Only a few days back we were talking about the dominant factor affecting oil prices and concluded that:
And that certainly seemed to appear true in yesterday’s move following Mr Trump’s announcement of “extensive talks” with Chinese President XI Jinping at the G20 meeting next week. Looking at the daily chart, the red ring is last week’s tanker attack and the green ring is yesterday’s announcement.We can see which carries more impact!
But this chart also offers a word of caution in that it shows we have only reached the top of the recent range and, apart from the announcement of this meeting, nothing in the world has changed yet - or has it???
As we have said earlier, Mr Trump is a businessman. And for him timing is the essence in all negotiations (almost like a chapter out of Zen Tzu). So what do we have here:
Mr Trump started his presidential campaign yesterday - good time for some good news on the economic future
Chinese Huawei’s founder and CEO just confirmed how hard the trade war is hitting them - evidence of a weakening opponent who is ready to compromise
OPEC+ is about to consider their terms for an extension of their production cuts which are designed to support oil prices (which Mr Trump does not want) - news of a possible trade war solution weakens the need and resolve for deeper or longer cuts ans so a milder outcome from the meetings than otherwise might be the case - especially from Russia whose oil chiefs wish to cease these production cuts.
THe US-Iran issue is still “hot” and heating up further with the European nuclear agreement parties urging Iran not to increase their enriched uranium stockpiles other wise, as Mrs Merkel said, “there will be consequences”.
We also said recently that:
What more can one say!
Normally, I would be urging caution on myself not to get swept up in this new wave of euphoria since a one-day move does not a trend make - but in this case I am stuck to find a reason why oil would crash back down again (until/unless the Trump/Jinping meeting fails to produce) - sometimes a turnaround can be that vicious - is this one of those occasions?
Yeh. I was just telling somebody else this morning: they interviewed a veteran trader (decades at it) yesterday on Bloomberg. When asked about market direction etc he said that he’s never seen markets behaving like this in decades and in all of his years in this business. But one example cited were indeed these Tweets that can move markets sharply one way or the other. Basically he was saying well how is it possible to trade under these conditions i.e. market norms and fundamentals mean nothing.
Weak USD, low interest rates, low oil prices, low taxes, strong stock market, strong exports/ intl trade balance. Whatever is working against those objectives will be “tweeted” back into line ----- when the timing is right!
Seems to me that there are three types of trading environments that one can consider in this light - two of which are probably doing just fine - and a third which is struggling.
Long term traders. Mr Trump’s tweets do not appear so contradictory on longer term moves. E.g. the SP500 and Crude Oil have seen some very long and steady moves over the past 9 months and have only recently gone into a neutral stance.
Short term traders. The 1m-15m TF traders probably do well on these moves like we saw yesterday. These TFs are not based on fundamentals anyway, just on an ability to jump in (and out) fast. Their problem is avoiding whipsaws - which is nothing new on this scale.
Then there are the medium term swing-type traders. Maybe this group is the most likely to be in trades whenever the surprise tweets occur, and probably mostly with only a relatively small open gain at the time. These also have relatively nearby stops which are within the range of reactions to such tweets. For this group there are neither fundamental nor technical models to predict the timings of these events. Also, the psychological uncertainty over what might happen “today” is far greater than for long term and very short term traders.
But I do not think Mr Trump is erratic in his objectives at all. It is only the likely timings that maybe we should focus on more. For example, it was obvious that the US/China trade war was not going to continue indefinitely without further negotiations. It was all about when these would restart not if.
We just have to adjust and get smart in a different kind of way!
Rather a strange day today with oil prices. Most of the day was soggy even with an EIA inventories reporting a draw of 3.1 mill barrels for the week to June 14. It also reported a draw in gasoline inventories of 1.7 mill barrels. True, these figures did spike prices up, but they quickly slid back again and remained lethargic until late in the day, when they started climbing slowly but steadily back to make a new high from yesterday.
So we are coming to a good close, confirming the anticipated upward bias, but with the cautionary note that we are still below the highs of early last week around 53.80 WTI.
