What’s your thoughts on this @anon46773462 - been keeping my eye on it for quite some time. I guess I don’t need to explain what it’s showing 
If the National Geographic photo of the year was for charting, then I think this would take it.
Hi!
I have been looking at the same thing. I think we are staring at the last pulses of the failing heartbeat of the oil markets.
I am currently seeing some friends off at the airport and will write more when i get back later! 
Hi @BaconSandwich, you are looking at the same graphic and support level that I was pointing to above in post 394, but you have taken it back even further.
Although this chart highlights a support range, I think the oil markets are beginning to find themselves in a tightening pincer between forced restraints on potential over-supply and diminishing demands caused by trends other than just economic slowdown. I think there are major structural changes kicking in here, which are only just starting but are likely to gain significant momentum in the coming years.
Although it might look like this zone is a purely technical support level based on previous dips in the charts, I think this zone is actually based very much of the fundamentals of the oil supply side. There are many producer nations and companies whose breakeven costs are already above this zone or within it, and even those companies who can still make money at lower prices are not far off their B/Es at these price levels for the benchmarks WTI and Brent.
But whilst this might put pressure on oil companies to slow down the supply, they still have to produce revenues and meet the expectations of investors. Shale oil in particular apparently requires a constant flow of fresh capital and the useful life of shale wells is considerably shorter than in the traditional oil fields.
We know already that the OPEC and non-OPEC allies, led by Russia, want higher prices and are prepared to cut back on production levels in order to try and achieve them. But the US is more than capable and more than willing to take up any slack resulting from OPEC reductions. It has even been suggested that the US could eventually be producing as much oil as Russia and Saudi Arabia combined.
This all means that the supply side dynamics are very different to what they were in earlier years when we lived in an era of fears of oil running out and any perceived shortfall pushed prices through the roof. Even earlier this year, when prices reached over $70 there were predictions of when we will hit $100. It never happened…
There is no talk any more of oil supplies being exhausted or exorbitant prices as we need to drill for the more costly oil reserves as the cheaper ones run dry. Instead we have ever growing reserves in the US and elsewhere, both onshore and offshore, which are easily and cheaply reachable.
When we combine this with the held back potential from OPEC+ we see a market that can and will respond with a progressively and proportionately speedy overdose of supply whenever prices start to move up. In other words the bottled-up supply just waiting to be pumped into the market will automatically be released into whatever increases in demand may appear and thereby place a cap on prices.
In addition, the OPEC+ countries are not going to allow their market share to be whittled away by the US and other producers outside their production cut agreement, and will immediately turn up their production once prices are seen to be firming.
But that is only the supply side.
On the demand side we are seeing signs of economic slowdown on a global scale, which is always a major negative for oil markets. But there are other issues as well.
I believe we are at the start of a major push away from oil-based products. EVs are making a fast entry into the transport market and not just for private cars. Haulage and even air traffic will soon include alternative fuels. Diesels are already hearing the doom bells ringing and virtually every car producer is planning more and more electric and hybrid versions - and even the traditional combustion engine is consuming petrol on a much more efficient basis. Once the charging infrastructure and battery efficiency issues are improved we should see a rapid change in the dynamics of transportation.
Environmental issues are also placing greater pressure for substitutes for hydrocarbon-based plastics and creating a growing awareness amongst consumers of a need to reject/recycle plastics as much as possible. Crude is used in a huge number of products in addition to just fuels and we could see a significant reduction in these applications.
But none of these things are going to happen “tomorrow” but, as we know, markets move on might happen and not on what is happening now or yesterday.
I still believe oil is going to provide some excellent trading opportunities in the nearby years to come but maybe there will be less extreme projections amongst the market commentators as (and if) this pincer effect between floor-level production costs and the constant potential supply just waiting to be pumped in the market whenever the profit is sufficient, gradually gains its momentum and visibility.
I guess that was my New Year “speech” 
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Crude oil prices are down in the international market. It is right time for the buyers to jump into the market as prices are supposed to move high very soon. I hope you had sold much of oil in the past few days. Selling period is almost end guys!
Christmas Eve:
Whilst I didn’t expect us to fall to 42 so fast, I also didn’t expect us to bounce off that level quite so quickly either! A real “dead cat bounce”".
Boxing Day provided the market commentators with a rare field day! Having savoured the joys of reporting on the major meltdown on Christmas Eve, they were now presented with a soaring rally that lifted WTI at one stage by nearly 10%! 
One may well ask oneself (or even some much higher authority! 
) what on earth is going on at the moment!
…And if one keeps a cool head then we could say that “nothing much at all!”. After all the furore surrounding the slump on Monday, all yesterday’s rally did was unwind Monday’s drop and put us back at the same level as last week’s Friday close, as can be seen in this 4-hour chart:
Basically, the crude oil market is currently taking its lead from the stock markets and both markets bounced strongly yesterday on the back of comments from various sources rather than any material change in the underlying current issues. Mr Trump said that equities were presenting an excellent opportunity to buy, and the Russian Energy Minister, Alexander Novak, stated that oil markets would see more stability during 2019 (meaning at higher levels than where we were then!).
Other equities-related fears concerning the future of the Federal Reserve boss and the US govt shutdown were digested along with the Christmas dinner and slid into the yesterday’s news category.
