Will You Catch The Falling Knife? NYMEX CL1!
At the beginning of October, it seemed like it would only be a matter of time before crude oil headed back into triple-digit territory. While NYMEX WTI futures traded to a high at $76.90, the nearby ICE Brent futures moved to a peak at $86.72 per barrel. Both of the oil futures markets reached new highs for the year and their highest levels since way back in 2014 when the prices were on their way down from over $100 per barrel.
Sentiment always tends to be at an extreme when a market hits a high or a low, but in the oil market, the early November sanctions on Iran caused many market participants to crowd into long positions. A combination of factors led to a top in oil and a sell-off that many analysts did not see coming. While U.S. President Donald Trump had lobbied the Saudis and OPEC to increase their output of the energy commodity as the price climbed, it seems that an event in Turkey led the world's leading producer to follow his directives in the oil market.
The murder of Jamal Khashoggi, a Saudi national and Washington Post reporter, gave the U.S. leader incredible leverage as the evidence pointed to the involvement of the Crown Prince Mohamed bin Salman. The Saudis likely began selling oil as a matter of survival, to retain the support of the United States. At the same time, the U.S. announced exemptions for eight countries when it came to Iranian crude oil. Disappointed longs headed for the exits in the oil market as U.S. output rose to a record 11.7 million bpd and inventories rose for ten consecutive weeks according to data from the EIA. By the end of December, the price of the nearby NYMEX future contract fell to a low at $42.52 per barrel. Well, if the price drops to below $40 per barrel, will OPEC cuts the oil production to stabilize the oil price to prevent a further meltdown? Put a tight 5%-10% stop if you want to catch a falling knife for the light crude oil futures. Good Luck!
Sentiment always tends to be at an extreme when a market hits a high or a low, but in the oil market, the early November sanctions on Iran caused many market participants to crowd into long positions. A combination of factors led to a top in oil and a sell-off that many analysts did not see coming. While U.S. President Donald Trump had lobbied the Saudis and OPEC to increase their output of the energy commodity as the price climbed, it seems that an event in Turkey led the world's leading producer to follow his directives in the oil market.
The murder of Jamal Khashoggi, a Saudi national and Washington Post reporter, gave the U.S. leader incredible leverage as the evidence pointed to the involvement of the Crown Prince Mohamed bin Salman. The Saudis likely began selling oil as a matter of survival, to retain the support of the United States. At the same time, the U.S. announced exemptions for eight countries when it came to Iranian crude oil. Disappointed longs headed for the exits in the oil market as U.S. output rose to a record 11.7 million bpd and inventories rose for ten consecutive weeks according to data from the EIA. By the end of December, the price of the nearby NYMEX future contract fell to a low at $42.52 per barrel. Well, if the price drops to below $40 per barrel, will OPEC cuts the oil production to stabilize the oil price to prevent a further meltdown? Put a tight 5%-10% stop if you want to catch a falling knife for the light crude oil futures. Good Luck!