Oil replicating Feb/Mar move, predicts PT: 40.75-36.80
Given the massive and unexpected DOE inventory build this morning, I thought it would be worth highlighting this chart again. If we take oil's Fed/Mar moves: Up +10.65 (+24.45%) and Down -11.62 (-24.44%) and apply them to the March 18th low, we arrive at a dollar move target of 40.75 and a percentage move target of 36.80. Both are nice in range with a large neutral zone encountered in late '08/early '09 as well as fib extensions from the strongest counter-trend rally in late July.
Again, nothing on the macro front has changed: China is still slowing, Iran will still be pumping, supply is still expected to outpace demand, oil rig counts are growing, and shale is still producing. Tack on seasonal slowdown in driving, seasonal reductions in refinery demand, which has already been higher than normal due to higher than normal crack spreads, a US export swap w/ Mexico and very real eagerness to life the US embargo.
And...biggest of all no one can predict what they don't expect. I haven't seen a single forecast for the average oil price in 2015 lower than the current level. Hell, money managers are still net-long on NYMEX futures and options.
Good luck catching that falling knife, because it still has momentum to the downside.
Again, nothing on the macro front has changed: China is still slowing, Iran will still be pumping, supply is still expected to outpace demand, oil rig counts are growing, and shale is still producing. Tack on seasonal slowdown in driving, seasonal reductions in refinery demand, which has already been higher than normal due to higher than normal crack spreads, a US export swap w/ Mexico and very real eagerness to life the US embargo.
And...biggest of all no one can predict what they don't expect. I haven't seen a single forecast for the average oil price in 2015 lower than the current level. Hell, money managers are still net-long on NYMEX futures and options.
Good luck catching that falling knife, because it still has momentum to the downside.