmed from disagreements over output levels for African producers. However, indications suggest a closer approach to reaching a compromise. The meeting's agenda features discussions by an advisory panel followed by a session with OPEC+ ministers. Notably, members such as Saudi Arabia and Russia previously committed to significant oil output cuts. Current discussions revolve around the continuation of these reductions, including Saudi's voluntary production cut and Russia's export reduction, both set to expire by year-end.
The likelihood of further oil cuts appears imminent, prompting us to refrain from offering a price prediction. However, I foresee a potential market shift—possibly a 1-2% increase if oil cuts are announced or a corresponding decrease in production sees an increase instead. My belief leans towards the former scenario. Nonetheless, any price hike might be short-lived as Saudi Arabia and Russia's production cuts are set to expire by year-end.
Henceforth, it pays to pay attention to this meeting and see what the fine details are.
Weekly Brent Crude Oil Price Prediction Update - W/C 20 Nov 2023Last Monday we posted our weekly price prediction for Brent Crude Oil.
The chart above is our analysis. You can see further analysis in our previous post.
Our price prediction for last week was between $78.00 (Min) and $87.50 (Max).
As you can see from the chart below our analysis proved true. The price stayed within the range. However, it followed the bearish indications more so than the bullish indications.
The price hit the blue line resistance levels and proceeded to go down. Following the resistance line and finding some support in the High Volume Node from the Fixed Range Volume Profile.
There are also fundamental factors at play here as well. OPEC+ delayed their meeting due on 26th November by four days due to conflicting opinions in the organisation, this is what also led to the price decline.
If you had shorted the stock once it hit the blue line resistance level it would have netted you around 3.30% ROI to the current price. Not bad for a week.
USOIL: Bearish channel with a consolidation phase before $70!The prices of oil appear very negative as they record losses for the fourth consecutive day. Markets are selling crude oil futures contracts due to the current division within OPEC+ on how to proceed, with the prospect of a lack of severe measures to support oil prices. The postponement of the OPEC+ meeting to a virtual mode on Thursday highlights a deep division within the organization, signaling an unfavorable situation for oil prices, which require a united front to maintain current levels. In addition to Thursday's OPEC+ meeting, the COP28 meeting will begin in Dubai. Several market participants have expressed their forecasts on OPEC+'s decisions. The consensus is that even if OPEC+ extends the current production cuts, it is unlikely to lead to a strong rally. Oil prices are poised for further declines as there are no measures in place against the considered bearish factors. On a daily basis, the price has been inside a bearish channel for days and continues to descend. Currently, it is positioned between a supply and demand zone very close to each other, which could create a period of stagnation or consolidation. The sentiment remains bearish, and personally, I expect the price to head towards the $70.00 per barrel area. Greetings from Gaia, wishing everyone a good trading day.
Crude Oil Review and Forecast
API Actual: 9.047M
API Consensus: 1.467M
EIA Crude Import Actual 0.259M
EIA Crude Import Previous: -0.385M
EIA Crude stock Actual: 8.701M
EIA Crude stock consensus: 1.160M
As Saudi Oil production had shrunk to nine million barrels per day in July since its last OPEC meeting with Russia to restrict supply amid signs of weakening global demand in slowing economy, Saudi, the largest oil supplier in the world had expressed its opinion on keeping the production to remain low until the end of this year. As foreseen through such decisions from the major suppliers, the most recent Crude inventory within the states has turned out to be way larger than expected.
Since September of 2023, the Crude oil future TVC:USOIL plunged by $-22.35 (-23.62%) to $72.28 per barrel during the last week trading session. Slower than expected recovery in economic activities(PPI Nov 2023) adding fear of the constant weakening of the oil demand, forecasting a skeptical view towards a short term recovery of the oil demand and its price as well.
The key major resistances are as follow:
Top: $77.8
Mid: $75.5
Low: $72.12
The weekly upside trend is still the last hope for the Bullish traders.
Once both the Four-hours and the daily candles closes below the $64-60 zone, we will then be able to finalize on such ambiguous consensus.
With OPEC+ meeting pushed back to this weekends, every commodity investors focus is on the meeting report, hoping for the decision to give them the better foresight of the future of the market.
