Crude Oil Price Update – Trader Reaction to $34.82 – $32.58 Sets the Near-Term Tone

U.S. West Texas Intermediate crude oil futures fell for the fourth time this week, weighed down by demand concerns as COVID-19 cases swelled globally and fresh lockdowns were to start in Europe’s two largest economies. Traders were also concerned that rising output from Libya and the United States, when coupled with a possible trimming of production cuts by OPEC+, would eventually create a global supply glut.

At 20:07 GMT, December WTI crude oil futures are trading $35.66, down $0.51 or -1.41%.

“Many nations with high oil consumption across the world are seeing infection levels that they didn’t have even during the first wave,” said Paola Rodriguez-Masiu, Rystad Energy’s senior oil markets analyst.

“These infection levels are destined to bite oil demand, as traffic will be curbed to a minimum during the coming lockdowns.”

Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The next downside target the May 28 main bottom at $33.53.

The main trend changes to up on a move through $41.90. This is highly unlikely, but due to the prolonged move down in terms of price and time, the market is inside the window of time for a closing price reversal bottom.

The minor trend is also down. A trade through $39.83 will change the minor trend to up. This will shift momentum to the upside.

The main range is $25.31 to $44.33. Its retracement zone at $34.82 to $32.58 is the primary downside target. This zone was almost tested on Thursday, but the selling stopped at $34.92.

Short-Term Outlook

In my opinion, $34.82 to $32.58 represents a value area. If you’ve charted the markets long enough, you would’ve probably seen this chart pattern hundreds of times. It is very common.

The rally started at $25.31 when OPEC+ decided to cut production by 9.7 million barrels per day. Helping to generate some of the upside momentum was the belief that authorities would eventually contain the coronavirus.

The market hit its high in late August when OPEC+ agreed to start trimming their production cuts. This put a little more supply into the market. U.S. producers also started to up the number of producing rigs.

The market started to freefall the last two weeks as Libya ramped up production, and COVID-19 cases began to rise around the world.

The reason the rally started is still intact. OPEC+ is cutting production. The nearly 50% correction of the rally signals that fears of demand destruction are encouraging traders to sell crude oil.

OPEC+ can’t do anything to stop the spread of the coronavirus, but the can control the supply by altering the production cuts. We think they are going to do this at about the same time the market trades $34.82 to $32.58.

Furthermore, a break below $32.58 will give OPEC and its allies even more incentive to announce their change in plans.

I think the market is close to a bottom, but it needs OPEC+’s help to stop the selling.

For a look at all of today’s economic events, check out our economic calendar.

Crude Weekly Price Forecast – Crude Oil Markets Get Hammered

WTI Crude Oil

The West Texas Intermediate Crude Oil market broke down rather significantly during the course of the week, slicing through the $36.25 level II reach towards the $35 handle. Ultimately, I do think that we break down below there, and then go looking towards the $32.50 level, followed by the $30 level. We are finally seeing a bit of demand destruction here, and therefore it makes quite a bit of sense that we will continue going lower. The US dollar strengthening of course gives us an opportunity to see crude oil breaking down as well. Fading rallies on short-term charts is how I am trading this, but longer-term traders are probably simply going to sell off.

WTI Oil Video 02.11.20

Brent

Brent markets also broke down significantly during the trading sessions that make up the week, crashing through the previous support. Ultimately, the market looks as if it is going to go looking towards the $35 level, perhaps followed by the $32.50 level. Brent will probably lead the way lower, due to the fact that the European Union is shutting things down, and the Brent market is used quite a bit more in non-US countries. With that, I think we go lower, and it is likely that we will continue to break down.

At this point, short-term rallies will probably be sold into but if you are a seller from the longer-term standpoint all you need to do is look for some type of noisy behavior to take advantage of. $30 will course be psychologically significant underneath, so pay attention.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Markets Continue to Get Hit

WTI Crude Oil

The West Texas Crude Oil market has broken down below the $36.25 level again, and it now looks like we are going to threaten the $35 level. If we break down below the $35 level, it is likely that we go much lower, perhaps reaching down towards the $32.50 level, and then possibly the $30 level. With that being the case, I do like the idea of shorting this market on short-term rallies that show signs of exhaustion. At this point time, the $30 level is my longer-term target, but I think it is can it take a while to get there. After all, it seems as if hope burns eternal, and at this point I think we have a bit of a lid on the market above at the 50 day EMA.

