WTI Heading for $60

WTI heading to $60, I have my reasons.

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It just touched $61ish....

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(edited)

12 minutes ago, Osama said:

It just touched $61ish....

Yup, things looking similar to the start of October where technicals drove price while fundementals took a back seat (at least partly sense because the news lately has favored bears these past few weeks). Since market psychologly is influenced by a number of different factors, both Technical and Fundemntal, I imagine a similar scenerio to what we saw when we hit $76 in which momentum was so strong in a single direction that news had a delayed reaction.

I see I potential trade set up occurring though

Edited by ATK
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15 minutes ago, ATK said:

Yup, things looking similar to the start of October where technicals drove price while fundementals took a back seat (at least partly sense because the news lately has favored bears these past few weeks). Since market psychologly is influenced by a number of different factors, both Technical and Fundemntal, I imagine a similar scenerio to what we saw when we hit $76 in which momentum was so strong in a single direction that news had a delayed reaction.

I see I potential trade set up occurring though

You see a retracement?

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5 minutes ago, Osama said:

You see a retracement?

Potentially yes, there are several important events occurring this month that will give us an idea if fundementals will start shifting towards the upside. Several technical factors on longer time frames that suggest the same thing as well.

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A few days ago I posted that prices would go down coming 2 weeks, pure on fundamentals, I do not have the skills yet on the technical side. That was based on more waivers for Iranian oil and no deal with China likely. As winter has not approached and SA will not reduce output within weeks and Russia at levels not seen before the slide is likely to continue for another week or so. Is there a counter event on the horizon? Maybe. China and the US ending trade war will be the start, I expect, of a strong rally. So below 60 I wil gradually move from short to long. I might not buy at the bottom, but who can? 80 perhaps to optimistic but a re bounce to 70 well possible.

Is there any reason why prices could go even higher?

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(edited)

19 hours ago, oilexpert.nl said:

A few days ago I posted that prices would go down coming 2 weeks, pure on fundamentals, I do not have the skills yet on the technical side. That was based on more waivers for Iranian oil and no deal with China likely. As winter has not approached and SA will not reduce output within weeks and Russia at levels not seen before the slide is likely to continue for another week or so. Is there a counter event on the horizon? Maybe. China and the US ending trade war will be the start, I expect, of a strong rally. So below 60 I wil gradually move from short to long. I might not buy at the bottom, but who can? 80 perhaps to optimistic but a re bounce to 70 well possible.

Is there any reason why prices could go even higher?

Yes there are, the middle of November is when we will have a tangible idea of how much Iran exports have fallen. It will definitelynot go to zero, but I do see their export's dropping to some extent. Not only that we will have a monthly opec report coming out next week that will state their outlook, if people think OPEC is going to be fine maintaining production at current levels while price continues to decline they will be sadly mistaken. December is when they will have their big meeting where they discuss production adjustments. I don't think we are going to get close to the same levels that we were previously at, but we will see some kind of retracement at some point

I also believe we will start seeing smaller builds followed by small-med draws in the coming weeks.

Edited by ATK
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(edited)

15 hours ago, ATK said:

Potentially yes, there are several important events occurring this month that will give us an idea if fundementals will start shifting towards the upside. Several technical factors on longer time frames that suggest the same thing as well.

I am going to indulge in the business of prognostication (without much support from fundamentals and most importantly my Crystal ball): I think oil prices were never expected to recover this soon---remember "lower for longer"? Two important things happened: One- Vienna agreement, however, even after that the prices remain range bound. Two- Trump's announcement of cancellation of JCPOA, Iran deal, in May. After May we saw a sudden spike---the announcement and its superimposition with Hurricane season made oil prices go further up, unnaturally. So the prices, as they stood on $86 ($76 for WTI) had one too many extra dollars and as I have written and have happened as well...we saw the market shed those dollars precipitously!!

In my latest article (https://seekingalpha.com/article/4217736-next-oil-prices) I have once again iterated the point that oil will fall further.