The Best Futures Trading Hours in Crude:
CL opens for trading on the floor, called the pit session at 9AM EST
European trading closes at 11:30 AM EST
The best hours for trading are the most liquid, between 9:00AM and 11:30AM
Pit session closes at 2:30PM EST, when floor trading stops for the day
Therefore, the best trading in the afternoon is the last hour between 1:30PM to 2:30PM EST
WTI - BEARISH OUTLLOKOPEC, deflecting blame for the oil market crash, slightly increased its 2023 global oil demand growth forecast to 2.46 million barrels per day. The group's aggressive production cuts, aiming for $100 per barrel, face skepticism. Market bears challenge OPEC's strategy, selling consistently for three weeks. Questions persist about OPEC+ members responding with additional production cuts. Despite concerns, OPEC's report downplays worries about demand, referencing exaggerated negativity around Chinese demand. In the market, WTI rose to $78.26 per barrel, up 1.4%, but ended the previous week down 4.1%. Brent settled at $82.54, up 1.4%, with Brent concluding the last week down 3.8%. The global crude benchmark also experienced an 11% decline in October.
Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
CRUDE OIL TO HIT $160?😳 (12H UPDATE)Oil is still accumulating buying momentum within this Wave 2 (Wave II) accumulation phase. We can expect price to carry on consolidating within a range for the next 2 weeks or so, which'll scare off the average, small retail trader. But if you hop onto the daily TF, you'll see overall the market is still bullish📈
Would the Middle East Conflict Push Gold and Oil Prices Higher?NYMEX: WTI Crude Oil ( NYMEX:CL1! ), COMEX: Micro Gold Futures ( COMEX_MINI:MGC1! )
Over the weekend, military conflict in Gaza between Israel and Palestine shocked the world. I condemn violence against civilians and pray for the victims and their families.
In the following paragraphs, I will discuss how the prices of strategically important commodities, namely gold and crude oil, might respond to the eruption of a global crisis.
Firstly, let’s look back into the recent past for those crises arising to a global scale. In the last five years, the world has witnessed three major crises of very different natures:
• US-China Trade Conflict: from January 2018 to January 2020, the world’s two largest economies imposed import duties to each other in a series of escalating actions and retaliations. A major event occurred on September 18, 2018, where President Trump added 10% tariff on nearly all Chinese-made products. The US-China trade conflict forever altered the global supply chain, with its impact being felt till today.
• Covid-19, the most severe pandemic in a century, from its outbreak in January 2020 to 2021. A big event that sparked market fear occurred on February 2, 2020, where the US imposed travel restrictions on incoming air passengers.
• Russia-Ukraine Conflict: the first military conflict in Europe since World War II, from February 14, 2022, till now.
Secondly, let’s measure how gold and WTI crude oil responded to these crises. For my analysis, I denote the day before Event Day as T0, where we may find last market prices before the impact hit. Event Day will be T+1, and then 1-week after (T+7), 1-month after (1M), 3-month after (3M), all the way through 1-year after (1Y). Here are what I found:
US-China Trade Conflict
• Gold spot price (T0) = $1,201.90 per Troy Ounce
• Price changes by time: -0.1% (T+1), +0.1% (T+7), +2.3% (1M), +3.3% (3M), +8.6% (6M), +11.6% (9M), +25.0% (1Y)
• Comment: Trade tension between US and China could push the global economy into a recession. Gold, a safe-haven asset, saw its market value growing 25% in a year.
• WTI crude oil spot price (T0) = $69.86 per barrel
• Price changes by time: +1.2% (T+1), +6.3% (T+7), +4.3% (1M), -27.7% (3M), -14.2% (6M), -24.6% (9M), -8.4% (1Y)
• Comment: High tariff raised the price consumers had to pay, hence reducing demand. Crude was down 28% three months after the all-in tariff was imposed.
Covid Pandemic
• Gold spot price (T0) = $1,574.75 per Troy Ounce
• Price changes by time: -1.0% (T+1), -0.1% (T+7), +2.6% (1M), +8.5% (3M), +24.4% (6M), +21.2% (9M), +16.6% (1Y)
• Comment: We saw the biggest stock market selloff in March 2020. Gold price was down initially as stock traders needed to raise money and meet margin calls. However, a flight to safety eventually took place, and gold was up 24% in six months.
• WTI crude oil spot price (T0) = $53.09 per barrel
• Price changes by time: -5.0% (T+1), -11.9% (T+7), -77.1% (1M), -61.4% (3M), -23.1% (6M), -31.1% (9M), +0.9% (1Y)
• Comment: Rapid Covid outbreaks stroke fear. Lockdowns put global activities to a pause. The pandemic wiped out oil demand, with WTI falling 80% in a month. April 20, 2020 made history as oil price of the expiring contract went below zero. As storage cost more than selling price, traders were willing to pay others to take away the crude for free.