Crude Oil Video 02.11.20

Brent

Brent markets tried to rally initially during the trading session on Friday, but then broke down again to reach towards the bottom of the candlestick from the Thursday session. At this point time, the market looks like it is going to continue to struggle due to the fact that we have no demand out there, and it looks like we are ready to go down towards the $35 level, possibly even the $30 level. After all, if the European Union is going to shut itself down it is hard to imagine a scenario where we suddenly take off as far as demand or value is concerned. Furthermore, the US dollar is also starting to strengthen as well, which of course is what this commodity is priced in. With that, I am a seller of short-term rallies.

For a look at all of today’s economic events, check out our economic calendar.

Oil Continues To Lose Ground On Demand Worries

Oil Video 30.10.20.

Some OPEC+ Members Reportedly Want To Boost Their Oil Production From January 1, 2020

The surge of coronavirus and the recently announced anti-virus measures in European countries leave OPEC+ with no choice but to extend the current oil production cuts for at least another three months.

However, a recent Reuters report suggested that some countries – Kuwait, United Arab Emirates and Iraq – were willing to find a way to increase their production at the beginning of the next year.

Interestingly, Kuwait has already stated that the country would support any OPEC+ decision, while UAE and Iraq did not make any comments about recent reports.

Iraq has the biggest problems as the country is in a poor economic shape and needs to increase its revenue from oil exports.

Most likely, additional weakness of oil prices will be sufficient enough to convince all OPEC+ members to stick to current production cuts instead of boosting production at the beginning of 2021. Negotiations would become more challenging if oil returns to the $40 level.

Oil Needs A Pause In The Constant Flow Of Bearish News To Have A Chance For A Rebound

This week was full of bad news for oil. France announced a nationwide lockdown, Germany decided to close bars, restaurants and gyms while the number of new coronavirus cases in the U.S. continued to increase at an alarming pace.

In addition, EIA reported that crude inventories increased by 4.3 million barrels. EIA has also stated that gasoline demand increased from 8.29 million barrels per day (bpd) in the previous week to 8.55 million bpd, but it remained well below 9.78 million bpd recorded a year earlier. I’d also note that many traders are nervous ahead of U.S. election.

In the near term, the main hope for oil bulls is that Saudi Arabia and Russia will agree to extend current oil production cuts and put pressure on other OPEC+ members to comply with the deal.

Obviously, this hope alone cannot provide enough support to oil prices at a time when additional bearish news are published on a daily basis. In this light, oil needs a pause in this flow of bearish news to have a chance to consolidate near current levels and set the stage for a rebound. It remains to be seen whether oil will get such a pause during the next week which is expected to be very volatile due to U.S. presidential election.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Lower As Tech Stocks Slide After Earnings Reports

Big Tech Stocks Are Losing Ground In Premarket Trading

S&P 500 futures are losing ground in premarket trading as leading tech stocks are under pressure after the release of third-quarter earnings reports.

Shares of Apple, Microsoft, Facebook and Amazon are losing ground in premarket trading, while shares of Alphabet are gaining more than 6% due to healthy growth of Google’s ad sales.

Elevated expectations are the biggest problem for tech stocks right now. For example, Apple shares are up by 57% year-to-date while Amazon stock gained almost 74% since the beginning of the year.

In this situation, it is not enough to simply beat analyst estimates on both earnings and revenue – the market wants to see a path for robust growth in the future. That said, it remains to be see whether the current premarket sell-off will  turn into a serious multi-day pressure on tech stocks as many traders are waiting for a pullback to initiate their positions in market leaders.

Oil Fails To Rebound As Coronavirus Continues To Surge

Oil remains under pressure after yesterday’s sell-off as traders evaluate risks of additional lockdowns. Yesterday, U.S. recorded more than 91,000 new cases of the disease, so coronavirus will likely get back to the headlines right after the U.S. presidential election.

Meanwhile, Exxon Mobil reported its third-quarter results, missing analyst estimates on revenue and beating them on earnings. Chevron also beat earnings estimates but failed to live up to revenue expectations.

This trading session is set to be chalelnging for oil majors as their revenues were hit hard by the pandemic while oil is trading near the $36 level amid virus fears.

Personal Spending Increased By 1.4% In September

U.S. has just provided Personal Income and Personal Spending reports. Personal Income increased by 0.9% month-over-month in September compared to analyst estimates which called for growth of 0.4%. Personal Spending grew by 1.4% compared to analyst consensus of 1%.

Both reports were better than expected and can provide some support to stocks during today’s trading session. The strength of Personal Spending is especially welcome as it shows that consumers remained confident in September.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – OPEC+ Has No Choice but to Postpone Planned Output Reductions

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower as traders try to consolidate prices after another steep sell-off the previous session. The current price action indicates that chart-watching traders are recognizing the importance of key 50% to 61.8% retracement zones of the entire late-April to late-August rally.