(Well that was my gimmick....context building...for a better show you know)

Here comes the prognostication: Oil will continue to fall further for the following reasons: 1) Surging US production, 2) Ongoing trade war (experts do not see any rapprochement anytime soon), 3) Rising interest rates (as US economy added 250,000 jobs last month expect another rate hike in December...also we will see the recently imposed tariffs on China going online by 1st January, if there are no more between), 4) Demand (connect his to a strengthening dollar and trade war).

Yes, however, we will see occasional spikes in-between which will get a support from none other than OPEC+ group: They will, after having rescued the world from a dearth of oil in the wake of IRANIAN SANCTIONS, once again assemble (11th November, then in December) to ensure that the current production cuts keep holding and the "compliance rate" jumps back.

Oil, therefore, to give a wide range continue to trade from lower $50s to a ceiling of, may be $90 (but this will be in extreme cases!).

(Did you enjoy it?... @Dan Warnick, @catch22..what about you?)

Edited by Osama
Had to mention someone
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59 minutes ago, Osama said:

Here comes the prognostication: Oil will continue to fall further for the following reasons: 1) Surging US production, 2) Ongoing trade war (experts do not see any rapprochement anytime soon), 3) Rising interest rates (as US economy added 250,000 jobs last month expect another rate hike in December...also we will see the recently imposed tariffs on China going online by 1st January, if there are no more between), 4) Demand (connect his to a strengthening dollar and trade war).

Yes, however, we will see occasional spikes in-between which will get a support from none other than OPEC+ group: They will, after having rescued the world from a dearth of oil in the wake of IRANIAN SANCTIONS, once again assemble (11th November, then in December) to ensure that the current production cuts keep holding and the "compliance rate" jumps back.

Oil, therefore, to give a wide range continue to trade from lower $50s to a ceiling of, may be $90 (but this will be in extreme cases!).

(Did you enjoy it?... @Dan Warnick, @catch22..what about you?)

Well, first of all, anything can happen.  There, that's out of the way.

Now, WTI at its current level ~ $61 +/-@$1.50ish has been achieved rather quickly and I don't see why it wouldn't stay near this range for the next week or so while we wait for numbers to start coming in about deliveries after Iranian sanctions start to become available.  But the time from purchase to delivery, as everybody knows, is about a month give or take, so those numbers may not be very accurate until early to mid December.  I state that because numbers related to purchases can and usually are manipulated, where numbers about deliveries are based on physical movements which are tracked fairly accurately.  If nothing else of circumstance happens between now and then, I think we range.  Looking to the next couple of months though, I think it will continue to become more obvious to the world at large that there is no shortage of supply and that demand is actually falling.  The numbers will tell over the next couple of months.  Bottom line, if the numbers say we are floating on excess capacity to a large degree, oil prices may in fact go down to the lower $50s, but not right now.

Just my opinion.

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(edited)

2 hours ago, Dan Warnick said:

Well, first of all, anything can happen.  There, that's out of the way.

Now, WTI at its current level ~ $61 +/-@$1.50ish has been achieved rather quickly and I don't see why it wouldn't stay near this range for the next week or so while we wait for numbers to start coming in about deliveries after Iranian sanctions start to become available.  But the time from purchase to delivery, as everybody knows, is about a month give or take, so those numbers may not be very accurate until early to mid December.  I state that because numbers related to purchases can and usually are manipulated, where numbers about deliveries are based on physical movements which are tracked fairly accurately.  If nothing else of circumstance happens between now and then, I think we range.  Looking to the next couple of months though, I think it will continue to become more obvious to the world at large that there is no shortage of supply and that demand is actually falling.  The numbers will tell over the next couple of months.  Bottom line, if the numbers say we are floating on excess capacity to a large degree, oil prices may in fact go down to the lower $50s, but not right now.

Just my opinion.

I 100% agree in the fact that Iranian numbers will not be nearly as bad as people's were expecting (smh at that 50% jump in longs in the second week of Oct lol), but I do imagine them at least having a slight effect. Venezuela's production is still in free fall as well, but really I think what will reverse things (whether thanks just for the medium term) would be OPEC deciding on adjusting production numbers.

