WTI Heading for $60

(edited)

OPEC talked a whole bunch about supply cuts this weekend, KSA coordination with Russia and Iraq to stabilize oil price back up from the bear swing. Russia and Iraq are on the fence, but this is starting to look like a 2019 reduction to prevent prices from falling below break even for OPEC+

When the talk about cuts this weekend materialize into inventory numbers in next 2-3 weeks, price will go back up.

https://www.bloomberg.com/news/articles/2018-11-10/opec-ministers-meet-as-oil-slump-adds-urgency-to-talk-of-cuts

https://www.bloomberg.com/news/articles/2018-11-11/saudi-arabia-to-cut-oil-exports-amid-signs-of-new-surplus

"Russian Energy Minister Alexander Novak said it’s “hard to say” if oil markets will be over-supplied next year. “We need to wait some time, to see how the market develops,” he told reporters in Abu Dhabi, the United Arab Emirates capital. Russia is currently pumping about 10,000 to 20,000 barrels a day below October levels, Novak said. "

Also, it is becoming a pattern to see ascending channels getting broken, and then continuing ascent as KSA reverses production trends.

OPEC is waving flags and flashing lights, from 'open the valve wide open' 2 months ago, to 'don't let this fall too low'. I think that their price target is Brent 75-85 for as long as possible. With new US production, we won't see 100 like in the past when shale wasn't a factor. Let's see if they make it happen.

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Edited by NatGasDude
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So, I'll ask the question again:  Who does not have enough oil?  The valves are opened as far as they need to be to meet ALL demand.  Nothing less;nothing more.  So it is narrative only, giving the speculators (who actually set the prices) fuel to speculate the price up, or trap long speculators when they drive the price down.  Reverse, rinse, repeat.

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You are right Dan, the only material global shortages are currently in Mexico as Pemex doesn't have enough light crude to feed its simple config refineries, and there is rampant pipeline theft going on as well.

Global demand is being met with +0.5-1 mb/d of supply surplus at the moment.

it isn't an OVERWHELMING quantity of oil available if you look at inventories. Comparing previous years in Total OECD inventories, Q2 2018 closed at 4.3 billion barrels, and Q2 2017 closed at 4.6 billion barrels.

Q2 2018 was actually the lowest stock level in 3 years, and despite all the trash talk on the air waves about 'demand reduction', it also marks the lowest days of forward demand available as well.

China+Japan+India are also expected to demand 1.4 mb/d more in Q4 than they did in Q3, Q1 is also peak Asian demand as well.

November IEA report comes out next week, so that will also play into the narrative game. It's an awful lot of media coverage and talk to drive the prices down, but not that much data to back up the oil drop at the moment. The price increases over the past 5 months were riding the back of the 'Iranian supply shortage and overwhelming Asian demand' narratives.

Lots of pumping and dumping, and hyper speculation going on. Look out for that IEA report though, I bet the market will go bonkers if it shows OECD stocks dropping, and stronger China/Japan/India crude demand than Q2 as that will interrupt the prevailing 'bear market' narrative.

 

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this is a wrong questions to ask. the right one is is there a big and nice quantity of Oil ? if it's yes. so in 2 Years the pipelines is going to be ready !

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(edited)

the market is ready to turn upwards- it just needs some impetus. OPEC production cuts and KSA already holding the bulls a carrot, IEA report to follow might provide the required impetus.

Its only a matter of time before we see the upward move - the real question is how much momentum it will carry before its over again... This is not to say it cant fall a touch further before this happens also - a futher silde down to $57-58 is not off the cards just yet...

Edited by catch22
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1 hour ago, catch22 said:

the market is ready to turn upwards- it just needs some impetus. OPEC production cuts and KSA already holding the bulls a carrot, IEA report to follow might provide the required impetus.

Its only a matter of time before we see the upward move - the real question is how much momentum it will carry before its over again... This is not to say it cant fall a touch further before this happens also - a futher silde down to $57-58 is not off the cards just yet...

Yup I agree, bulls now have something they can work with, but really we will have to start seeing changes in inventory builds before any longer lasting moves to take hold. The Sunday meeting adds to bullish speculation, but the December meeting will give us a hard number in terms of production cuts.

We will have to wait to see if bulls put the cart in front of the horse and drive up prices prior to the release of that data or if the market will wait and see and remain hesitant before making bets on the upside

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1 hour ago, ATK said:

Yup I agree, bulls now have something they can work with, but really we will have to start seeing changes in inventory builds before any longer lasting moves to take hold. The Sunday meeting adds to bullish speculation, but the December meeting will give us a hard number in terms of production cuts.

We will have to wait to see if bulls put the cart in front of the horse and drive up prices prior to the release of that data or if the market will wait and see and remain hesitant before making bets on the upside

Hi guys, I am new and I would like to say hello to everyone. 

I am learning a lot from the oil trading and I would start to ask you: Do you mean that at this time, no position must be taken (short or long as well) ?

 

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1 minute ago, White_Dragon said:

Hi guys, I am new and I would like to say hello to everyone. 