Does this week’s price action mean the selling is out of control? No. All we can surmise is that the fundamentals have worsened enough since about August 26 to take away about half of the entire rally from April.

Since that high was reached, we’ve seen U.S. stimulus funds evaporate as fiscal coronavirus aid expired, the end of the U.S. driving season, increased U.S. production, a failure to pass new fiscal stimulus legislation, increased production from Libya, OPEC+’s plan to continue to reduce its production cuts and a resurgence of the coronavirus in the United States, Europe and Russia.

At 08:25 GMT, December WTI crude oil futures are trading $36.15, down $0.02 or -0.06% and December Brent crude oil is at $37.36, down $0.29 or -0.77%.

Oil Losses Deepen as Anxiety Builds Over Lockdowns, US Elections

Global oil prices are under pressure again on Friday, although the selling is not as bad as it was earlier in the week, with both futures contracts set for a second straight monthly decline. The catalysts behind the selling are growing concerns that the rise in COVID-19 cases in Europe and the United States could hurt consumption.

Global coronavirus cases rose by a single-day record of half a million on Wednesday prompting governments across Europe to impose mobility restrictions again to curb the spread of the virus.

Short-Term Outlook

Governments around the free world tried to stop the spread of the virus by telling their citizens to wear masks, practice social distancing, avoid crowded areas and to test frequently. While these “requests” were being followed, oil traders began to bet on a steady demand recovery. But the plans blew up as people took matters into their own hands, leading to a resurgence in the pandemic.

With cases rapidly rising around the world and threatening the global demand recovery, bullish speculators had no choice but to liquidate their long positions. There is uncertainty over when demand will return, and when traders see uncertainty, they sell their positions and move to cash or other protective assets. Some even short the market.

So is the market out of control? No it is not. The selling has been orderly and there are sound reasons behind it.

But since it looks as if the pandemic will get worse before it gets better, no one really has control over demand. So the only choice is to work on the supply. That could mean lowering production in the United States, OPEC+ telling Libya to lighten up on production, or OPEC and its allies including Russia postponing plans to raise their output by 2 million bpd in January. Saudi Arabia and Russia are in favor of maintaining the group’s output reduction of about 7.7 million bpd currently into next year. If they start to push this agenda then prices may stabilize.

For a look at all of today’s economic events, check out our economic calendar.

U.S GDP data Stops Oil Bears from breaking below $35/Barrel

Crude oil prices were relatively higher at the last trading session of this week after losing more than 1% in value in the previous two trading sessions.

Oil bulls are nursing their wounds still, after the bears had increased their selling pressure at unprecedented levels, on the basis that COVID-19 recent attacks on key emerged markets has brought about a freeze on the energy demand/supply rebalancing wheel, taking oil prices far below $40/ Barrel.

In the case of Brent crude futures it trades below its critical support level of $38.50/barrel at the time of writing this report.

However, Oil bulls are presently riding on macros, showing the world’s largest economy and consumer of energy printed a far impressive economic data than anticipated by many Wall Street analysts.

Data seen from the U.S Commerce Department’s released yesterday revealed the world’s leading producer of oil, recorded a GDP growth of 7.4% from the prior period, a quarterly surge that equals an annualized growth of 33.1%.

That said, the recent price action shows the bulls present resolve is slowing down on the bias that, North Africa’s leading producer is bringing oil supplies to an supposedly fragile energy market coupled with bearish sentiments on the second wave of Covid-19 prevailing in the Northern hemisphere, saw oil bulls suffering from exhaustion as it tried to break above $38.50/Barrel.

Adding pressure on oil prices in the mid-term are macros showing leading oil and gas companies have reduced their operating costs by 35%, on the sentiments that COVID-19 resurgence will soften energy demand in the global economy growth by at least 3 months.

That said the oil cartel group is expected to intervene strongly with all ammunitions at its disposal as it monitors the deteriorating demand prevailing around the global economy closely as well as rising crude oil supplies from Libya.

Oil traders, remain upbeat that it’s almost impossible for oil prices to go negative as seen in April, but remain highly worried on the COVID-19 attacks still making major headlines. Nevertheless traders are now focusing their attention on the likely winner of the tightly contested U.S election coming up in few days’ time.

For a look at all of today’s economic events, check out our economic calendar.

 

Crude Oil Price Forecast – Crude Oil Markets Test Major Support

WTI Crude Oil

The West Texas Intermediate Crude Oil market has broken down during the trading session on Thursday, slicing through the crucial $36.25 level that had been so supportive. However, we have broken down through there and reached towards the $35 level. We have bounced from there, and now it looks very likely that we will continue to short off signs of exhaustion. Looking at this chart, the market will probably continue to drop from here and perhaps reach much lower. Ultimately, I like the idea of shorting this market on rallies as we have further to go to the downside from a serious lack of demand and of course Europe locking itself down.

