WTI Crude Oil Trading

WTI sell-off bottomed at crucial technical confluence area, destined for $60 on bullish fundamentals
4 February 2019, 19:21

 

1. WTI is under pressure within a complex technical picture.
2. Oil is a two-sided coin on fundamentals with a keen focus on geopolitical developments over Venezuela risk.
3. WTI is currently trading at $54.25bbls, down from a high of $55.96bbls but above the session lows of $53.46bbls.

Fundamentally, oil prices are on the backfoot from what appears to be a switch up in the sentiment surrounding the Venezuela risk following the U.S.'s extra sanctions aimed at starving the regime of cash and pressuring the President, Nicolas Maduro, to resign. He is facing an unprecedented challenge from opposition leader Juan Guaido and cooperation from various nations such as the UK, Sweeden, US, Canada and Spain.
In recent weeks, a growing number of international governments have come out in support of Guaido, condemning Maduro for an election held late last year which was marred by an opposition boycott and vote-rigging. What all this means is that the markets are banking on the idea that Maduro will be pushed out in a U.S. lead coup, replacing his dictatorship with a Western-friendly regime, which would be regarded as bearish for oil, at least for the near term, considering his nations is home to the world’s largest crude-oil reserves. The opposition leader, Juan Guaidó, who would likely replace Maduro is expected to contribute more oil to worldwide supplies.

A case for the upside
"Moving forward we expect the fundamentals will start to generate more positive momentum as OPEC+ cuts begin to show in US inventory data, which along with any improvement in risk sentiment, could be the catalyst needed to help see CTAs cover and send prices toward $60/bbl into the second quarter,"
analysts at TD Securities argued.

WTI levels
The techncial picture is quite complex. We have a bullish correcting channel and the price has so far been able to break above the 38.2% fibo of the Oct 2018 decline in oil prices circa 55.50. The price action is now entering a possible bullish C wave of another ABCD move that commenced at the end of January from 28th Jan swing low down at 51.41, targetting the 60 handle. There is also an inverse bullish head & shoulders and neckline that the price has so far been unable to break below around 53.20 with a confluence of the 100 4hr SMA. At this juncture, we have seen a 38.2% fibo reversion of the sell-off which makes sense considering the daily ATR was well overdone. A 50% retracement will open the 54.60s. However, to the downside, a break of the H&S neckline and confluence area opens risk to S2 and confluence with the 21-D SMA in the 52.60s.

WTI PRICES REMAIN IN BULLISH TERRITORY, BUT HAVE SLUMPED TO TEST CRITICAL SUPPORT AHEAD OF KEY RISK EVENTS
5 February 2019, 19:37

 

1. WTI's upside attempt was capped at $55.18bbls in European trade and was sent to a low of $53.60bbs.
2. Concerns over a potential slowdown in energy demand resurfaced following prices reaching their highest YTD levels yesterday.

The mention of Chinese slower economic performance, despite still on track of 6% GDP for the year ahead, weighs on the market's risk appetite and the surprisingly soft Chinese General Services PMI for January released on the weekend showing the Composite level dipping to 50.9 from 52.2 in December, barely holding expansion territory, was a reminder that the global backdrop is not so rosy as the recent rally in oil prices are otherwise saying. Then, along came the delayed release of the U.S. factory orders data from November, which sent oil prices even lower yesterday. There was a pickup on a spot basis, but with China out, markets are thinner and price action is more volatile.

However, prices are still holding near multimonth highs as investors weigh up news from the political crisis in Venezuela which is seen as a positive, following the U.S.'s extra sanctions aimed at starving the regime of cash and pressuring the President, Nicolas Maduro, to resign.
On the other hand, the opposition leader Juan Guaido is garnering international support from nations that are condemning Maduro for an election held late last year which was marred by an opposition boycott and vote-rigging. Should Guaido gain the presidency, following a U.S. lead coup, replacing his dictatorship with a Western-friendly regime, this would then be regarded as bearish for oil, at least for the near term, considering the nations is home to the world’s largest crude-oil reserves. The opposition leader, Juan Guaidó would be expected to contribute more oil to worldwide supplies.

However, the Venezuelan state media have intensified a campaign against Guaidó claiming that he and his international supports risk plunging the country into a civil war. Maduro has also issued a warning hinting that Juan Guaidó could soon be imprisoned as a result of his challenge. In response, John Bolton, Donald Trump’s national security adviser, has proclaimed that violence against or intimidation of Guaidó or other opposition leaders “would represent a grave assault on the rule of law and will be met with a significant response”.

