API inventories data for week ending 4.1. is released later today. That could throw the market one way or the other, but I think those numbers could be quite unreliable given that it was year end and a holiday period. I don’t know how much that affects refineries’ work…
I am still trading WTI CFD’s with my same long term forex broker(s), but I am seriously considering making the change to exchange futures and options thereon - and I am interested in the backwardation/contango issues too. But I am still a relative Newbie to trading oil and I am still not 100% sure whether to leave spot currencies altogether or not (mind you, looking at the EU chart for the last couple of months doesn’t exactly entice me back again there! 
) . I also like my broker platform incredibly much and don’t wish to change from that. I am in no rush to make any decisions in this area yet! 
Thank you for those encouraging words! I really, sincerely, do appreciate you saying that!
But I have to confess that, again, I really am a Newbie with this commodity and all I am really doing is reading a lot of stuff (in fact anything I can find because I am really interested in this industry) and then regurgitating what I think is useful or significant into this thread. So what I write is actually third-hand information! 
I am very conscious of the fact that what I write about the industry/market and my trades is always “after the event” and therefore not especially useful to others. TBH, I have tended to drift away from the original theme of this thread, which was to use it as a personal Newbie’s notepad on various oil issues. I didn’t really anticipate anyone even bothering to read it when it is an oil thread on a forex forum! 
I am not sure what you meant about cooperation with writing for blogs. All I can say is that I don’t feel competent enough to contribute to anything that others may take seriously and I am uncomfortable with the responsibility that others may act on my comments. This thread is different in that it is not a blog in any way, and I write within the overall understanding that I am also learning my trade here rather than presenting myself as some kind of “expert” - and I am happy if others want to share the journey with me some of the way.
Having said that, if there is anything related to oil that you (or anyone) would like me to share some views on then I am always ready and happy to comment on it here to the best of my ability.
Now I’m worried - are you still in? That last rally must have been pretty near your stop area? This is a really jumpy market today!! I decided to quit today while I’m up and super-glued my hands to the chair, just in case I’m tempted! 
Yea i’m still hanging in there - I wanted to watch how the 50.0 levels works out, but i’ll be out for a loss if it moves to a new high.
Next short will be at 51.0, then i’m done for the year ha
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Yes, as you said earlier, oil really does seem to respect technicals!
Looking at your earlier chart you must have been within nanopips of your stop! Phew!!
Looking a bit better now, but I am still dubious of the downside here - unless the API kills it later with a big build in inventories!
Seems strange that although equity markets seem to be positive about the rather dilute statements from the US-China talks, the oil markets are not so convinced - or so it seems!
Oh that was indeed stopped out for a loss - when re-analysing the chart I was inclined to view the 50.0 level as rather significant so I jumped back in - in hindsight I should have left it open rather than paying spread twice for almost an identical exit and entry price.
I’ll be back to the glorious land of FX come monday - this is too hectic for me 
I understand what you’re saying, I am sure this is just a typical period of uncertainty and fluctuation that so often follows a steep and deep trend such as we have seen through the autumn here.
I suspect some of the forex markets are going to also be very erratic - especially after the Brexit vote in UK next week! JPY has also demonstrated what unpredictable times we are living through right now!
I hope you will still call in here from time to time! 
Indeed - I expect this year to full of fun.
Ah well, back to the world of online dating tonight, I suspect my profile picture here is doing me no favours though 
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US Crude oil futures settle at $49.78
The price of crude oil is settling at $49.78 on the day. That is up $1.26 or 2.6%. The high for the day reached just below the natural resistance level at $50 (high reached $49.95). The low extended down to $48.31. Hope for a US/China agreement has the market feeling a little more confident about a stall in the global slowdown.
Technically, the pair tested the 61.8% of the move down from the December high. That comes in at $49.89. A move above it, and the $50 level, will take the price into the $50 to $54.55 area that defined the range in the first half of December.
Until that break above, however, the highs we are seeing are against a topside resistance area.
