Last week, our short-term price target of 80 USD was reached. Because of that, we would like to reiterate that we remain bearish on USOIL. In addition to that, we maintain our long-term price target of 70 USD.
Illustration 1.01 Illustration 1.01 shows the similarity between the oil price pattern in 2008 and now.
Technical analysis - daily time frame RSI, Stochastic, and MACD are bearish. DM+ and DM- are bearish. Overall, the daily time frame is bearish.
Technical analysis - weekly time frame RSI, Stochastic, and MACD are bearish. DM+ and DM- are bearish. Overall, the weekly time frame is bearish.
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.
I may look differently for the following reasons There are many factors affecting the oil price: recession, fear of recession, supply/demand, costs production, interest rate hike etc other than technical analysis. 1st Technically, we can see a clear support around $75 ; and 2nd costs of oil production is about $ 79 for Saudi Arabia at moment and it is much higher for US oil production. The costs of oil production in 2008 was about $50 for Saudi Arabia and highest oil price was just over $147. So that candle patterns may give less weight comparing 2008 and 2022, as the drop of oil price was reasonable and also bearable particularly for oil production countries. However it may not be the case at moment. 3rd Supply/Demand (a)the tension of Ukraine and Russia is escalating which affect the supply substantially and it will continue drive the oil price up; and (b) 2nd largest oil consumption country China has suffered more than other countries due to its strict Covid 19 policy. I expect that it will be reopening soon. If it is so, then the demand will be higher which will drive the oil price higher. (c) even with the fear of recession, you can see the airlines, hotels and cruises are booked for coming Christmas and New Year ! Only the traders and funds managers etc are fear of recession and interest rate hike, NOT the ordinary persons who are longing for a good holiday for a few years . So that fear of recession and rate hike become less weight comparing to the other factors, at least for the coming New Year! From the above analysis, I expect that oil price will rise sooner or later,
@pickingatautumn, I think no matter what, airlines will be booked out around this time of year. Don't have any data to back that up though.
Tradersweekly
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@pickingatautumn, How did you derive 75 USD as support? Unfortunately, I can not see a point from which I would derive it (at least on my chart). Unfortunately, I do not know particular production prices for every producer. But as far as I remember, a few years ago, when OPEC increased production to put pressure on U.S. producers, some shale producers reported being profitable between 20-40 USD. Regarding 2008, I am watching mainly rig count as an indicator of what is happening on the ground. I would argue that we see a peak in the rig count like back then. However, one must account for a delay between the price decline and rig count decline. Furthermore, recession, lagging wages, and risk-aversion will weigh on the oil market. Thank you very much for your comment and great points!
pickingatautumn
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@Tradersweekly, I was unable to upload a weekly chart image to this forum. However, from the weekly chart, you may see $75 zone (including the prices around it) has been the key support/resistance since 2006 to date.
kimozelghonemy
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Interesting
Tradersweekly
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@kimozelghonemy, Thanks for the comment. Unfortunately, I think the recession will drive oil and gas prices down.
kimozelghonemy
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@Tradersweekly, Everything is strange, one moment we were at the war and supply chain problems and everything going up Suddenly thereafter a recession and everything getting dumped
There are many factors affecting the oil price: recession, fear of recession, supply/demand, costs production, interest rate hike etc other than technical analysis.
1st Technically, we can see a clear support around $75 ; and
2nd costs of oil production is about $ 79 for Saudi Arabia at moment and it is much higher for US oil production. The costs of oil production in 2008 was about $50 for Saudi Arabia and highest oil price was just over $147. So that candle patterns may give less weight comparing 2008 and 2022, as the drop of oil price was reasonable and also bearable particularly for oil production countries. However it may not be the case at moment.
3rd Supply/Demand
(a)the tension of Ukraine and Russia is escalating which affect the supply substantially and it will continue drive the oil price up; and
(b) 2nd largest oil consumption country China has suffered more than other countries due to its strict Covid 19 policy. I expect that it will be reopening soon. If it is so, then the demand will be higher which will drive the oil price higher.
(c) even with the fear of recession, you can see the airlines, hotels and cruises are booked for coming Christmas and New Year ! Only the traders and funds managers etc are fear of recession and interest rate hike, NOT the ordinary persons who are longing for a good holiday for a few years . So that fear of recession and rate hike become less weight comparing to the other factors, at least for the coming New Year!
From the above analysis, I expect that oil price will rise sooner or later,