Crude Oil Video 30.10.20

Brent

Brent markets have broken down through the support level at $39, showing signs of negativity yet again. In fact, it looks as if the Brent market is slightly more negative than the WTI market, which makes quite a bit of sense considering that Brent is more widely used around the world outside of the United States. With that being the case, I think that we will continue to see a lot of noisy trading, and therefore I am looking for short-term rallies to fade. The market is very likely to go looking towards the $35 level, and as a result I think that if you drill down to short-term charts, it is very likely that you will get signs of exhaustion that you can jump into. Ultimately, this is a market that will continue to see a lot of negativity and therefore I have absolutely no interest in buying this market anytime soon.

For a look at all of today’s economic events, check out our economic calendar.

Oil Tries To Settle Below The $36 Level

Oil Video 29.10.20.

Lockdown In France Pushes Oil To Multi-Month Lows

Yesterday, the President of France Emmanuel Macron announced that the country will have to go through another lockdown. This lockdown will be a bit lighter than the previous one but it is still expected to deal a significant blow to oil demand in France.

Currently, the markets wonder whether other European countries will follow suit. For example, the situation is very challenging in UK but its government is trying to avoid a full lockdown.

At this point, the situation in Europe is the main problem for the oil market although the recent developments in the U.S. are also worrying. Yesterday, the U.S. reported more than 81,000 new coronavirus cases.

While nobody expects that any serious anti-virus measures would be introduced before the U.S. election on November 3, 2020, the U.S. may be ultimately forced to impose additional curbs in case the number of new cases continues to increase. As the U.S. is the world’s biggest economy and the main oil consumer, such scenario will be bearish for oil.

OPEC+ Will Be Forced To Keep Current Production Cuts After January 1, 2021

Yesterday, Saudi Aramco stated that current oil demand was not robust enough to justify boosting oil production. Currently, OPEC+ countries are set to increase their oil production by 2 million barrels per day (bpd) at the beginning of 2021.

However, it is already clear that OPEC+ will be forced to keep current production cuts intact for the first months of 2021 as the world failed to contain the virus and has to deal with a powerful second wave of the disease.

In this situation, demand for oil will be under pressure at a time when Libya plans to increase its oil production from 500,000 bpd to 1 million bpd by the end of 2020.

Libya is exempt from the production cut deal due to the civil war in the country, so OPEC+ cannot stop Libya from getting back to its normal production levels.

In addition, inventories have started to increase which is a signal that demand has already stalled.

Thus, the only option for OPEC+ is to continue with current production cuts for the first quarter of 2021. In the near term, the coordinated action of OPEC+ countries is the main hope for oil bulls.

For a look at all of today’s economic events, check out our economic calendar.

Indices Try to Catch a Breath. Great Session for USD

Almost all indices collapse and aim for long-term lows.

SP500 is testing the 23,6% Fibonacci.

DAX is very close to reach the 38,2% Fibonacci.

FTSE breaks the lower line of the wedge formation.

CAC reaches crucial support from the first half of the year.

EURUSD breaks the lower line of the flag formation.

EURAUD eventually bounces from the upper line of the sideways trend.

EURGBP in a flag but with inclinations for an upswing.

AUDCHF goes lower after the bounce from a crucial resistance.

WTI Oil breaks the lower line of the symmetric triangle.

Gold goes lower after the escape from the mid-term pennant.

USDPLN breaks the neckline of the inverse Head & Shoulders pattern, it looks bullish.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Higher As GDP Rebounded Faster Than Expected

Initial Jobless Claims Decline To 751,000

The U.S. has just provided Initial Jobless Claims and Continuing Jobless Claims reports.

The Initial Jobless Claims report indicated that 751,000 Americans filed for unemployment benefits in a week. Analysts expected Initial Jobless Claims of 775,000.

Meanwhile, Continuing Jobless Claims declined from 8.37 million to 7.76 million compared to analysts consensus of 7.7 million.

S&P 500 futures are gaining ground after the release of employment reports despite traders’ worries about the risks posed by the second wave of coronavirus in U.S. and Europe. Most likely, the trading action will remain very nervous until U.S. presidential election on November 3, 2020.

GDP Grew By 33.1% In The Third Quarter

The U.S. has also reported that third-quarter GDP increased by 33.1% quarter-over-quarter after it suffered a drop of 31.4% in the second quarter. Analysts expected that GDP would grow by 31% in the third quarter.