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Well we finally broke to the upside and changed the handle to $50’s and passed through the 4-hour 200SMA (which we may well see tested as support later today?)
The American Petroleum Institute (API) data released yesterday was again mixed in its message. For crude oil inventories they reported a bigger than expected draw of 6.127 million barrels compared with an anticipated draw of 3.300 million barrels.
However, this draw in Crude Oil was countered by a larger than expected build in gasoline inventories of 5.5 million barrels, compared with the predicted build of 3.45 million barrels for the week.
Once again, we are left to wait for the EIA data released later today to see if these figures are matched there!
Having got our foot through the $50 door, we now need to see if we can stay there and make further gains. I am still looking for a range of 50-60 and we are now at the base of that. But nothing has really changed, we are still waiting for news concerning concrete action by US and China regarding trade and the Brexit situation still faces a dramatic stage early next week when the UK parliament votes on the proposed agreement with the EU.
So global economic factors and future data concerning OPEC+ production cuts are still dominant.
There was one other issue that caught my eye yesterday concerning an official report detailing slowdowns in the US shale oil regions due to profit and investment difficulties arising as a result of low oil prices - but more on that later.
Big crude draw as API showed and EIA is expected to confirm. Dallas energy survey from 3rd January proved to be even bigger bullish catalyst
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It was indeed a survey from the Federal Reserve Bank of Dallas that indicated a significant decline in oil business activity in the fourth quarter. The overall Business Activity Index showed a drop from 43.3 in last year’s 3rd quarter to only 2.3 in the last quarter. Such a low figure points towards oil business activity being close to flat.
In particular, oilfield services slowed down as well as a drop in related employment.
The significantly lower oil prices in the last quarter has added to existing problems with pipeline constraints and budget/investment issues and has resulted in an overall difficult drilling environment and cutbacks in drilling activity.
The survey also reported that over half of oil and gas executives said that the recent drop in oil prices caused them to “lower expectations for capital spending” in 2019.
The oil rig count also began to level off in the third quarter, further evidencing the difficulties being felt across the industry with low oil prices.
We have now seen oil prices finally pull up into the $50’s range and with OPEC’s coordinated cuts starting to eat into oil surpluses, combined with the end of waivers for Iran’s eight oil customers ahead, we are unlikely to drop back towards the lower $40’s unless there are strong signs of global economic stagnation.
And in that respect, with the start of the next US presidential election campaigns not so far away now, it is unlikely that the US will consciously endanger its own economic strength and equity markets even if it means slightly higher oil prices for the consumers. But since cheap energy is another big issue we are, once again, looking at a market with both a price floor and cap.
The EIA report on crude oil inventories is released today at 10:30a.m. EST. Crude oil stocks were reported in the last release as more or less unchanged. I have not seen any numeric estimates for today’s release but I believe, as with the API yesterday, a draw is also expected in crude oil inventories.
The EIA report showed crude oil inventories falling by -1.68 mill barrels (predicted at -2.4 mill barrels).
The report also showed gasoline stocks up by 8.07 mill barrels and distillates(diesel) by 10.61 mill barrels - both significantly more than expected.
All in all, stocks are higher than expected and consequently we are currently seeing prices retracting below $51. Will prices drop from here? maybe a bit, but I am expecting them to hold and then continue upwards towards $52.
I think the positive comments appearing about the US-China negotiations and the US desire to see stronger equities markets will override these weekly data. We shall see!
The Crude Oil market had a great day yesterday. It has been on a rising trend since the end of last year and has now recovered a lot of the steep fall during last autumn.
Perhaps the strongest driver has come from the US-China talks which ended with some promising comments from both sides. China is reported as saying the trade talks with the U.S. were extensive and detailed, and that both sides agreed to continue to keep in close contact.
OPEC*s Saudi Arabia also underpinned the market with comments that it is determined to “stabilise” the market, and that the OPEC+ alliance actions are starting to bring the market back after a near-40% drop from highs seen in 2018.