Looking ahead
There are two major risk events for WTI today, First up, we have the American Petroleum Institute supply data - although tomorrow's Energy Information Administration will likely garner more attention where analysts expected the EIA to report a rise of 3.7 million barrels in crude stockpiles for the week ended February 1st, according to a survey conducted by S&P Global Platts. We then turn to President Donald Trump’s State of the Union address in the evening which will likely give the dollar something to think about where investors will be watching for hints over Sino/U.S.-China trade relations progress, along with the partial government shutdown with respect to further infrastructure spending and border wall funding. the even follows an "informal meeting" that Trump had with Fed Chairman Powell where both discussed "recent economic developments and the outlook for growth, employment and inflation.

WTI levels
We have an inverse bullish head & shoulders and neckline that the price has so far still not been able to break below around 53.20 with that confluence of the 100 4hr SMA. However, the bullish correcting channel and price need to cross over and break with conviction the 38.2% fibo of the Oct 2018 decline in prices, circa 55.50. Meanwhile, the price action is potentially completing a possible B wave of another ABCD move should the mentioned confluence support level hold and price move above daily R1 located at 56.05, targeting the 60 handle. However, to the downside, a break of the H&S neckline and confluence area opens risk to S2 and confluence with the 21-D SMA in the 52.60s.

WTI, looks to be moving toward the 51.00 mark into next week. This aligns with possible dollar upside which has not yet peaked but is due to peak later this week or early next week.

I'm not short at the moment, but will look to be short at another failed attempt to close above 55.50 ish area.

More downside risk than upside risk ATM.

United States CFTC Oil NC net positions declined to 298.7K from previous 306.3K

EIA: Commercial crude oil inventories increased by 1.3 million barrels from previous week
6 February 2019, 17:32

Below are some key highlights from the weekly oil market report published by the U.S. Energy Information Administration.

1. U.S. crude oil refinery inputs averaged 16.6 million barrels per day during the week ending February 1, 2019.
2. Gasoline production decreased last week, averaging 9.9 million barrels per day.
3. Distillate fuel production increased last week, averaging 5.1 million barrels per day.
4. U.S. crude oil imports averaged 7.1 million barrels per day last week, up by 63,000 barrels per day from the previous week.
5. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.3 million barrels from the previous week.
6. Total products supplied over the last four-week period averaged 21.2 million barrels per day, up by 2.0% from the same period last year.

Market is choppy almost took a hit but managed to close my short 0,15% account gain. WTI is currently leveling at support (blue area + trend line + rsi trendline). The daily fib @38.2 did his work as resistance last week.

stronge bounce from trendline beside the somewhat bad news imho

1. numbers did meet expectations
2. would have seen a bigger impact on inventories due to venezuela oil sanctions

WTI rebounds above $54, turns positive on the day
6 February 2019, 18:52

•Crude oil stocks increased by less than expected in the U.S.
•Azerbaijan oil minister says OPEC, Non-OPEC need to extend oil cuts agreement.

Crude oil stayed under pressure during the first half of the day on Wednesday and the barrel of West Texas Intermediate fell below the $53 mark for the first time in a week. However, with the latest weekly EIA report showing a smaller-than-expected buildup in the U.S. crude oil inventories, the WTI staged a meaningful recovery and was last up 0.95% on the day at $54.45.
The EIA said that commercial crude oil stocks increased by 1.3 million barrels in the week ending February 1 compared to analysts' estimate of 2.18 million barrels. Commenting on the data, "As we move deeper into maintenance season, we have seen a third consecutive build to crude stocks. The build is once again only modest, given stymied imports and strong exports," Matthew Smith, director of commodity research at ClipperData, told Reuters.
Meanwhile, Azerbaijan's oil minister earlier in the day told reporters that he saw OPEC and non-OPEC needing to extend the output cut agreement to provide additional support to the crude oil recovery.

Trendline broken

support ??

WTI drops below key support structure, eyes $51.41 key level
7 February 2019, 18:59

•WTI has finally given out and has dropped to a low of $52.26bbls spot after breaking the ascending channel's support.
•$51.41 is the 27th fractal low target to confirm a change of flow which will jeopardise the reverse H&S and ABCD bullish formation within the ascending channel.

The move appears to be techncial with no significant headlines out specifically pertaining to the price of oil. However, volume has started to pick up and the support structure at $53.00/50 gave out.

We had the EIA report that revealed a smaller-than-expected weekly fall in U.S. natural-gas supplies while a risk-off tone developed with the Dow falling 350 points to session lows as Fed's Kudlow said that there is a 'sizable distance' that remains in China-U.S. trade talks which strips out the demand side scenario again. The European Commission has slashed growth forecasts for the Eurozone for 2019 and 2020, further stoking concerns of a global growth slowdown. The dollar is strong and there are also reports out that Libya could soon increase production which could bring more oil to the market.

"As the supply-side comes back into the picture, General Haftar's capture of Sharara likely suggests that the oil field, which is the country's largest, will resume full operations in short order. While this will likely lead to a dip in OPEC's over-compliance, we suspect the market will ultimately shrug this off in the near-term, considering that OPEC+ supply outlook remains fairly tight. Meanwhile, firm downward momentum will keep CTAs from covering their shorts for a while yet,"
analysts at TD Securities explained.
WTI levels
The price has broken the 21-D SMA and channel/neckline support which brings in the 51.41 level as the 27th fractal low target. RSI and MACD are negative and volume is with the move.