While the GDP report indicated that economy rebounded stronger than expected, traders will likely remain cautious as they wait for the presidential election.

Today, U.S. will also provide Pending Home Sales data for September. Analysts expect that Pending Home Sales will increase by 3.4% month-over month. A better-than-expected report may provide some additional support to stocks.

Oil Dives Below The $36 Level On Viris Fears

Yesterday, France imposed a second national lockdown in order to contain the spread of the virus. This lockdown will be a bit lighter than the first one as schools will stay open and people will be able to go to their jobs. However, it will still deal significant damage to oil demand in one of Europe’s biggest economies.

Germany has also announced additional restrictions, closing bars, restaurants, gyms and other public places, but stopped short of imposing a full lockdown.

According to recent reports, Britain is under pressure to introduce another lockdown but the country’s government is trying to avoid this scenario as it would deal a huge blow to the economy.

Not surprisingly, oil traders have reacted to the new risks and pushed oil below the $36 level. Most likely, today’s trading session will be challenging for oil-related stocks.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Down on Growing Concerns Over Global Oil Supply Glut

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sharply lower on Thursday on increasing concerns that a resurgence in the coronavirus pandemic will derail the economic recovery while putting a dent in the global demand recovery for fuels. Traders said governments’ renewed restrictions to curb a second wave of coronavirus infections and signs of a growing global oil supply glut are sending prices tumbling.

At 10:28 GMT, December WTI crude oil is trading $35.90, down $1.49 or -3.99% and December Brent crude oil is at $37.66, down $1.46 or -3.73%.

Breaking news is also weighing on prices with the release of a survey saying Saudi Arabia may cut or keep Asia crude prices steady in December.

Demand Outlook Deteriorating

Amid surging COVID-19 cases in Europe, France will require people to stay home for all but essential activities as of Friday, while Germany will shut bars, restaurants and theatres from November 2 through the end of the month.

The pressure on prices indicates that traders are worried about a second viral wave sweeping the U.S. and parts of Europe. Meanwhile, stricter social distancing measures and more lockdowns are expected to bring a larger-than-expected impact on global energy demand.

US Energy Information Administration Weekly Inventories Report

U.S. crude oil stockpiles rose last week as production surged, posting its largest one-week increase ever, while gasoline and distillate inventories fell, the Energy Information (EIA) said on Wednesday.

Crude inventories rose by 4.3 million barrels in the week to October 23 to 492.4 million barrels, much more than analysts’ expectations in a Reuters poll for a 1.2 million-barrel rise.

U.S. gasoline stocks fell by 892,000 barrels in the week to 226.1 million barrels, the EIA said, in line with expectations. Distillate stockpiles, which include diesel and heating oil, fell by 4.5 million barrels.

Production surged to its highest since July at 11.1 million barrels per day in a record weekly increase of 1.2 million bpd. Some of that was due to offshore facilities coming back online after Hurricane Delta.

Saudi Arabia May Cut or Keep Asia Crude Prices Steady in December: Survey

Top oil exporter Saudi Arabia may maintain or cut slightly its crude official selling prices (OSPs) for Asian buyers in December after benchmark Dubai prices and refining margins weakened, a Reuters survey showed on Thursday.

Three of six Asian buyers expect the December OSP for Saudi flagship grade Arab Light to fall by 10-20 cents a barrel from the previous month, while two others expected prices to hold steady, the survey showed.

Daily Forecast

WTI and Brent crude oil are getting close to retracing 50% to 61.8% of its rally from April. This is likely to raise red flags with OPEC+ who may start to seriously consider halting its plans to reduce production cuts on January 1.

The reported surge in U.S. production combined with Libya’s ramping up supply and OPEC+ considering easing off its current production curbs means we could see an inventory glut over the near-term.

The current sell-off reflects this concern as well as COVID-related demand loss.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Markets Got Crushed

WTI Crude Oil

The West Texas Intermediate Crude Oil market has broken down a bit during the trading session on Wednesday, reaching down towards the $37 level. This is in reaction to the concern of the European Union locking down multiple borders, and of course the fact that the US dollar has got quite a bit of a bit during the day. Ultimately, this is a market that I think continues to be negative overall, because quite frankly the oversupply of crude oil still is a major issue. If we break down below the $36 level, then the market is to go down towards the $35 level, and that eventually the $30 level after that. Rallies at this point in time should continue to be selling opportunities.