But, as always, it was not all good news. The EIA inventories report showed a smaller than expected draw on crude inventories but also a huge increase in gasoline and diesel stocks. Since the refineries are currently working at near full capacity, this drew comments that it appears they are working flat out to produce fuels for a market that doesn’t need it.
Another negative influence came in the form of the latest edition of the World Bank’s “Global Economic Prospects” report, which was titled:
Storm Clouds Are Brewing for the Global Economy
That’s quite an attention-grabbing title from such a highly respected organisation. I am not going to go into all the details given in that link (just read it), but it generally raises a wide range of concerns that point to deteriorating global economic conditions.
In addition to worsening trade terms, it also addresses issues such as a gradual end to the accommodating policies of global Central Banks over the last 10 years since 2008, as well as the negative impact on nations resulting from a stronger dollar.
It also echoes concerns over the constant growth in national debt levels which will absorb an ever increasing portion of national wealth, especially with the added burden of increasing interest rates.
One other interesting item regarding the transition from oil to other energy sources concerns car sales in China:
On one hand, China reported its first annual decrease in auto sales in more than two decades, falling by 6 percent in 2018.
On the other hand, sales of electric vehicle sales in China exceeded 1 million for the first time last year and is expected to rise to 1.6 million in 2019 according to The China Association of Automobile Manufacturers.
But where do we put the kids?..or maybe this one was just for the kids):
Bit of a bumpy day busy going nowhere. Not surprising to have a “rest day” after this week’s moves so far.
Price is observing technicals today, bouncing off the red-ringed Daily Pivot line and hanging around that green dot-dashed weekly 200SMA. In fact, three of the four 200SMA lines are converging as the market recovers from the autumn declines. The Daily 200SMA is still way above the market at $65.
1H chart:
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Its Friday, and after a significant week, it is useful to stand back and take a look at things from a distance and reset one’s market perspective.
This is the weekly USOil chart covering the period 2015-today. We were already looking at that broad range inside that oblong channel last December on the way down, and focusing on a possible base around the $43 area.
We can see now, looking back, that the markets did precisely that with a low of $42.34 on Christmas Eve.
Since then we have streaked back up towards the top of that range, which does indicate that the sell-off was, as usual, overdone.
But the more interesting and relevant question is where do we go from here. We have broken above the Weekly 200SMA but we are still intraweek and that will only become valid if we close today, for the week, above that level (on my charts currently 52.15).
I think that 4-year channel is still very relevant. Although we have moved outside of it on several occasions, both above and below, we seem to have always returned to this range of 42-55 and spent a lot of time within it. And if we consider the longer term fundamentals, there is little to suggest we should move strongly above that range in the near future. Global economic growth forecasts are being downgraded and there is little to suggest any huge increase in demand for oil products. EV’s and more efficient conventional engines are continually reducing the demand for fuel and many governments are applying financial incentives to encourage and accelerate this trend.
I think it is also worth remembering that the OPEC+ alliance is reluctantly cutting back on its output. This clearly means that they can, want to, and will increase their production as soon as their objectives are met. That surely translates into a capping on price rises at some point…
On the other side, it is an entirely credible claim that the OPEC+ will keep oil inventories in balance and support prices. Even US shale, which has been increasing rapidly is restricted by physical limitations such as pipeline capacity and financial limitations in the form of finding fresh capital investment and a need to make and share out profits.
So I think there is a great possibility we will close today above that benchmark weekly 200SMA and, as a result, could touch that $55 level maybe next week. But I think, at least in the current environment, we will be hard-pushed to climb much more above that.
For those who follow Fibonacci levels, it is interesting to note that the .382 retracement of the autumn sell-off comes in just above the top of that range at 55.53. That might be a good target level to focus on!
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Its Sunday morning, a time for reflection. Gazing out the window, it is a crisp bright morning with bright blue skies and the sun sparkling off the crisp white snow that covers the land and weighs down the branches of the tall spruces. Its been a cold night, -15 degs C, and the squirrels and small birds are busy finding food to give them energy. The forest tracks are spotted with the colourful clothing of the early morning skiers. I am not one of them.
