Crude prices struggled in 2023. Although major production cuts were implemented by OPEC member countries, the USA has ramped up production, and concerns about global growth have emerged.
While economic growth and demand remain a headwind moving forward, the question is whether crude is trading at fair value or if it may be undervalued.
Inventories and Seasonality:
Recent crude inventories data from the EIA revealed a decrease of over -9.23 million barrels, compared to the expected draw of -2.15 million barrels. Demand is beginning to ramp up, and consumers tend to travel more as the winter season comes to an end. Middle East tensions are still elevated, adding another layer of uncertainty to the supply chain dynamics.
Technical Analysis:
Crude has tested the 67.50-70 range many times, and this area continues to be a major support. Recent price action displays a decisive break above the 50-day EMA. Prices are now attempting to test the 200-day EMA, a much more significant area of resistance. Breaking above this 200-day EMA, coupled with a Golden Cross, could be exactly what crude needs to find upside momentum and enter a bull market in 2024.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
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/cme/
*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.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
While economic growth and demand remain a headwind moving forward, the question is whether crude is trading at fair value or if it may be undervalued.
Inventories and Seasonality:
Recent crude inventories data from the EIA revealed a decrease of over -9.23 million barrels, compared to the expected draw of -2.15 million barrels. Demand is beginning to ramp up, and consumers tend to travel more as the winter season comes to an end. Middle East tensions are still elevated, adding another layer of uncertainty to the supply chain dynamics.
Technical Analysis:
Crude has tested the 67.50-70 range many times, and this area continues to be a major support. Recent price action displays a decisive break above the 50-day EMA. Prices are now attempting to test the 200-day EMA, a much more significant area of resistance. Breaking above this 200-day EMA, coupled with a Golden Cross, could be exactly what crude needs to find upside momentum and enter a bull market in 2024.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
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/cme/
*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.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.