Crude Oil and oil markets

Charts continue mixed. Still not impressed with upside potential based on daily and 4H charts, but still waiting for 1H chart to confirm a sell signal before entering. Later today is the US oil rig count release which is sometimes provocative…

[I]“The Baker Hughes Rig Counts are an important business barometer for the drilling industry and its suppliers. When drilling rigs are active they consume products and services produced by the oil service industry. The active rig count acts as a leading indicator of demand for products used in drilling, completing, producing and processing hydrocarbons. This particular case represents the number of rigs drilling exclusively for oil.”[/I]

Well nothing interesting developed for me today. So I’m done for the weekend and wish anyone dropping by a sunny one. :slight_smile:

Actually, I’ve been thinking. This has been an incredible personal journey into starting commodities and surprisingly easy has been the transition! I know now already that I will not be returning to forex - ever. Crude was my starting point in life and now it will eventually be my end too, I am so at home here in the oil markets! :slight_smile:

But, I am thinking, it is [I]not [/I]forex and this [I]is [/I]a forex site, and [I]especially [/I]for Newbies in [I]forex[/I]. So this Friday feels very much like a crossroads, I find myself no longer reading other threads here and I am sure my stuff here about crude is of no interest to others either :). So like the proverbial ships that pass in the night (or was it oil tankers? :slight_smile: ) I feel a parting of ways here. It has been a real experience to be here on BP in very many ways. But all things end and this is that time…

Good luck to all newcomers to trading and may your careers be for you as long and as rewarding and as fruitful as mine has been for me!..

What a loss to BP that will be Manxx! You have so much knowledge to share and I’m sure there are many people here who are also interested in oil and in need of different perspectives. I’ve enjoyed your thoughtful and insightful posts (and this thread) and wish you well. Between the walks on your beautiful frozen lakes I hope you will find the time to pop back in occasionally ?:slight_smile:

Indeed - I agree with your entire post; thank you.

(I’m sorry not to have taken more part in this thread, by the way - I haven’t been so well, this week - and sorry to have seen Manxx’s post above only this morning :8: ).

told you a year ago manxx, once you go commodities you never go back to forex.

you should have listened to my advice earlier :stuck_out_tongue:

heres another advice (i didnt read the entire thread, so excuse me if you already mentioned it etc)
become a master in reading the cot report.
especially in commodities its the best tool you can ever find.

yes forex forum.
wish a happy time and sucess everyone trading 1/100 of a cent.

Hi Turbo!!! been a long time! :slight_smile:

You are probably right there! :smiley:

I just got [I][U][B]so[/B][/U][/I] bored with forex. Nothing else but Brexit (will it/won’t it work), Trump (will he/won’t he make US great again), EU elections (will they/won’t they be populist), add a sprinkling of terrorism issues here and there and a stumbling from one Central Bank statement to another and I wasn’t sure whether to be depressed or just hibernate for a few years…

But Crude Oil is a total industry, so many things to learn and wonder at besides just the price - it is [I][B]exciting[/B][/I]! :).

But, alas, it is (naturally) of no interest to anyone here, so I took it “home” and am building my own pdf on it instead of posting here where it is just in everyone’s way.

But one thing I do [I][U]still [/U][/I]enjoy about this site is the quotations at the bottom of each page. By way of example, I’ll leave you with a slightly modified one that I thought was funny:
[I]
“Trading is one percent inspiration and ninety-nine percent perspiration.”
[/I]

Ok, Jazzman, so if you have got this far from Turbo’s thread then: welcome! :slight_smile:

I ceased posting here since it seemed a bit selfish to occupy space concerning a commodity that is only of interest to me on a site dedicated to forex, but if it interests you, too, then that makes two of us - which maybe then constitutes a quorum? :slight_smile:

Not to say three of us, which constitutes a quorum 50% larger than the aforementioned one. :slight_smile:

Lexy, you could never be only 50% of anything! rather,at least 500%! :slight_smile:

We have a seemingly curious situation regarding the outlook for oil prices over the near term! :slight_smile:

Supporting the market, we have OPEC and the 11 other non-OPEC producer countries continuing their reduced production levels in order to stabilize prices - and will possibly be extending these cuts to the end of the year. In addition, we also have a number of analysts predicting that increasing demand will remove the current global oil supply glut and support prices around the $60 a barrel level. But if prices do start to rise significantly then that will immediately place temptation in the way of these OPEC and NOPEC countries to start increasing their production to avoid losing market share and to increase badly needed revenues.