$70 is the magic number for them so I don't imagine they will let Brent stay lower than that for quite long. They have a report next week that can at least give us some idea of where they might be leaning for their meeting in December 

Edit: https://www.google.com/amp/s/www.wsj.com/amp/articles/oil-prices-rise-ahead-of-opec-meeting-1541592360

That didn't take long lol, guess it will be 2019 PRODUCTION CUTS now lol

Edited by ATK
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(edited)

Looks like the market has found a bottom and fresh bidding is on now the midterms are behind us. The analysis i gave in Osamas thread is what im standing by - assuming the current bottom is in place at $61 - im going to have to disagree with you ATK - i think we could be looking at a 38% fibonacci retracement from $61 up to $68. This is pure technical analysis based on the AB=CD harmonic pattern, nothing fundamental considered.

EDIT - i should also add a timframe - 38% retracement over the next 5-10 trading days...

Edited by catch22
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5 minutes ago, catch22 said:

Looks like the market has found a bottom and fresh bidding is on now the midterms are behind us. The analysis i gave in Osamas thread is what im standing by - assuming the current bottom is in place at $61 - im going to have to disagree with you ATK - i think we could be looking at a 38% fibonacci retracement from $61 up to $68. This is pure technical analysis based on the AB=CD harmonic pattern, nothing fundamental considered.

So we find a happy median of @Tom Kirkman's legendary (well, often repeated anyway) $65/barrel for WTI.

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(edited)

10 minutes ago, catch22 said:

Looks like the market has found a bottom and fresh bidding is on now the midterms are behind us. The analysis i gave in Osamas thread is what im standing by - assuming the current bottom is in place at $61 - im going to have to disagree with you ATK - i think we could be looking at a 38% fibonacci retracement from $61 up to $68. This is pure technical analysis, nothing fundamental considered.

It was mostly just from looking at the monthly chart (60.1x would maintain an uptrend on the monthly chart, saw it as a potential place for a bounce if the downward momentum continued), this was also based on the premise that we would see another crude build and/or a small draw. I imagine the market might react in a similar fashion as the start of oct where the upward momentum was so strong that we were able to hit $76 a barrel after an 8 million barrel build. The EIA report today will give us an idea.

But with that being said, it's possible we hit/ are close to the bottom for now.

Edited by ATK
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nothings for certain :) i estimate the probability of this pattern completing at approx 75% probable. Still plenty of scope to be wrong!😂

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2 hours ago, catch22 said:

Looks like the market has found a bottom and fresh bidding is on now the midterms are behind us. The analysis i gave in Osamas thread is what im standing by - assuming the current bottom is in place at $61 - im going to have to disagree with you ATK - i think we could be looking at a 38% fibonacci retracement from $61 up to $68. This is pure technical analysis based on the AB=CD harmonic pattern, nothing fundamental considered.

EDIT - i should also add a timframe - 38% retracement over the next 5-10 trading days...

Nice touch adding a timeframe, I'm sure many here will appreciate it 

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EIA report showing a 5.5 million barrel crude build and a surprise 1.8 million barrel gas build. Distillates draw larger than expected at 3.4 million barrels.

Report favors bears

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Predictions need time-frames to have any value... Just saying a number is worthless.   WTI has been anywhere from $55 to $75 in the last year - so it's pretty easy to spit out a random number (up or down) and claim you were "correct" at some point.

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(edited)

6 hours ago, catch22 said:

Looks like the market has found a bottom and fresh bidding is on now the midterms are behind us. The analysis i gave in Osamas thread is what im standing by - assuming the current bottom is in place at $61 - im going to have to disagree with you ATK - i think we could be looking at a 38% fibonacci retracement from $61 up to $68. This is pure technical analysis based on the AB=CD harmonic pattern, nothing fundamental considered.

EDIT - i should also add a timframe - 38% retracement over the next 5-10 trading days...