That is a scary read, @Trendswithbenefits! And what scares me most is that it again raises the question, what happened to the US government machinery? Has Congress been fired? Or on permanent holiday? President Trump and a few close colleagues seem to have succeeded in locking the entire congress machinery into an understairs cupboard and are freely playing the world according to their own rules and whims.
We are all aware of Mr Trump’s characteristics of impulsiveness and unpredictability, but I am sure he, himself, is not a warmonger, he just wants the publicity as the big, tough, successful deal-maker. He is not a military man and the thought that he could be manoeuvred into a large-scale war, just at the start of his re-election campaign as well as in the midst of his Chinese “chess match” is surely as horrendous for him as it is for anyone else! So where is Congress?
Oil finally broke through last week’s high in early trading this morning, creating a spurt to the upper end of $55 range. 55.50 was my TP and I really didn’t expect to see it so soon and I really don’t know what to do now.
I have seen no other news yet why we have broken upwards except for the technical break of last week’s range. If that is all we are seeing then I will consider re-entering on a pullback towards that previous high from last week, i.e. somewhere in the range 53,80 - 54.00. So I’ll come back when I have something more concrete to add!
For the record, the upcoming OPEC+ meetings have been moved from next week to 1-2 July, i.e. after the G-20 meeting - shrewd move!!!
Also, just for the record, I do not wish to discuss oil prices in the event that any kind of war does break out. People who know me here from earlier times, know how much I am disgusted by retail speculating on how to make a few bucks from other people’s tragedies and catastrophies. Of course, the world has to carry on and the professionals all still have a job to do - but that is not the retail market at all. So if we do get to that point, I will not be commenting here on it at all.
So now there is news now of a US drone being shot down by Iranian surface-to-air missile in international airspace over the Strait of Hormuz. That would explain it!
Don’t mind me butting in here with my lack of understanding and insights i.e. with just ye olde boring technical trading stuff. But that jump in Oil is (was) a perfectly good Fractal trade long (three bar Fractals). Whether it now is going to trend up I have no clue at all of course. Be interesting to see what ADX(14) says (not at my PC at the moment).
To be honest, Dale, I think we are moving out of a normal market situation at present where TA of any kind would have a relevance.
Afterall, we have a G20 event on the doorstep including teams from the US and China meeting prior to the big Trump/Jinping meet. The results of that are not likely to be anything concrete now but the tone and comments will almost certainly flavour the optimism (or pessimism) for an end to the trade war. And this comes at a time when many analysts are anticipating a recession next year - adn a collapse in oil prices to even $40.
That is followed by the OPEC+ meetings where the terms of a production cut continuation will be decided and with a target of around current price levels
Then we have a potential war in the middle east involving a highly complex situation involving far more than just the visible US v. Iran conflict. And if we see an escalation to a state of war in the Hormuz Strait, that passes 30% of global seaborne crude oil, then any seizure of merchant shipping there will send oil soaring in spite of the global excesses in oil inventories.
The fact that all three of these events and scenarios are more or less simultaneous, and beyond the normal day-to-day “business as usual”, surely means any TA based on “yesterday” cannot hope to be predictive of “tomorrow”?
This won’t be a war… The US will just surgically remove Iran’s military presence and its ability to conduct operations in the Hormuz Straits… and after Iran says It will breach its nuclear deal… maybe take out a few atomic research sites saving Israel the hassle… the old 2 birds with one stone sort of thing…
This is all about allowing seaborne crude to continue to flow… The only escalation will come if Russia decides to take a stance… Iran’s middle eastern allied nations are all on their knees… Syria, Lebanon… maybe Iraq… This will be why the jump in Gold and Oil are going hand in hand…
I should’ve held strong on my long oils, The analyst above missed the retracement but it certainly broke 55!
At the risk of sounding naive, I seriously ask if it’s simply “creating excuses” to “justify” driving the price higher.
I also wonder if there has ever been a profit and loss statement for the private companies, their employees and investors that have benefitted from an affilliation with America’s longest war? I am sure it would be shocking.
After two good days long (with a contract rollover in the middle) I have just closed my positions- that is enough for me for now. I want to see some reactions first before looking for more.