But we also have US producers increasing production and drill rigs and thus countering to some extent the OPEC reductions and also reducing US oil imports from e.g. Saudi Arabia. However, whilst the US administration is committed to energy policies that will maintain lower prices and reduce oil imports, the US oil industry itself will not wish to see prices falling too low and damaging their own revenues.

Therefore, on balance, one could start to see evidence that prices may well be near their lows for the time being as we approach the summer increase in demand, and maybe see a gradual increase towards the year-end.

I was therefore curiously surprised to read an article this weekend reporting that Russia has now planned its federal spending budget for 2017-2019 based on an oil price of $40 a barrel continuing throughout this 2-year period…

My charts finished last week still with a negative trend on the daily - requiring a price rise now through 49.45 to cancel it (Turbo’s 5-day method). But there was a clearly neutral/positive end-week close on the one hour and shorter term charts.

There is also an interesting situation on the long-term daily chart going back to the middle of last year:


My own thoughts are that we could possibly now be entering a consolidation period, which will see strong oscillations between broad extremes from now until the OPEC decision in May concerning extending their production cuts.

The question is which goes first, the 5-day 49.45 (high from 21.3, which if not touched on Monday, will drop anyway on Tuesday to 48.25,the high from 23.3.) - or that daily support line, which could lead to a substantial reactive fall…

Going into the new week I am still too wary to buy until and unless the daily turns upwards and so I continue to watch the 1H chart for a downturn…


Manxx, the JMMC met today in Kuwait - their communique could affect price tomorrow, worth being aware of it although maybe the market will just shrug it off.

Thanks, yes, Peterma, I have been watching that. So far there has only been talk of them analysing the degree of compliance so far from partners, especially the non-OPECs like Russia. I somehow doubt that they will end by saying anything that could be construed as negative for prices given that their interest is entirely the opposite - but then there is always the contrarian view - if they say positive things that dont have market credibility then it is negative! :smiley:

It still seems that the problem is the increase in US production cancelling out the deliberate shortfall from OPEC/NOPEC. They have said that OPEC’s compliance rate was 106% in February and 64% for the non-OPEC nations including Russia - but that is not having any impact so far on prices and it all feels very heavy…but there are still plenty of long-term interests anticipating an eventual rise in prices and are buying. But on the other hand, I read that there are very high long positions at present and if these start to liquidate then we could easily see a fall towards $40 in a very short time. That’s why I am still only looking for sell opportunities …and thankfully can rely on charts (and blame them!) instead of having to form a fundamental “smart-view”! :smiley:

Yeah, I agree on the smart view, having said that sometimes it helps when you see price move and you can figure the reason.

I’m not a fan of old stuff except when I can learn from it, so here is an old piece, with some good info.

Thanks! I was just off to bed (I’m 2 hours ahead of the UK) so I’ll take it with me…:smiley:

Sleep well, the Russians have said they’ll just wait and see (that’s typical opec/oil talk) so the JMMC meet will be disregarded.

No pulling of the sells around 48.00 for now.

Early prices down from Friday’s close in Far East. Overnight hourly chart at this point lining up with the negative daily.

Everyone seems to be currently concentrating on the level of inventories in the US and so this week’s key data releases will be the API crude stocks on Tues and the EIA weekly on Weds as well as the rigs count on Fri.

There is undoubtedly a significant build in US crude stocks but, at the same time, there are some mitigating circumstances that may well start to change that situation in the coming weeks:

1 - recent stock increases include arrivals from Middle East from before the start of the reduction agreement and will now start to tails off.

2 - seasonal factors lead to temporary stock increases at this time of year as US refineries schedule maintenance work prior to production starts for the summer season.

Most commentaries seems to point to a broad range of $60 -$40 a barrel in the next few years.