Russia-Ukraine Conflict
• Gold spot price (T0) = $1,854.60 per Troy Ounce
• Price changes by time: -2.5% (T+1), -2.5% (T+7), +6.5% (1M), -1.8% (3M), -2.8% (6M), -5.0% (9M), +5.0% (1Y)
• WTI crude oil spot price (T0) = $91.25 per barrel
• Price changes by time: +4.7% (T+1), +5.3% (T+7), +30.7% (1M), +12.90 (3M), +1.1% (6M), +0.6% (9M), -17.2% (1Y)
• Comment: A major military conflict in Europe significantly raised the global risk level. Gold, the safe-haven asset, and crude oil, an energy commodity critically important in wartime, both went up in the first month, by 6.5% and 30.7%, respectively.
• However, the impact was short-lived. On March 16, 2022, the Fed begin hiking interest rates, which has become the driving force in global market. Impact from Russia-Ukraine became a secondary factor and sat in the back burner.
To sum up the above examples, I observe that gold prices usually go up in the aftermath of a global crisis. Crude oil has a mixed bag of reactions. If a crisis results in economic recession and a consequential reduction in oil demand, oil prices would go down. However, in the case of a major war, oil price would go up due to its strategic importance.
Review: Event-driven Strategy focusing on Global Crises
In June 2022, I introduced a three-factor pricing model for commodities futures:
Commodities Futures Price = Intrinsic Value + Market Sentiment + Crisis Premium
Intrinsic Value is the baseline cash price of the underlying commodities, determined by available supply, demand, inventory, shipping costs, and factors affecting these variables.
Market Sentiment indicates if investors are bullish or bearish. Whether speculative investors place more money on the long side or the short side affects the price of a futures contract. Market sentiment could be either positive or negative, resulting in a price premium or a discount of the intrinsic value.
The new Crisis Premium factor captures “Event Shock” during a global geopolitical crisis.
Previous trade example:
Russia and Ukraine together accounted for 28% of global wheat export. Wheat price shot up by 75% following the start of the conflict. I designed a Long Strangle options strategy on CBOT Wheat futures, and simultaneously bought out-of-the-money (OTM) call and put options. A “risk-on” outcome could push wheat price higher, making the calls more valuable, where a “risk-off” outcome would pull wheat price back down, making the puts in-the-money (ITM).
Trading Opportunities with Micro Gold
Since the September FOMC meeting, gold prices suffered a 6.3% drawdown, sending the futures price from $1,969 to $1,845. Friday settlement price was nearly 9% below the yearly high.
On the one hand, high-interest money market funds beat out non-interest-yielding gold investment; on the other hand, strong dollar raised the cost of gold purchase by foreign investors. As a result, gold prices have been under pressure.
However, my analysis illustrates that gold prices could rise in response to geopolitical conflicts. Since its founding, Israel had five major wars with its Arab neighbors. We do not know whether this time it would be contained as a regional conflict or spark a chain reaction of a global war. By the intensity of how it started, it doesn’t seem like a short one.
To express a view of rising gold prices, we could consider a long position in COMEX Micro Gold Futures ( AMEX:MGC ). The December contract (MGCZ3) was settled at $1,845. Each contract has a notional value of 10 troy ounces, or $18,450 at market price. CME Group requires an initial margin of $780 per contract.
Hypothetically, if gold futures go back up to $2020, its yearly high, the $175 ($2020-$1845) price increase would translate into $1,750 for a long futures position. If gold price goes down instead, each dollar of decline would result in a loss of $10 per contract.
Alternatively, we could consider the newly launched Micro Gold Options. A Long Strangle Options Strategy, where simultaneously buying OTM calls or puts, could be deployed if we expect a big move in gold price, but not certain of its direction.
Trading Opportunities with WTI Crude Oil
Since June, WTI crude oil first staged a nearly 40% rise, from $67 going to $93. However, it has seen a 9% drawdown since the Fed meeting on September 20th.
A major military conflict in the Middle East, the world’s most important oil producing region, threatens to interrupt oil supply and push up oil price. If the conflict is escalated to involve major oil exporting nations, the situation could be dire.
To express a view of rising crude price, we could consider a long position in NYMEX WTI Futures ( NYSE:CL ). The December contract (CLZ3) was settled at $83.18. Each contract has a notional value of 1,000 barrels, or $83,180 at market price. CME Group requires an initial margin of $6,186 per contract.
Hypothetically, if WTI futures go up above $100, which we saw from February to July 2022 in the first months of the Russia-Ukraine conflict, the $17 price increase would translate into $17,000 for a long futures position. If crude oil price goes down instead, each dollar of decline would result in a loss of $1000 per contract.
Similarly, the newly launched Micro WTI Options could express a view that a big move in oil price is expected, without knowing its direction.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. 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
