"Never catch a falling knife." - Pick it up from the ground when it's already lying. This is what I'm going to do here.
After the two-week frustrating bottoming pattern it looks like oil is starting a rally today. OPEC meeting finished today though there is no production cut the chart is showing bullish signs:
-The trendline is broken today:
-Price broke above the 10 EMA and I think the daily close will be above the 10 EMA too.
- MACD crossed over at extreme levels - RSI left the oversold zone after tagging the most oversold territory in 10 years.
Notice the indicator extremes on the chart:
We might have printed a multi year low 6 days ago.
The multi year resistance is at 42$. It's still possible after a convincing bounce we will drop to that 42 $ level at the beginning of next year but now my bet is on a multi week rally up to 61-63$ where the 50 EMA is.
The 2017 range high is at 54-55$ that is the level we need to break for higher prices.
Hi Arpad, here is the latest EIA synopsis; U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.5 million barrels from the previous week. At 441.5 million barrels, U.S. crude oil inventories are about 7% above the five year average for this time of year. Total motor gasoline inventories increased by 1.8 million barrels last week and are about 3% above the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories decreased by 4.2 million barrels last week and are about 11% below the five year average for this time of year. Propane/propylene inventories decreased by 3.3 million barrels last week and are about 6% below the five year average for this time of year. Total commercial petroleum inventories decreased last week by 10.3 million barrels last week.
My take; I am buying and will continue to buy with each move downward. The head wind is the US dollar, the FOMC rate hike of a .25 percent to cool the US economy should hold us at or near where we are with oil prices. There is no question that we are experiencing increased demand for oil both in the US and else where as evidenced by the 10.3 million barrel draw.
Correlations between amount of oil in the market and its price is questionable.
You better present graphic evidence of oil price and amount its amount on the market as the functions of time.
MMadryga
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@dp, Hi there, here are some facts to ponder. 1) Saudi inventory levels are at record lows. (At US request.) 2) US heavy crude is at record lows not enough to process into Diesel 3) Crack spread on regular gasoline production is low, means US refineries will switch to diesel production and import more heavy oil most likely from Canada 4) There is little to no inventory in large floating tankers and US market will continue to draw from storage for gasoline until crack spread improves. 5) The only markets that matter are the US and China, if a trade deal is reached (I believe one is in the works) 2019 will see higher oil prices 6) as mentioned above US demand is increasing as is world demand. Meanwhile we have another cut in OPEC production. I am not saying we are not going to see lower lows but reality is perception. Best MM
I see your point, the change in fundamentals of the market.
In my view, the system is a bit more complex than the reaction of the price to the change in supply/demand situation. it is more like a pray-predator system, which is the the special field of the research in applied math.
Let me give you the example. You have isolated island populated by 100 foxes and 100 rabbits. There is grass, sun and rain every day. What are you expectation of this system in, say, 1 month?
The answer is not quite trivial. Number of foxes and rabbits will oscillate in time in sinusoid-like manner. Where are the fundamentals in this system?
The same way, the population of bears is increasing until a few bulls are alive, not until all of the bulls are eaten out. Then the story reverses.
In this relation, your statement is proved if you present historical data of oil/gasoline/ diesel fuel supply and demand and overlap them with the price of oil. Otherwise, your statements are useless.
I tried to make the story as simple as possible, not talking about nonlinear PDE's :)
A-shot
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@chartwatchers can you please post an update so we can see where it is at in relation to the MAs
bertcoin
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You are still holding some longs though, right? Or did you close all? We have a little ways to go to resistance (that I may not want to test) on my chart.
chartwatchers
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@bertcoin, I started a podition at 53. I doubled the position at 42. Now I closed the ones I opened at 42.
chartwatchers
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@bertcoin, resistance at 54. we will test it sooner or later. In the long term it’s a buy.
bertcoin
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@chartwatchers, agreed. I may bail at any time above 53.12 on WTICOUSD.
FFMEO
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Excellent idea.
Now 50 EMA is about $53 due to the drop down to $42 instead of $63 as in the draft? Will “a multi week rally ... where the 50 EMA is...” till only (now is ~ $53) or the oil will go further?
My take; I am buying and will continue to buy with each move downward. The head wind is the US dollar, the FOMC rate hike of a .25 percent to cool the US economy should hold us at or near where we are with oil prices. There is no question that we are experiencing increased demand for oil both in the US and else where as evidenced by the 10.3 million barrel draw.