Oil Playbook ( 2021 )

Prices for Crude Oil are down -20% from last year which means the bearish outlook is priced in. The bearish outlook is that the -16% drop in consumption outweighs the -7% drop in production plus the 4% increase in inventory stockpiles. Bulls want to know if demand has bottomed or not and since consumption tends to be highest in Jan-Feb, it might have further to fall since travel is still lagging. However, exports have recovered and circling back, the -20% discount in crude prices indicate the market is fundamentally balanced given the uncertainty.

Production
2019 Average: 12,197
2020 Average: 11,318
%Change: -7.76%

Stockpiles
2019 Nov: 1,918
2020 Nov: 2,003
%Change: +4.24%

Consumption
2019 Average: 1,070
2020 Average: 916
%Change: -16.81%

Exports
2019 Average: 8,471
2020 Average: 8,407
%Change: -0.76%

Trading Strategy
Swings in the dollar index are primarily moving prices so this will create the trading opportunities in the near term. Get ready.

There is a momentum divergence on the DXY daily chart and the RSI has some room to run.

Crude prices have reached a resistance level .

If the Dollar index does start to rally then crude prices are going to waterfall. Best to wait for a decisive candle closing below the 10 day EMA before making a short trade.

Trading is risky. Don't do it.

Long oil /gas producer equities
KMI , LUKOY, EQT

Comment: Bullish Divergence on DXY

Comment: Fibonacci retracements to watch if the selling continues on Oil. The 0.618 lines up nicely with a macro fib level so that would be a very significant area to pay attention to, if it gets there...

Comment: Still above the 10 day EMA so I am waiting for a close below and then switch to the 1 hour for a short entry. It's important to wait because like the last couple times, shorts got squeezed out.

Comment: I've trimmed about 1/4 on some of my oil stocks LUKOY, KMI, RDS.B since they were up 20% -- but will definitely buy back if prices pull back.