That timeframe is pretty decent for a potential retracment with OPEC members discussing potential production cuts in the coming days

I still think this thing has one more leg down especially with today's report

Edited by ATK

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(edited)

21 minutes ago, Enthalpic said:

Predictions need time-frames to have any value... Just saying a number is worthless.   WTI has been anywhere from $55 to $75 in the last year - so it's pretty easy to spit out a random number (up or down) and claim you were "correct" at some point.

Tell this to @Top Oil Trader, this post started as a joke but then turned into some meaningful discussion. I think we could see a move to $60.1x either tomorrow or Friday 

Something to know about me, I trade weekly options so when I discuss trade it's usually on a much shorter time frame (~5 - 7 days). 

Edited by ATK
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Indeed the inventory report was very bearish- however there must be considersble resistance now as it couldn't break below $61 when it normally would have produced a greater fall?  Im guessing you thought this would have been the trigger for $60? So we still have our bottom holding -albeit on shaky ground...  if the report surprised to the upside it would have sent it flying imho.. 

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1 hour ago, catch22 said:

Indeed the inventory report was very bearish- however there must be considersble resistance now as it couldn't break below $61 when it normally would have produced a greater fall?  Im guessing you thought this would have been the trigger for $60? So we still have our bottom holding -albeit on shaky ground...  if the report surprised to the upside it would have sent it flying imho.. 

I mostly just weigh all the fundemental factors to give me an idea of direction and then look at potential support/resistance zones. Iranian sanctions have had the wind taken out of its sails esepically now that waivers are being offered, the report was squarely bearish (the gas build was a big surprise), US oil production is soaring adding 400,000 bpd, and really right now the only thing that can potentially save bulls is a production cut by OPEC which we won't know about (at least to an extent) until sunday.

Oh I also agree if the report came out more bullish that it would of sent prices higher, bulls are getting thirsty for a retracement

Edited by ATK
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12 hours ago, Enthalpic said:

Meanwhile in Canada.... people are investing in more oil-sands production despite our: lack of pipelines; supply glut; and the super low price of the Canadian Crude Index. https://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=HB0800&mobile=false

What are they thinking is going to happen?

sutpidities

Canada is going to start building new refineries, that are designed to use that Suncor/Syncrude heavy oil as the feedstock. It is inevitable that Canada will artificially create a new home for its own oil.  The Federal Govt  cannot survive the next election if Alberta  cannot sell its oil at a decent price (which at $20/bbl is not a decent price).  Alberta finances the rest of the country, now that BC is whacked with US softwood tariffs, Ontario is destroyed by the stupidities of the wind-electric follies driving manufacturing into the ground and out of the country, and the Maritimes in a state of perpetual decline, mostly due to an aging population and rising health care costs. 

I predict you will also see a big push for new oil tankcar production for the railways, with National Steel Car in Hamilton (Ont.) the big winner.  Also it is possible that rail tankcars will end up being built at Bombardier factories in Thunder Bay, Ont., and at La Pocatiere, Que., which has faced problems selling trainsets and is out of new work.   https://www.cbc.ca/news/business/bombardier-rail-layoffs-1.4542085

Canada will do massive oil by rail until they can get some new pipe laid, which I predict will run overland from Alberta-Sask. to new refineries in the East.  The pipeline will go all the way to New Burnswick and Irving Oil "pressured" into switching from Middle East KSA oil to Alberta crude.  Just watch. 

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14 hours ago, Enthalpic said:

Meanwhile in Canada.... people are investing in more oil-sands production despite our: lack of pipelines; supply glut; and the super low price of the Canadian Crude Index. https://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=HB0800&mobile=false

What are they thinking is going to happen?

 

Maybe "when pigs fly, they can carry the oil to the customers"?

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12 minutes ago, Dan Warnick said:

Maybe "when pigs fly, they can carry the oil to the customers"?

Or various refineries are built right next door to the oil-sands projects.  Then the finished product, which has less volume than the crude, can be moved effectively by unit trains. 

Don't underestimate the abilities of Canadian rail.  The two major railroads have centuries of experience doing long-distance hauling.  They can accomplish the movement of that oil. 

PS:  National Steel Car has picked up a huge order for new tank-cars and grain cars, hundreds of units. Figures. 

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