Crude Oil and oil markets

Well done! :slight_smile:

As I said this morning, the Hourly chart was still looking vulnerable to the downside and the price had stayed below the daily Pivot all day. The short trade signal confirmation really came on the 15m chart after price spiked very briefly above the Pivot but then closed firmly back down below again. A short position with stop above that spike and…:slight_smile:


Thanks Manxx for sharing your thoughts and it makes more sense to stick to what you are good at it.
Sorry if I am spoiling your thread as this is my first interaction in forums. Getting back to silent mode and will read your writings.

You are certainly not spoiling the thread in any way! You are more than welcome to bring your thoughts and ideas here anytime. You have already added to the overall content here - thanks :slight_smile:

Even a casual glance at the daily chart shows that we have seen a significant drop in prices this week, in spite of continuing strong opinions that the OPEC/Non-Opec agreement will be continued as from June.

Prices have dropped considerably back towards lows seen in March and also discounting over half the increases seen after the OPEC agreement was first announced at the end of November last year.


But the concerning factor here is that this is in spite of fact that the OPEC led group has achieved an extremely high level of compliance with the agreed cuts. The conclusion being that continuing increases in other countries’ production, notably the US, is compensating for these reductions.

The problem for OPEC is that if they continue their reduced production levels for a further 6 months, will they start losing their market share as other producers fill the gaps - and without necessarily even achieving the desired price rise that should already be starting to appear.

On the other hand, if they abandon their production cuts in order to preserve and protect their market share they risk pushing prices further down and reducing their revenues in spite of their higher exports.

Whichever way they choose to go, there is a risk that they will fail in managing to reduce global oil reserves, and in driving prices higher, and that they will continue to feel pressure on their overall state revenues and available resources for future development of their industry.

Not much change in oil after an otherwise important and eventful weekend in politics.

Technically, the charts are, naturally, still negative.

We are now approaching the daily 200 sma and the upper edge of the support range earlier this year. The further we drop into this range and below $50 the more likely we are to see some buying appearing and maybe more “peptalk” from OPEC.

For today I am not really expecting anything major one way or the other in the early hours, but let’s see where NY takes us this afternoon. We may well see a touch on that 200 sma around 49.00. On the upside, we could reach the bottom of that broad range around 50.70…

Here’s the current daily chart.

The 5-day short (entry level 52.275 on 18.4.) now has a stop way up there at 53.185 (high from 17.4. WTI) so not much chance of seeing that today (with the caveat of the ever-present unexpected geopolitical events) - just shows how fast and furious the fall has been.


Well with a low of 49.01, I’ll take that as close enough! :smiley:

I have been out of town all day, so I haven’t caught up with any news. Catch up tomorrow.

Here’s the updated daily with a couple of hours to go to the close:


I thought I’d add here the 4 Hour ribbon chart for the entire current down move. A clear move example of MA’s at their best!

Interestingly (at least for me) the turn here once again reflects the reversal of the High-5 method from long to short on the 18.4. (ringed in green). The previous long had already been signalled as over in the area of the red ring where both ribbons had crossed-

I am really looking towards when this 4Hour turns and how it matches the next High-5 reversal.


One issue that is often raised on BP is that technical indicators are bad because they are lagging. My response is always that Price Action techniques are just as much a comparative technique as an indicator, and in many cases even more so. Without some kind of comparative study between where we are now and where we have been before - and why, it is very difficult to establish a view on where we might be going from here. In this sense “lagging” information is a virtue.

But there is another kind of lagging info, which brings with it a need for great caution. What I am talking about is market commentary. The web is full of commentary on just about anything and it is obviously good to follow what is going on in one’s area of interest - but is it good as a base for trading decisions?

A good commentator is often not actually directly employed or involved in an industry, but has good contacts from within that industry. This means the explanation of what is happening now is credible and valuable but is already, by definition, priced into the market.

As a result, what tends to worry me is when all of the good commentaries are all focusing on the same issues and with the same conclusions…

After 6 days of significant crude oil declines, all the commentaries are concerned with the same thing - how far down we are going to go. Is it $45 or $40 or even $35,… and the reasons why this is going to happen. Today I have read about:

  1. OPEC cuts are not achieving anything so far and therefore will not in the future either

  2. the 11 non-OPEC producer countries that are included in the cuts will not necessarily wish to continue

  3. the summer gasoline consumption will be less than expected, adding to crude build-ups

  4. shale production and rig counts increasing in US

  5. general global demand for oil decreasing as a result of marked-down estimates in GNP growth rates

The charts certainly reflect this negativity but we are approaching some heavy previous support areas in the form of previous lows, an upward channel going back to last summer, and the daily 200 sma.

I see this as a pivotal area. If we break through these areas then it suggests there really are genuine fundamental pressures leading to more downside. But if we start to hold and fumble around these levels, then we may start to see the speculative shorts closing out and a rebound - and everyone turning their attention back to, for example, geopoliticals and North Korea.

As so often with market commentaries, when everything looks totally good or totally bad, it is time to anticipate a reversal!

Here is a longer term daily chart going back to last summer. It does look very vulnerable to further declines but I am cautious here in front of these big levels.


