CL - Resistance at 63 Technicals favour a lower price on the weekly: - Major resistance at around 63 - at the upper band of the BB - CoT : Commercials are extremely short - Seasonality: Weakness into Feb due to reduced demand for heating oil. The extreme cold right now my override this
In favour for bull: - continous draw down of crude stocks, which is already considerable lower than this year around - cold weather to continue - ongoing violence in Iran
Recommendation: wait if we brake out or retreat in the net days. Friday will probably show that already
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Fundamentals: - Latest weekly inventory report showed a big 7.4 million barrel draw of crude stocks, which should be supportive of CL - Iranian situation still unresolved, supportive for CL - Saudi Aramco has further reduced the price of Arab crude. This probably accounts for the price decline today
Technical: price backed up from key resistance
Result: - Right now favouring the bear case, but not with very high odds - sold a small position of CLJ8C70 @ 0.14
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Trend is now up. CL quite convincingly over resistance at 63. Net resistance may be about 66, but it is weak. Market is overbought. Thus a decline in the next days is possible. I will wait until next week before cutting my short. My entry was too early.
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although we saw a big drawdown of inventories yesterday, CL is continuing to fall. Which suggests the markets is weak and may fall over from here. The question is if that is just a short correction or a trend change. If the rig count increases further in the coming weeks it may be a change to a downtrend. We will see in the coming weeks.