In the recent past, we abstained from setting price targets for the short and medium term. Meanwhile, we became focused on the long-term price target of 70$, which stays in place as we continue to be bearish on USOIL. Our view is based on the deepening recession and falling oil demand.
Yesterday, the IEA Executive Director, Faith Birol, said in his interview with Bloomberg during the COP27 summit, "The recent decision of OPEC+ to cut the production by two million barrels a day was definitely not helpful." Additionally, he said that this move by the cartel was fueling inflation in developing countries and may require a "rethink".
If his words come true, the world could see temporary stabilization of USOIL prices between 80$ and 90$. However, all depends also on Joe Biden, who currently does not support more drilling activity. Since the stance of the U.S. administration might quickly change (with an even deeper recession and end of midterms) and send prices much lower, we pay close attention to the energy dispute between the U.S. and OPEC.
Technical analysis - daily time frame RSI, Stochastic, and MACD show signs of exhaustion. DM+ and DM- are bullish but due to cross each other. Overall, the daily time frame is neutral.
Illustration 1.01 The image above shows the hourly chart of USOIL and simple sloping support/resistance levels. Interestingly, the immediate sloping support was broken to the downside, which is bearish.
Technical analysis - weekly time frame RSI and MACD are neutral. Stochastic is bullish. DM+ and DM- are bullish. Overall, the weekly time frame is neutral.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
one has to wonder if stop loss gets triggered here too. like gold, indices, ect ect
Tradersweekly
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@francisoconnell, We presented no entry and no stop-loss. We stated only the long-term outlook and our price target; it is no trade signal or trade advice. We follow the trend and reassess our view accordingly. Let us know what is your call.
JoeChampion
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Excellent view!
DeGRAM
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Great chart analysis. Thank you!
louistran_016
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question, if oil and nat gas continue to fall should we expect energy inflation to cool down significantly in the next few quarters? this market is pricing in both inflation and recession at the same time, which are opposing forces imo
Tradersweekly
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@louistran_016, It is hard to tell, it all depends on central banks and their path forward from here. Recession can be inflationary or deflationary.