Purely technical move and wouldn't be surprised if it retraced back to the 53.00 area.

WTI DROPS NEARLY 5% THIS WEEK, LOOKS TO SETTLE CLOSE TO $53
8 February 2019, 20:37

 

1. Gloomy economic outlook weighs on crude oil prices.
2. The U.S. - China trade conflict hurts market sentiment.
3. The number of active oil rigs in the U.S. increases to 854.

Crude oil stayed under pressure throughout the week as investors started to price the potential negative impact of the global economic slowdown on the oil demand outlook. After testing the $52 handle on Thursday and also earlier today, the barrel of West Texas Intermediate erased a very small part of this week's losses and was last seen trading at $52.70, where it was up 0.2% on a daily basis.

Earlier this week, both the European Commission and the BoE slashed their 2019 growth expectations citing geopolitical factors such as the ongoing trade conflict between the U.S. and China and the uncertainty surrounding Brexit. Moreover, reports of President Trump not planning to meet his Chinese counterpart Xi before the March 1 deadline further weighed on the sentiment and forced crude oil to extend its slide.

Meanwhile, the latest data published by General Electric Co's Baker Hughes energy services showed that the total number of active oil rigs in the U.S. increased to 854 this week from 847.

Assessing crude oil's recent price action, "The oil demand side of the coin is facing a number of headwinds ... Venezuela's oil woes are largely priced in and there is no guarantee that the OPEC+ supply pact will be extended," PVM analysts told Reuters.

"This is hardly a recipe for a sustained bout of upward buying pressures. There is, however, one potential lifeline for those of a bullish disposition. The rumour mill is in full swing that the Trump administration will not renew waivers to sanctions against buying Iranian oil."

Technical outlook
Oil Technical Analysis: WTI ending the week hugging $53.00 a barrel.

WTI resumes slide, hits 3-week lows below $51.50
11 February 2019, 18:11

 

1. Stronger US dollar pushed crude oil prices lower.
2. Higher production in the US and demand concerns continue to weigh.

WTI (oil futures on NYMEX) dropped further during the US session and at the moment consolidates below the key $52.00 area suggesting more losses ahead. It is falling by more than 2%.

Crude oil prices reversed sharply after the beginning of the US session, breaking sharply lower. After WTI reached $52.67 turned to the downside, falling more than $1 in the first hours of the American session. It bottomed at $51.30, the lowest intraday level since January 17.

Since last Monday, WTI is under pressure moving with a clear bearish bias, retreating from levels on top of $55.00. At the moment, WTI trades at $51.50, down 2.30% for the day.

A stronger US dollar on Monday offset the improvement in risk appetite and positive expectations about the outcome of the China-US trade talks. The DXY is up for the eight-day in-a-row, and it just broke above 97.00 for the first time since late December. Gold is falling is also lower today, after rising during the previous three days.

On Tuesday and Wednesday, inventory data is due. Also important for crude oil prices are the China-US negotiations and the developments around Venezuela.

Some interesting reading regarding the OPEC Monthly Oil Market Report:

https://www.opec.org/opec_web/en/publications/338.htm

SELL at 53,65;
SL at 54,10;
TP no.

EIA cuts 2019 world oil demand growth forecast by 50,000 bpd
12 February 2019, 19:09

In its latest monthly forecast report, the U.S. Energy Information Administration said that it cut its 2019 world oil demand growth expectation by 50,000 barrels per day to 1.49 million barrels per day. The EIA cut its 2020 oil demand growth forecast by 50K bpd to 1.48 million bpd. With the initial market reaction to these announcements, the barrel of WTI eased from its session highs and was last seen trading at $53.55, where it was still up 2.15% on a daily basis.
Source: Reuters.

EIA: COMMERCIAL CRUDE OIL INVENTORIES INCREASED BY 3.6 MILLION BARRELS FROM PREVIOUS WEEK
13 February 2019, 17:31

Below are some key highlights from the weekly oil market report published by the U.S. Energy Information Administration.

1. U.S. crude oil refinery inputs averaged 15.8 million barrels per day during the week ending February 8, 2019.
2. Gasoline production decreased last week, averaging 9.6 million barrels per day.
3. Distillate fuel production decreased last week, averaging 4.8 million barrels per day.
4. U.S. crude oil imports averaged 6.2 million barrels per day last week, down by 936,000 barrels per day from the previous week.
5. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.6 million barrels from the previous week.
6. Total products supplied over the last four-week period averaged 20.8 million barrels per day, up by 0.6% from the same period last year.

I just opened a short on WTI at current price 54.40$, looking towards 52$