The oil markets put in yet another good show last week, finishing considerably higher than the previous Friday close. But we did not succeed in closing above that weekly 200SMA, running out of steam during Friday afternoon and closing just short of it:
I guess that was not so surprising considering how far we have already travelled back up since the Christmas Eve low. We flirted around just above the $53 range for a while but, with nothing new to provide additional boost, we ran out of new buying and probably met with some profit-taking before the weekend.
I must admit, I was also slightly puzzled in a negative way, with the outcome of the US-China talks. Although there was no great expectation of a list of concrete results, I did expect to hear some specific comments filtering out during the week concerning what topics were handled and what intentions were agreed upon. But there was not really anything more substantial than a few positive, but vague, comments that it all “went well”.
If we add to that the growing drama surrounding Brexit (or no-Brexit) and the parliamentary vote on Tuesday concerning the proposed agreement with the EU - and its highly possible rejection - it is not really surprising that the oil prices closed off their highs.
But if we take a closer look at the daily chart, I think there are some interesting issues here:
The boxes and horizontal red dotted lines highlight a region of around $50-53 that has previously held prices for some time and somehow suggests that this is a region of the real value and balance under present supply/demand conditions. I think this is supported by the speed with which we returned back to this range after the Christmas Eve oversell.
The weekly 200SMA, which we rarely come close to, is running horizontally right through the middle of this range - also suggesting an area of longer-term balance.
The difference between the box pre-Christmas and the box post-Christmas is that the earlier box formed an area of consolidation on the way down and we broke out on downside continuation. The current box, however, was entered from below and we are now approaching the top edge. So do we anticipate a breakout on an upside continuation?
If we look at the core fundamentals, pre-Christmas was a period of falling stocks markets and pessimistic concerns over US-China trade talks and a surplus of oil resulting from the Iran waivers issued by the US to eight big oil importers. But post-Christmas sees the market being supported by cuts in OPEC+ alliance production and their declared aim to bring balance back to the market together with some optimism that the trade talks will produce tangible positive results. We are also facing tighter restrictions on Iran oil exports as the current waivers end in May ( and new orders priors to that).
The one big negative unknown factor at the moment is the Brexit outcome and its impact on British, European and global economic progress.
I do not personally trade Fibonacci levels but a lot of traders do and, because the autumn decline was so far and fast, I have added it here to show the .382 retracement level hanging like a goal line just above this value region - and therefore likely to form an objective if we break through this upper region and above the weekly MA.
I have also left my two ribbon “pipelines” (short term/long term, “light”/“heavy”) visible just to emphasise the entry from below and the current upward momentum. I won’t be turning bearish on this market unless these pipelines start leaking and folding.
Whilst no one knows what the coming week will bring, I think it is clear that the focus is currently more on demand factors ( trade news/economic progress) than supply and reactions will be stronger on trade news items than on inventories. A big negative supply-side factor would be if doubts surface concerning OPEC members’ compliance with their agreement targets and individual quotas.
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It seems that we have started the new week with the first signs of demand-side focus. Prices have fallen this morning in Asia in response to data released showing a drop in China’s imports and exports in December.
Whilst this is nothing new to the world and only reflects the impact of the trade war as it has been, it does serve to show that it will take more than a few high-level officials to meet and then say nothing more concrete than we had great talks in order to improve the markets’ confidence - whether we are talking of oil or equities.
China’s December exports fell by 4.4% and imports fell by 7.6%. In addition China’s trade surplus fell to $351.76 bill, which is apparently the lowest level since 2013.
These all underline the seriousness of the trade war that the US started and demonstrate that equity and oil prices are hampered until progress is made on resolving those issues (which I am sure no one doubts will happen - but when and how!)
With this, and against the background of perhaps the most important week in UK and EU trade history, i.e. Brexit, I think it is wise, as a day trader, to remain sidelined for at least today and tomorrow…
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