I am learning a lot from the oil trading and I would start to ask you: Do you mean that at this time, no position must be taken (short or long as well) ?

 

I'm personally waiting to see what happens, bulls got way ahead of themselves last time after OPEC had a meeting stating they wouldn't change output in reference to Iranian sanctions.

People stopped listening after they heard "would not change output" and went immediately to talking about $100 a barrel oil. If they had actually listened they would of actually heard that OPEC didn't want to increase output due to DEMAND BEING MET. They feared that the rally was based on irrational exuberance and that increasing output would lead to a supply glut. Well would you look at that, everything they feared has come to fruition thank's to greedy hedge funds pushing the price up on pure speculation.

So basically I'm waiting until supply numbers at least partly match OPECs mentioned cut in production. If we keep seeing builds, then bulls don't have much to stand on 

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5 minutes ago, ATK said:

If they had actually listened they would of actually heard that OPEC didn't want to increase output due to DEMAND BEING MET.

Yep.

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3 hours ago, ATK said:

So basically I'm waiting until supply numbers at least partly match OPECs mentioned cut in production. If we keep seeing builds, then bulls don't have much to stand on 

are we talking about global supply numbers or American supply numbers? the builds are going to continue in the US, and those figures tend to move markets because they are weekly and are considered more transparent (cough). 

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6 hours ago, catch22 said:

the market is ready to turn upwards- it just needs some impetus. OPEC production cuts and KSA already holding the bulls a carrot, IEA report to follow might provide the required impetus.

Its only a matter of time before we see the upward move - the real question is how much momentum it will carry before its over again... This is not to say it cant fall a touch further before this happens also - a futher silde down to $57-58 is not off the cards just yet...

SPDR OIL & GAS - XOP (ETF) supposedly tights with Oil&Gas movement spontaneously. I always compare and track the both crude&oil and related ETF indexs to see the performance to determine where the markets would potentially move next. 

I am very surprise that XOP is currently downtrending over 2% even thogh Oil&Gas are both gaining (crude is a bit volatile now). I come across thinking of why? And I could see one of the reasons which could be Stockmaket discouraging and fearing away the investors. (DOW has fallen 450+ now). 

Usually we always rely on fundamentals as a common ground to determine where oil would go, however, we now know:

1. Supply is greater than demand.

2. Iran is no longer a critical issue. My understanding this issue was resolved.

3. US and Russia will keep the fair production, but Saudi said they will probably cut production. However, I don’t think Saudi would really execute it, because politically speaking,  Trump will not be happy with it and the murder effects have not gone away completely, unless Saudi straight cut production by a significant amount regaless any cause.

4. The globa economy is getting so much weaker because of the ongoing and non-stoppable trade wars between CN & US. Of course all those emerging countries are more helpless for bosting up global economy in the following couple years. Oil could go North since Trump is the big engine to boost stockmarkets, but most likely I would still remain as a bear in oil.  And the question is how much oil could gain again? What I see is if oil goes up in these couple years, that will be a high possibility resulting the next globa economic crash immediately. 

I do aggree Oil (WTI) could be bounced back, but it won’t be anytime soon until next summer. And I think WTI could fall further to $55 by the end of the year. 

By the way, I seriously feel so annoying by this dude below......   lol.  Sooner later he would say:” I foresee a $100 Oil.”  

97E20384-1EC9-4138-BE55-74849B7CAFAF.jpeg

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46 minutes ago, Rodent said:

are we talking about global supply numbers or American supply numbers? the builds are going to continue in the US, and those figures tend to move markets because they are weekly and are considered more transparent (cough). 

American of course! For the reasons you mentioned above lol

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(edited)

Well - oil is still stuck in its downward channel...

After the Saudis tried to talk it up with production cuts - Trump tweeted against production cuts and the market happily sent it back down under $59 again... Oil is has now been closed lower for 11 consecutive days in a row - the most consecutive days in a row for more than 30 years! Something to think about...

Here is the 4H chart showing the downward channel since this bear run began from +$76. Also i have the 50SMA, 100SMA, and 200SMA showing, and down the bottom the ADX and RSI.

You can see the ADX (indicator of trend strength) is beginning to drop lower which means the trend strength is likely weakening. Although it is a lagging indicator, so it doesnt mean the trend cannot continue some more - it just adds weight to a technical argument that a correction is due. The price is well below all 3 moving averages, and the RSI is hovering around the low levels weve had since the bear run began- save a few little ever present bumps.

On the daily Chart - RSI is showing very oversold, to an extent that has not shown since april 2017.

Going forward - although it could certainly go lower from here as we are clearly in a strong bear trend and currently in the center of the downward channel, i dont like shorting it given the level we are at now and the ADX weakening and very oversold. A reversal could happen at any moment so a short position from this low is extremely risky. Going long from where we are at now is also a problem as there is no clear indication when the reversal will happen. What i would like to see is first - a green daily candle. Then the break above the downward channel resistance line. This will give us some indication that a reversal is on offer. When it breaks the upper line, i would also like it to break the 50SMA - which can also act as resistance often bouncing off it and heading down again. If we see it break both of these in confluence with some strong price action - then i think we have a reasonable probability position to go long on a larger corrective move - but not before. To put the icing on the cake for a long position - i would like to see some fundamental news headlines which gives the bulls a tangible reason to be more committed. Waiting patiently for this to happen and we should see a move up into the mid $60s again.