In addition,there was some news about a further meeting between US and China in the beginning of January concerning their trade dispute.
Put all this into thin markets (either by chance or by design!) and you get a significant response.
So the big question now is: Where do we go from here?
Personally, I am still holding on to the belief that oil prices will bottom out around the lower $40’s unless we drop into a recession, which I do not believe is likely at all unless the US/China trade wars really turn ugly and Brexit ends up as a slide into an economic “black hole”.
And I also think that WTI could end up ranging around $50-60. But I don’t discount the possibility of some wide movements in the meantime such as seen this week that could easily still see further tests of the lows as well as some sharp spikes to the upside.
We have come a long way down in a short period of time (about 45%) and there is plenty of room for upside movements, like yesterday’s, without denting the daily/weekly TA picture at all. Maybe this week saw the first rampant price swings that are so typical of a market that is in the early stages of entering a consolidation phase after a major trend move…
If this is so then it calls for great care in picking entry levels and plenty of space for stops to avoid accidents. For me, this means quick trades off shorter term charts like 1-hour or 15min for the remainder of this year! And take a closer look at the real fundamentals after the New Year.
Further to the post above this, whilst I do not want to be a pessimist, if we add some pretty colours to the daily chart of the entire move since the downtrend started in October, then we are clearly still in last week’s range - and at the bottom end of it! And yesterday’s move does not look quite so optimistic as one might at first assume.
We still have a long way to go before the TA shows a turn around in the longer term charts (the supertankers)…
But this is how the equities rally was portrayed in our local newspapers this morning. Here is one happy trader sensing a turn in the market’s fortunes - let’s hope his enthusiasm will turn out to be well justified!
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I think it is possible, but at least for today, I think all eyes will be on the equity markets. If that starts a continued rally then oil will undoubtedly follow. If it fails and sinks then you will no doubt get your 43 level fairly quickly (a surplus of oil is still a threat with increasing US supplies).
This is my 4-hour S&P chart. The red circle shows how we stopped dead on that green dotted line on Monday which is the weekly 200SMA and, as such, could IMHO be a very strong support area. We could easily drop and test that again, as often happens with these kinds of supports that are visited only rarely, but the blue circle shows us still hovering above yesterday’s daily pivot and last Friday’s close - if we don’t break those then there is a real chance of another strong gain developing today in thin end-of-year trading!
We all know how important a strong equity market is to Mr Trump and we may see some encouraging words winging across the markets at any time!
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You seem to be on your way there! We broke below the pivots on both oil and S&P and we may see some more on the downside here.
In line with my end-of-year trading policy , I just took a quick trade off the 15min chart and that will do me for today! I was looking for 50 pips but this was close enough for today, I’ll let my broker have his spread 
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It’s getting there, about 100 pips in the bag so far
I can see this retracing now, sods law. Standard 50% retrace
Well done!
My only concern here is that S&P bounced off last Friday’s close (red circle on left chart) - here’s S&P and Oil 1H side by side. We can see how oil is almost tick for tick copying equities
You’re absolutely right, i’ll be closing this out at BE should it bounce. It was always a punt 
BaconSandwich, thanks for posting on this thread, I use the DXY as my indicator for the USD crosses and its usually very rewarding to me. However you have provided me with another index to keep watch on to trade the Oil crosses.
Good going on your 100 pips today!
Oh i’m just adding into what Manxx is already providing, he’s my current indicator haha.
It’s just a drop in the water really, and not realised profit yet. Looking for the 43.0 level, so about 270 pips is the final target.
Momentum is not on my side it’s fair to say.
Manxx, or others what do you consider the best oil index to utilize when correlating to forex?
I confess I don’t understand what you are looking for here. Do you mean the oil benchmarks like WTI, Brent, Dubai, etc? or some other kind of index? Are you looking to use this to predict movements in certain commodity- based currencies such as CAD?
I can’t personally help you here because I don’t do these kinds of correlation studies but if you explain more about what you wish to achieve then maybe someone else can give some input here?
Manxx, sorry to be confusing, I use the DXY index to trade the USD crosses
I was wondering which oil index WTI, Brent etc. might bet correlate to a forex pair that is sensitive to the oil monuments, such as any CAD cross.
OK, I see. I don’t use benchmarks in this way but maybe someone else has some experience of this?
I would be a little cautious concerning CAD crosses at the moment. It certainly does correlate with oil prices but its own oil industry is in a state of turmoil at present due to excessive oil production being bottlenecked as a result of insufficient pipeline to move it forward!
As a result, Canada’s own oil benchmark, the Western Canadian Select (WCS) has been recently trading at huge discounts of as much as US$50 to WTI. I cannot say how this affects CAD crosses, but is worth looking into before relying on correlations with WTI or Brent, for example.
Worth noting that according to the calendar, the API oil inventories data (normally released on Tuesdays) is released later today. Similarly, the weekly EIA will be released tomorrow (normally Wednesdays) as well as the usual rig count data.
Whilst oil markets are focused on equity prices right now as a sign of global growth expectations, oil production levels are still a very important factor in the price equation at present. US production continues to increase whilst the recently agreed OPEC+ production cuts agreement has yet to start coming into effect.
These releases may impact prices significantly.
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Yes and thanks for you insights, I shall make some time to look into the oil sensitive crosses,