Having already done my short trade for the day (probably out again much too soon :slight_smile: but let’s see!), I’ve now turned my attention to another term in the oil industry - the FPSO / FSO - used for temporarily storing crude oil.

These are vessels used by offshore drilling facilities to temporarily store crude until it is offloaded into tankers to avoid tankers having to wait whilst the oil is pumped straight on board. In some cases the production and storage are combined in the same vessel, in which case it is called an FPSO (Floating Production Storage and Offloading).

In addition to storing crude temporarily in between tanker loadings these storage vessels are also used by oil companies to store crude longer term in anticipation of higher prices. Iran stored a lot of crude in such floating storage as a result of the sanctions imposed on them.

Although these FSO vessels are often purpose-built, use is also made of oil tankers which have either been decommissioned from earlier use as tankers or are chartered for the duration of storage.

One example of a decommissioned tanker is the Seawise Giant:

It was built as a supertanker in the 70’s and was the longest ship ever built. Its length, at 458m was 15 metres longer than the height of the Empire State Building in NY(443m).

Is was so large that it could not navigate the English Channel, Suez canal or the Panama canal.

It was damaged in the Iran-Iraq war, salvaged, restored, changed owners and name many times and eventually ended up as an FSO off the coast of Qatar.

Eventually, it was demolished as scrap in India in 2010.





We have talked here a few times about the negative impact of low oil prices on the government revenues of oil producing nations.

An article published today by the Stockholm International Peace Research Institute (SIPRI) gives an interesting perspective on how low oil prices are affecting one aspect of expenditure by a number of oil-dependent countries. Many oil-exporting countries are beginning to report significant cuts in their military expenditure:

‘Falling oil revenue and associated economic problems attached to the oil-price shock has forced many oil-exporting countries to reduce military spending,’ said Dr Nan Tian, Researcher with the SIPRI AMEX programme. ‘For example, between 2015 and 2016 Saudi Arabia had the biggest absolute decrease in spending of $25.8 billion.’"

"The largest cuts in military expenditure in 2016 related to falling national oil revenues were in Venezuela (–56 per cent), South Sudan (–54 per cent), Azerbaijan (–36 per cent), Iraq (–36 per cent) and Saudi Arabia (–30 per cent). Other notable decreases were seen in Angola, Ecuador, Kazakhstan, Mexico, Oman and Peru. Only 2 of the 15 countries with the largest falls in spending in 2016 are not oil exporters. "

Some other interesting highlights from the same report:

[I]“Total world military expenditure rose to $1686 billion in 2016, an increase of 0.4 per cent in real terms from 2015”
"Military spending in North America saw its first annual increase since 2010, while spending in Western Europe grew for the second consecutive year.

The United States remains the country with the highest annual military expenditure in the world. US military spending grew by 1.7 per cent between 2015 and 2016 to $611 billion.

Military expenditure by China, which was the second largest spender in 2016, increased by 5.4 per cent to $215 billion, a much lower rate of growth than in previous years.

Russia increased its spending by 5.9 per cent in 2016 to $69.2 billion, making it the third largest spender.

Military expenditure in Western Europe rose for the second consecutive year and was up by 2.6 per cent in 2016. There were spending increases in all but three countries in Western Europe. Italy recorded the most notable increase, with spending rising by 11 per cent between 2015 and 2016.
[/I]
Source: Home | SIPRI.

So we did indeed see bit of a bounce off these key areas today around the 200 sma and the up channel.

But whether this is sustainable will depend on the first of the US Crude Oil inventories weekly data releases tomorrow from the API.

With US warships close to North Korea afterall, and this time with a nuclear submarine thrown in for good measure - as well as another day nearer the OPEC production cuts extension in May still with no confirmation for Russia that it is going to continue to join in - anything could happen!

But for now, a bit of relief from the downwards pressures - but not a lot…:

Daily chart:


I am a profitable trader and I am offering weekly analysis for free. Here is what I’m expecting oil to do this week.

Today crude shows nice up trend as I prefer but in 1 minute chart and can go upto 49.96+/.10 without any struggle. Since 5M is not yet shown up but sure will show up, I am in now. Let us see.

Hi AV!

Good luck with your trade!

With the overall main focus being on crude inventories at the moment, and the EIA data being released later today, you may well see some good opportunities on the short term charts today before its release.

Early exit is good with these beasts rather than with little profit or loss. What happened yesterday suddenly spiked which i am seeing in other commodities as well. Particularly when they approach to
any one of the extreme side. For example, when silver in very peak and everyone was expecting next level, just in five minutes made drastic down and I also had good loss but in profit due to tight SL.
Just my observation.

Since the overall focus is very much on changes in crude inventories, it was not surprising that there was no sign of fresh selling ahead of this week’s inventory releases.

The downside for now seems to have stalled around the 200 sma, which apparently is a benchmark level widely looked at. However, based on the charts, there is no evidence yet to suggest this down move is over, rather we are at a typical pause session awaiting fresh input and I see possible upside limits around 50.20 and 50.75 for short term trading.