I do not believe this is about artificially inflating prices at all. This is real. And its been brewing ever since Mr Trump took the US out of the Iran nuclear agreement and reintroduced previous oil sanctions and a lot more, too. The US is looking for a much tighter agreement and a change in regime in Iran. These sanctions have apparently now driven the Iranian economy into the ground and with hyper-inflation, too.
Question now is whether Iran crumbles and surrenders under the strain and a realisation that fighting is tantamount to national suicide - or will they, with their backs to the wall, come out fighting to the last.
My greatest fear is that the US administration, if pushed, will go for a fast and furious solution that will not just be surgical removal of military targets with minimal “collateral damage” but also a blasting of governmental units with multiple MOABS!
An all-out war is no good for anyone positioned in the middle east itself, no matter what their internal relations are like towards each other, but a long drawn out tit-for-tat is certainly politically dangerous for Mr Trump’s party in the election run up period.
Let’s remember that Mr Trump does not want expensive oil. Whilst that might be good for the US oil industry it is not good for the rest of the economy (including gasoline prices at the pumps!).
And so now yet another big meeting for next week or so!! - on top of the G 20, Trump/Jinping, and OPEC.
Now a meeting has been arrange for 28th June in Vienna between Iran and the remaining parties to the Iranian nuclear accord, France, Germany, Britain, China and Russia, to try and save the 2015 nuclear accord.
The EU’s top diplomat Federica Mogherini, has pledged to defuse tensions between Iran and the United States to ensure that any escalation is avoided - let’s hope she is successful!
Earlier, President Trump had appeared to indicate a reluctance to escalate by stating that the shooting down of the US drone could have been an accident.
But the oil markets have remained firm, albeit steady for several hours, around the $57 level.
In these circumstances, historical support and resistance levels become meaningless since we are in an entirely new situation and in total ignorance of what the future moves will be until they occur.
Trade with caution… if tensions suddenly appear relieved and the markets suddenly remember the global glut of oil instead - and the reasons why central banks are looking to ease and stimulate growth, well, that’s oil…
Let’s not forget that Trump breached the nuclear deal first. They were compliant according to multiple allied inspections. This flexing of muscle is nothing more than Iran trying to get everyone back at the table to renegotiate sanctions. While the Hawks known as Bolton and Pompeo would love to drop some bombs hopefully Trump’s campaign manager tells him that starting another war would decimate his chances of getting reelected.
Seems we passed an uneventful night with oil prices remaining relatively stable but still very firm. Interestingly, we managed to bounce off the 4-Hour 200SMA - which says more about the (temporary?) overstretching of price rather than the power of the 200SMA in these current circumstances, but nevertheless another example of the value of this line on longer term charts.
In another episode, the oil sanctions on Iran have apparently now led India to further diversify its oil import sources. India first started buying US shale oil in 2017 (after changes in the law regarding US oil exporting), but this time they are negotiating to substantially increase supplies from Russia’s far east side instead.
They have been discussing establishing oil shipping routes from Russia’s far east into India’s east coast terminals. And these “new frontiers of co-operation” include gas as well as oil and even further mutual investments in each other’s energy exploration, infrastructure and investments.
India is a major consumer of oil and imports around 80% of its requirements and was Iran’s number-two oil buyer after China until the sanctions hit. Now it is adding Russia to its other existing suppliers from the Middle East.
The current major shift and struggles in global powers continue in a big way…
Today is the summer solstice and here in the Nordic lands the sun does not set tonight, rather it just tracks the horizon for a while before rising again into tomorrow. It is a magical atmosphere of daylight midnight.
Midsummer is perhaps the biggest event here of the year and there is little interest in sleeping through it! So I certainly won’t be watching the rest of the world quite so intensely this weekend.
Do you know just how many people know nothing about this nowadays??? Education sure ain’t what it used to be either.
Reason for my chiming in here is just to add that today is the shortest day and longest night in the Southern Hemisphere. And thank ■■■■ for that i.e. it means the Sun starts moving back down this side from tomorrow. If there is one thing in this world I cannot stand it’s Winter!!!
Unfortunately it’s doesn’t follow that things start getting warmer here though i.e. in spite of this we seem to have a colder month or two just after.
But it’s nevertheless one more hurdle overcome for the year.
So where is Congress?
