I haven't posted about crude in a few weeks because the fundamentals and technicals simply have told the same story over and over again. Bulls get bullish because A) they believe the global economic growth falacy or B) it's so oversold it must go higher.
My charts did not change, and, yes, it has played out well technically to the downside. It is ever closer to the $42.13 longer-term trend line (purple dotted line).
OPEC... or Saudi Arabia, rather, will continue to put the big hurt on US shale plays. The EIA crude inventory report shown a surplus of 8.9 million barrels, following a increase of 10.1 million barrels the following month. The API data was even more bearish, suggesting an increase of over 12 million barrels.
US shale companies will continue to pump, even as rigs fall to multi-year lows. Even given the 120+ days of declining gas prices, demand is still not there.
Potential long accumulation could be interesting in low $42, perhaps lower. However, $80/90 barrel oil is not even going to be possible. $55/60 seems more realistic.
Dear Sir, I appreciate you because of your professional charts . However the oil price is a function of a variety of factors.ln my view, it is unlikely to go through the floor of 44 USD.
CommoditiesTrader
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Well, I do appreciate that. And, I'm always here to help. The problem is, it's already breeched 44/BBL, and it'll likely do it again - with each time weakening any support levels. Historically, I would feel more comfortable going long near $42. It may seem like not much, but that is a big difference.
You are right, though. It is comprised of a lot of factors, and I try to comprise a lot of them while conducting my analysis, which is why I tend to forecast a lot of these moves. $48/$50 will likely be a stronger supply zone, while I don't see any true price inflection until 53.50/bbl.
Crude did have a nice day, today. In downward moves like seen in crude, these days can occur often. The only issue I've seen thus far is that when everyone is willing to call a bottom, it breaks lower.
With the US stockpiling 8-10 million barrels a week in surplus, it's hard to see it change much from here. That's why I only see upside to $55/60.
Although, the volatility is proven great for trading!
Sonic_scheme
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What is your thoughts now that oil is above 53.50?
Could you give us an update on your analysis. Thank you!
CommoditiesTrader
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Hi,
Yes, of course. I been meaning to update. I will aim to post something in depth by tomorrow :D