Another option to go long from is to enter a tentative small position after we get a green daily close. Then build on the position as it moves higher, adding more as it passes resistance hurdles of the lower TF moving averages to prove that the upward momentum is not stalling. This way you can get in earlier but if the bearish trend resumes then you get stopped out for a small position instead of a large one... my 2c...

 

 

 

 

 

Edited by catch22
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14 hours ago, Keven Tan said:

1. Supply is greater than demand.

Hi Kevin.

With respect, please keep in mind that supply = demand.  Nobody, for example, is ordering more than they want or need, and nobody is doing without oil right now, except for limited technical reasons such as sabotaged pipes or refineries that are shut down, things like that.

Now, the perception of reduced supply can move markets, and the Saudis talking about cutting production can effect the perception that there may be a shortage in the future.

You are right, however, that it will be interesting to see what perception the Saudis want to change relative to President Trump's public demands.  They can give lip service to him and say they have no control, or they can ignore him, but in fact they have no control.  The only way  they have any control, as has been discussed, I think by @ATK is if they actually physically cut production and stop filling orders.  But to ATK's point, if they do that in this day and age, they will surrender market share and they may find that their influence is not what it once was.  That, as far as I'm concerned, is way too much of a risk for the Saudis (letting the world know for sure that they don't hold so much sway anymore).

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Interesting graph.

I haven't played the oil market outside stocks, CFDs and spreadbetting.  Does anyone recommend a good place to buy options? 

I've been looking at https://www.cmegroup.com/trading/why-futures/welcome-to-nymex-wti-light-sweet-crude-oil-futures.html which looks interesting but thought something on the CBOE might be good.  To be honest, I'm pretty clueless here, any advice on where to buy contracts would be appreciated,

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$57 is my target for support but there is so much technical damage here.  We are finally getting into a 5 year average of specs from coming off all time highs. We are nearly the most oversold in modern history.  

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On 11/8/2018 at 4:19 AM, Jan van Eck said:

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. 

With all due respect, Jan, I still disagree with the concept that Canada can perpetually subsidize the Alberta producing industry to the tune of $25-50 per barrel. Today's WCS price of $15 is a preview of things to come -- not a spot number. IMO 2020 will make permanent the situation whereby Canadian Bitumen sells for a negative price. Regardless of the price, it is impossible to put ten gallons of bitumen in a five gallon bucket. Economically-mandated shut-in of Canadian production will solve the pipeline limitation problem permanently.

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(edited)

15 minutes ago, oilfutures said:

$57 is my target for support but there is so much technical damage here.  We are finally getting into a 5 year average of specs from coming off all time highs. We are nearly the most oversold in modern history.  

$56.7x is the daily S3 Fib pivot point and we are currently getting oversold across all timeframes, so i expect at least some kind of bounce (maybe to around $58.4) to give RSI a time to cool off, but we are still going to have to see a change in inventories before we see any major move to the upside.

In order for the uptrend to be maintained on the monthly chart, we are going to need to close the around $59.8 - 60.1x by the end of this month. If we close below there, we will see oil head much much lower. 

Edited by ATK

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This selling reminds me of Gadafi or 2009 melt down.. Just market orders.. I have no idea where the low is but if cramer is saying 40... he might be right... oil is the type of instrument that when people love it they love it and when they hate it they hate it...

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2 minutes ago, ATK said:

$56.7x is the daily S3 Fib pivot point and we are currently getting oversold across all timeframes, so i expect at least some kind of bounce (maybe to around $58.4) to give RSI a time to cool off, but we are still going to have to see a change in inventories before we see any major move to the upside.

Yes, likely needs an improvement but the question will be how much of an improvement is needed?  It is like a beaten up stock that can still go up on bad earnings because it was not as bad as priced in.

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ATK do u think this weeks EIA report will be another build?

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(edited)

5 minutes ago, oilfutures said:

Yes, likely needs an improvement but the question will be how much of an improvement is needed?  It is like a beaten up stock that can still go up on bad earnings because it was not as bad as priced in.

Basically we need to stop seeing weekly builds occurring, I'm not super hopeful seeing how the US added 13 more rigs last week

Probably 2-3 solid weeks of draws will be needed to instil some hope for bulls

Edited by ATK

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1 minute ago, Oilfuturestrader said:

ATK do u think this weeks EIA report will be another build?

Possibly yes, the US seems to just keep adding more and more rigs so production isn't going down anytime soon. I also imagine many countries using their waivers in the second half of November so that will likely have an affect on the US's exports, South Korea has been buying a lot of oil from the US, but will likely be cutting back some of those purchase's for Iranian oil

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I hear the PIPE lines are all coming online now.. USA is a wash in oil.. Shit this might be a bear market til next year

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