Crude Oil Video 29.10.20

Brent

Brent markets also fell, reaching down towards the lows again but have bounced slightly during the middle the day. At this point time, the market is still looking to break down and I think eventually we will get below the $38.75 level which would open up the trapdoor to much lower pricing, the first of which being the $37.50 level, followed by the $35 level. Ultimately, this is a market that I think continues to suffer as well, and the Brent market is probably even more sensitive to the European Union than the WTI market is. That being said, this is a market that eventually looks likely to break down and therefore I look at rallies as selling opportunities, especially if we get closer to the 50 day EMA. The 50 day EMA sits just below the $42.50 level, and therefore I think a lot of traders will be paying attention to it.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Update – Downside Momentum Makes $35.72 – $34.82 Next Major Target Area

U.S. West Texas Intermediate crude oil futures are trading lower on Wednesday as a surge in the U.S. Dollar weighed on demand for the dollar-denominated asset. The safe-haven dollar rose as coronavirus cases jumped in the United States, Europe and Russia. Traders are worried that the latest increase in coronavirus infections could halt the global economic recovery and drive down fuel demand.

At 15:02 GMT, December WTI crude oil futures are trading $37.40, down $2.17 or -5.58%.

Prices are also being pressured by a mixed inventories report from the Energy Information Administration. It showed U.S. stocks rose while gasoline and distillate inventories fell last week.

Crude inventories rose by 4.3 million barrels in the week to October 23 to 492.40 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.2 million-barrel rise.

U.S. gasoline stocks fell by 892,000 barrels in the week to 226.1 million barrels, the EIA said, compared with analysts’ expectations in a Reuter poll for a 961,000-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 4.5 million barrels in the week to 156.2 million barrels, versus expectations for a 2.1 million-barrel drop, the EIA data showed.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The main trend will change to up on a move through the nearest main top at $41.90.

The minor trend is also down. A trade through $39.83 will change the minor trend to up. This will shift momentum to the upside.

Short-Term Outlook

An extended trade through the last main bottom at $36.93 will reaffirm the downtrend. This could trigger a break into the June 12, 2020 main bottom at $35.72. This is followed by a major 50% level at $34.82.

The fundamentals are bearish. If the freefall continues into $35.72 to $34.82 then we’re likely to hear something from OPEC+ regarding the planned reduction in production output cuts on January 1.

If OPEC+ starts to feel too much heat then look for them to postpone the planned reduction. This won’t change the main trend to up, but it could trigger a closing price reversal bottom that could lead to a meaningful short-covering rally.

For a look at all of today’s economic events, check out our economic calendar.

Oil Suffers A Major Sell-Off Amid Virus Fears

Oil Video 28.10.20.

Oil Is Under Serious Pressure Amid Fears Of New Lockdowns In Europe

The world markets are in a sell-off mode today, and oil is no exception. The main reason for this sell-off is the fear of a second wave of lockdowns in Europe.

According to recent reports, France will soon issue a stay-at-home order which will tell people to stay at home except for work or essential exercise.

Meanwhile, the German newspaper Bild reported that Angela Merkel was pushing for a light lockdown from November 2. This lockdown is expected to close businesses like bars, restaurants and gyms in an attempt to contain the second wave of coronavirus.

While the upcoming lockdowns are not expected to be as strict as the lockdowns in spring, oil traders worry that they will put significant pressure on demand for oil.

At this point, it looks like oil demand will certainly suffer a blow, but the size of this blow remains uncertain. If the decline in oil demand is not as strong as feared, oil will have good chances to get back above the $40 level.

U.S. Crude Inventories Increase By 4.3 Million Barrels

Yesterday, API Crude Oil Stock Change report showed that crude inventories increased by 4.58 million barrels. Today’s EIA Weekly Petroleum Status Report confirmed that crude inventory levels have significantly increased.

According to EIA, crude inventories increased by 4.3 million barrels. Meanwhile, gasoline inventories decreased by 0.9 million barrels while distillate fuel inventories decreased by 4.5 million barrels.

Crude oil imports increased by 0.5 million barrels per day (bpd) and contributed to the increase of crude inventories. However, the main catalyst for the rapid inventory increase was the major growth of U.S. domestic production levels.

The U.S. domestic oil production grew from 9.9 million bpd to 11.1 million bpd. Finally, the rising number of U.S. oil rigs led to a major increase in domestic production levels.

It should be noted that the next week’s report may show a decline in U.S. oil production as  Hurricane Zeta forced evacuation of offshore platforms in the U.S. Gulf of Mexico.

In total, EIA published a bearish report as crude inventories increased together with the U.S. oil production. Most likely, oil will remain highly volatile in the upcoming trading sessions as topics like European lockdowns, U.S. stimulus negotiations and U.S. presidential election will keep traders busy.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Oversupply Fears Fanned by Bearish API Report; EIA on Tap

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are under pressure Wednesday as sellers returned after yesterday’s one-day reprieve. The markets gave up yesterday’s gains early in the session as a surge in U.S. crude stocks and rising coronavirus infections in the United States and Europe fanned fears of a supply glut and weaker fuel demand.