As previously mentioned, as prices trend lower it begins to affect the profitability of production sites and eventually leads to plant shutdowns. With that in mind, I found an interesting graphic of the production cost levels for various countries:


When considering trading with multiple timeframes in Crude Oil it seems that the normal concept of, say, Daily/4H or 4H/1H changes to a long-term TF of 2-5 years and a short-term TF of 2-5 mins! :smiley:

The changes in the actual fundamentals of supply can take years before new production developments actually come on stream, and even longer if one includes the exploration stage. And the demand fundamentals can also take years as the economic cycles in various countries and regions change.

On the other hand, the speculative and hedging interests in the oil market are absolutely huge and from many sources. This means the instruments and the liquidity and the size and the motivation are all present and can create reactions to new insights and situation changes within hours and minutes…stay aware! :slight_smile:

Well that was a nice “early bird” start to a new week! I never usually trade on Mon mornings but that cross on the 1H was just too tempting… and I closed it after writing the above post…now for that breakfast coffee! :slight_smile:


I probably closed it far too early but it was approaching previous lows and, afterall, it is early… :slight_smile:

Hi, Peterma - thanks for that article! Here are some highlights from it that I thought were interesting and currently relevant.

On the time lag in long-term fundamental changes:

[I]“Taking a longer-term perspective, the oil price drop can be explained by previous large investments and technological innovations that caused oil production to surge at a time of weakening growth. Technological breakthroughs sparked the shale oil revolution in the United States, and several years of high oil prices, against a backdrop of strong growth in emerging market economies, encouraged large-scale investment in oil. Owing to a [B]considerable lag between investment and production[/B], the resulting supply entered the market when demand for oil was no longer increasing.”
[/I]
On the impact of greater cost efficiency on increasing production in US shale oil:

[I]The arrival of US shale oil and unconventional oil exploration more generally is a [B]structural supply-side shift which might cause oil prices to stay lower for longer[/B].[/I]

On current bearish v. bullish factors:

[I]"The [B]downside[/B] risks to oil prices are:

  • on the supply side related to further increases in global oil production owing to a stronger than expected return of Iranian oil and the continued resilience of non-OPEC production, in particular US shale oil.
  • on the demand side, a stronger than expected slowdown in emerging economies might affect oil demand negatively.
    [/I]

[I]The main[B] upside[/B] risks are:

  • stronger than expected cutbacks in oil production owing to geopolitical tensions
  • and larger supply fall-backs if oil prices remain persistently low."
    [/I]

On balance I would still consider the downside factors as more dominant, realistic and current…

Digesting the thread and watching the charts. Manxx, you mentioned your chart indicators as “MA’s, some as ribbons, and a MACD with settings 50,60,4 to give a longer term signal.” I was looking to replicate what you have as a starting point (if you didn’t mind), but my experience with indicators is very limited. Just MA’s mainly.

The fundamentals are interesting - reading the summary above and being a total newbie myself (on oil), I’d be hard pressed to make a prediction. I read somewhere that fuel oil stock building started in April for the following winter and that consumer demand increased in the Summer as people used their cars more for travelling. Quite what effect that may have on pricing (if any), and the bigger picture I don’t know. That’s probably the sum total of my “knowledge”, apart from what you’ve provided here.

Noticed this earlier: Hurricane makes ‘largest undeveloped’ oil find in UK waters - BBC News
New oil field discovered in the UK - 1 billion barrels - but won’t be in production until 2019

Hi Jazzman!
I have absorbed the same information, yes. Apparently, crude stocks rise whilst some refineries shut down for maintenance before starting to produce the summer gasoline, which then draws on the crude stocks.

This effect has been somewhat diluted by the extensive shift to low-consumption vehicles, and will be further reduced if the summers continue to be abnormally warm.

But these are fairly routine events and well anticipated in the markets.

If you have not traded oil before then be careful (demo, maybe?) because moves can be swift and contrary. One has to leave plenty of breathing space for spiky movements. This is readily apparent if you look at, for example, an hourly chart and note the length of the candle wicks relative to the bodies.

How are you looking to trade this? I guess with CFD’s? Futures are an expensive way to learn but nice once we get to that level of confidence! :smiley: CFD’s though usually have a nasty spread and we must take that into account when judging the position of stops and targets - also how much to look for to make the trade risk worth while, e.g. not much point in looking for a 10-pip move if you have to give 5 pips to the broker…

I’ll come back about the charting, in the meantime here are some interesting thought that I found today…