PS: The “High-5” trade 5-Day stop is now at 52.605 (from 19.4.). Entry level was short at 52.275 on 18.4. Position at close yesterday: + 292.50 pips

Daily chart:


Yesterday’s upside is shown a bit clearer on this 1 Hour chart. It is a variation of my normal 1H chart in order to show the ribbons clearer, which form my entries. The blue ribbon has been crossed upwards since yesterday - and still is - but it is up against the overhanging green band which is the 4H chart band (which is compressing as the move runs out of momentum).

I need to see a close below, and a crossover of, the blue ribbon back downwards before (re)selling:


…and, again, nothing to do with crude oil. Here we were deep into the new growth of a fresh, sunny spring and this was the view this morning…it is not just markets that can be fickle, luckily haven’t changed my car tyres yet…!


Not good luck, just luck only today it seems. I was out with little profit and no more trading in Crude today, staying away, You can have a look at Natural Gas for the trend I use to follow just FYI,

…and as we were pondering in an earlier post, when all the commentaries end up 100% in the same direction, it is time to be wary and look the other way!

And so it seems with today’s EIA weekly Crude Oil inventories release. I have not read any analyses yet but it seems we had a much bigger draw than expected and the market shot up immediately.

However, being a cautious trader, I am waiting for price to settle down before deciding what to do next. There was really only one trade prior to the number when that blue ribbon on the 1 Hour crossed and the bar closed under the Daily Pivot for the first time since the early hours in the Far East - that was good for a quick 20 pips. But otherwise it was a slow and directionless day - until the release that is!

But the price is currently too high above the upside breakout for me to buy here. We only have two trading days left this month and I really want to end with a decent profit, so I am double careful about doing anything rash at this stage to spoil that… besides that:

a) I don’t have an identifiable sensible stop level at present

b) I am not convinced this one figure blows away all the recent negative arguments in one puff and it could still give way at any moment.

result? I’m sidelined for now! :slight_smile:

The 1Hour now looks like this:


Surprisingly quiet evening following a release that was so far from expectations…

Trouble is, whilst crude stocks saw a large drawdown of 3.6 mill barrels that was only expected to be around 1.75 mill, and therefore bullish, there was also a large increase in gasoline inventories of 3.37 mill barrels compared with an expected increase of only 1.54 mill, and therefore bearish…stalemate!

But one other interesting bit of news. Apparently, Pemex, the Mexican State oil Company has decided to hedge its entire oil output for the rest of this year, locking in a price of $42 per barrel for up to 409,000 barrels per day. The Finance Ministry has,apparently, based its budget forecast on this sum reflecting a skepticism about further revival in prices this year.

If I remember rightly, Russia has earlier talked of basing its own future budgets on a similar level…

If we do not manage to finish today on a firm note following such a large draw in crude inventories, then it suggests to me there are other real downside factors at work here.

After yesterday’s EIA data, the above-mentioned scenario seems still to be valid. We just fell short of the 50.20 level with a high of 50.17, and the daily 200 sma still seems to be holding…but the upmove was very short-lived in spite of the huge drop in crude stocks and slumped back to the same levels we were at before the release:


There are some fascinating scenarios concerning where we go from here. It would be short-sighted to only look at the crude storage situation because the oil market is a process and it takes many months for oil to pass through it from bedrock to gas station:

oil production=>transport=>crude storage=>refinery=>gasoline storage=>distribution=> gas station=>consumer

Yesterday’s EIA data showed a large drop in crude inventories but also a large increase in gasoline inventories. This is surely normal as the refineries end their seasonal maintenance and build stocks for the traditional summer driving period…but there are unusual situations currently at each of these points in the process:

Production: Will OPEC and the other 11 non-OPEC producer countries extend their productions cuts in their May meeting? by how much? Will the increasing US shale oil production continue to counter the impact of these cuts?

Crude stocks Whilst global crude stocks have generally dropped a little, they are still well above the 5-year average level that OPEC wants - and even if that level were to be achieved, would it also increase prices or just produce better stability at these low price levels?

Refining: Whilst it is normal for refineries to step up their processing at this time of year, the US refinery capacity is already at record highs above 90% (at least, So I have read). So unless there is significant increase in consumer activity out one end, there will be a slowdown in draws from crude stocks at the other.

Consumption: There are reports that US gas station sales are currently below last year’s levels. There is also speculation that the increase in low-consumption and electric vehicles will already significantly reduce demand. This, together with reduced consumption from more efficient commercial vehicles, and combined with an increase in much cheaper wind and solar energy, will tend to de-couple the link between overall energy demand and the demand specifically for oil products. In addition, there are downgrades in overall economic growth in many places.

All in all, there are many issues right now in addition to the basic supply v. demand equation.

On balance, the charts are still negative, but showing signs more of stagnation and uncertainly that any specific trend and this is also noticeable in a widening of spreads, both during last night’s quiet period and again this morning.

My own strategy at present is to grab quick moves off the 15min chart as and when it makes sense with respect to the 1 Hour. Yesterday offered 2 reasonable intraday sells and today also looks more prone to the downside - but I am waiting for the NY session…