At 09:49 GMT, December WTI crude oil is trading $38.00, down $1.57 or -3.97% and December Brent crude oil is at $39.90, down $1.30 or -3.16%.

American Petroleum Institute Weekly Inventories Report

The API reported on Tuesday a bigger build than expected in crude oil inventories of 4.577 million barrels for the week-ending October 23. Analysts had predicted a much smaller inventory build of 1.11 million barrels.

The API also reported a surprise build in gasoline inventories of 2.252-million barrels of gasoline for the week-ending October 23 – compared to the previous week’s 1.622-million barrel draw. Analysts had estimated a 2.0-million-barrel draw for the week.

Distillate inventories were down by 5.333 million barrels for the week, compared to last week’s 5.983-million-barrel draw, while Cushing inventories rose by 136,000 barrels.

Oil production in the United States slid significantly last week, increasing the gap between this week and the all-time high this year to 3.2 million barrels per day. U.S. oil production currently sits at 9.9 million bpd, according to the Energy Information Administration (EIA).

Daily Forecast

WTI and Brent crude oil prices finished higher on Tuesday despite the expected drop in demand because of a number of factors. Bearish factors this week include a ramp-up of oil production in OPEC producer Libya and a surge in COVID-19 cases in the United States, Europe and Russia.

Another hurricane in the Gulf of Mexico helped produce a rise in prices yesterday, but the reaction appeared to be muted as forecasts began to show the storm would miss major production facilities.

“A resurgence in COVID-19 cases in Europe and North America has stopped the recovery in demand in its tracks,” ANZ Research said in a note.

“If market conditions worsen, (OPEC+) will have no choice but to delay the increase of quotas by a month or two at its meeting on December 1,” ANZ said.

Russian President Vladimir Putin indicated last week he may agree to extend OPEC+ oil production reductions.

It appears that prices are likely to continue to retreat until OPEC+ decides it can’t take the pain. I don’t think anyone can control the demand recovery at this time, but production can be controlled and that may be enough to provide short-term support.

Today’s Energy Information Administration (EIA) weekly inventories report is expected to show a 1.5 million barrel build in crude. However, its the gasoline and distillate numbers that are likely to draw the most attention from traders.

For a look at all of today’s economic events, check out our economic calendar.

Soft Energy Demand, COVID-19 Virus Hit Hard on Crude Oil Market

The usual prevailing macros affecting oil prices include soft energy demand, rising COVID-19 caseloads coupled with North Africa’s oil juggernaut Libya’s return to the already sensitive oil markets weighed heavily on black fossil oil.

Brent oil futures at the time of writing this report traded slightly above $40.80/barrel losing more than 1.6% in its value, not forgetting the U.S oil-based traded contract, West Texas Intermediate futures trading slightly above its critical support level of $38.50/ barrel, thereby revealing losses of more than 2% amid the pending hurricane storm Zeta scheduled to hit the U.S Gulf Coast, anytime from now.

It’s fair to say that oil bulls are back on the bench at least for now amid growing distortion in energy demand/supply rebalancing coupled with the lingering U.S. stimulus deal and the highly contested U.S election coming to play in some days’ time.

Crude oil bears are presently having a party of a lifetime on reports coming from the American Petroleum Institute (API) showed a rise of 4.577 million barrels for the week that ended on October 23, and not surprisingly, it also showed gasoline inventories ticking up as Americans head to the winter months, at a time when economic activities are relatively lower due to the cold.

Heavy losses seen in recent price action are prevailing on the bias that energy experts were expecting a build of 1.2 million barrels.

Compounding the oil bulls’ woes remains the usual suspect, COVID-19 pandemic weighing heavily on the distorted energy market, with caseloads rising rapidly at the speed of sound, to an extent that many economic experts are now downgrading their economic recovery expectations further into the future.

Johns Hopkins University data printed the number of individuals affected with the deadly virus is now nearing 44 million globally as of October 28, meaning restriction of human mobility might be intensified, as COVID-19 virus now looks out of control.

The blurred mood among oil traders remains tuned on fading reflationary hopes and heightened fears that French lawmakers are considering a frightful economic step back into the Covid-19 full stop abyss with full lockdown measures now on the table , one thing remains clear oil bulls are far away at least in the near term.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Update – Strengthens Over $39.42, Weakens Under $38.83

U.S. West Texas Intermediate crude oil futures are trading steady-to-better on Tuesday, recovering some of yesterday’s steep decline, on short-covering ahead of a potential drop in U.S. production as oil companies began shutting offshore rigs with the approach of a hurricane in the Gulf of Mexico.

At 15:35 GMT, December WTI crude oil is at $39.08, up $0.52 or +1.35%.

Helping to put a lid on prices is a surge in global coronavirus cases, which could derail global demand recovery and worries over a global supply glut as Libya ramps up production.

Finally, an analyst survey by Reuters ahead of data from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday estimated that U.S. crude stocks rose in the week to October 23, while gasoline and distillate inventories fell.

Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $41.90 will change the main trend to up. A trade through $38.28 will indicate the selling pressure is getting stronger. A move through $36.93 reaffirms the downtrend.

The short-term range is $44.33 to $36.93. Its retracement zone at $40.63 to $41.50 is resistance.

The minor range is $36.93 to $41.90. The market is currently straddling its retracement zone at $39.42 to $38.83. Counter-trend traders are trying to form a secondary higher bottom.

Short-Term Outlook

Based on the early trade, the direction of the December WTI futures contract into the close is likely to be determined by trader reaction to the minor 50% level at $39.42.

Bullish Scenario

A sustained move over $39.42 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the next minor pivot at $40.09.

Bearish Scenario

A sustained move under $39.42 will signal the presence of sellers. This could lead to a retest of $38.83, followed by yesterday’s low at $38.28. This price is a potential trigger point for an acceleration to the downside with the next target the October 2 main bottom at $36.93.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Continues to Look Vulnerable

WTI Crude Oil

The West Texas Intermediate Crude Oil market has tried to rally initially during the trading session but has given up a lot of the gains to show signs of exhaustion yet again. Ultimately, I think that the market is going to go down towards the bottom of the range that it has been in, which means that we could go as low as $36.25. That is an area that of course is important as it has been tested twice, but ultimately if we break down below there it opens up the possibility of a move down towards the $35 level.

Crude Oil Video 28.10.20

Brent

Brent markets also tried to rally but gave back the gains before the end of the day. Ultimately, the market is likely to find plenty of resistance above, near the $40 level, and then of course the 50 day EMA sits just above, and is sitting at the big figure, so that should be plenty of resistance. Ultimately, beyond that we have the 200 day EMA which causes major resistance as well. That being said though, the market is going to continue to move back and forth on the idea of stimulus and whether or not it is going to create more demand. At this point, it is difficult to see a scenario where we get out of the overall range.

If we do, then it will be like a “trapdoor opening” that could send this market much lower. Fading rallies continues to work as far as I can see, on short-term charts. As far as buying is concerned, I have no interest whatsoever.

For a look at all of today’s economic events, check out our economic calendar.

Oil Gains Ground As Tropical Storm Zeta Forces Evacuation Of Offshore Platforms

Oil Video 27.10.20.

Another Storm Provides Support To Oil Prices

Oil is rebounding after yesterday’s sell-off as Tropical Storm Zeta forced evacuations of offshore production platforms in the U.S. Gulf of Mexico.

This hurricane season is very busy. The latest EIA Weekly Petroleum Status Report indicated that hurricane-related shutdowns have put significant pressure on U.S. oil production and pushed it to 9.9 million barrels per day (bpd).

The additional support from Tropical Storm Zeta comes at a time when the market is worried about the impact of the second wave of coronavirus.

The latest Baker Hughes Rig Count report showed that the number of U.S. oil rigs continued to increase which will lead to increased production levels in the future.

However, the disruption from Tropical Storm Zeta will put pressure on domestic oil production and keep the total production levels way below the recent 11 million bpd in the near term.

BP Says That Oil Demand Continues To Recover

BP has recently reported its third-quarter results, beating analyst estimates on earnings and missing them on revenue. In its comments, the company stated that the gradual recovery of oil demand continued, led by strong demand from Asia. This is not surprising since Asian countries have enjoyed success in containing the virus.

Nevertheless, the company’s CEO stated that the second wave of the virus hit the demand harder than expected.

At this point, the size of the blow dealt to oil demand by the second wave of coronavirus is one of the biggest questions for oil traders.

Despite the challenging situation on the virus front, most countries have avoided full lockdowns which put great pressure on demand for oil. However, even limited virus containment measures hurt weakened businesses and consumers so it’s hard to expect that they would last long.

In case the upcoming inventory reports do not show a dramatic increase in inventory levels, oil prices will have a chance to rebound as traders could start to bet that the second wave of the virus would not deal big damage to oil demand.

For a look at all of today’s economic events, check out our economic calendar.