We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Bearish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.90%, while traders in US 500 are at opposite extremes with 72.88%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/JGa74oRdsK
  • The price of #gold continues to pull back from the yearly high ($1765) following the failed attempt to test the 2012 high ($1796). Get your $XAUUSD market update from @DavidJSong here: https://t.co/JnUaOdlhKp https://t.co/l4mbrzY0wl
  • Fed's Bullard says we have a better probability for a quick recovery compared to previous recessions $DXY $SPX
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Silver: 0.69% Gold: -0.23% Oil - US Crude: -2.49% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/enkKZQzC4J
  • #Gold Price Technical Outlook: $XAUUSD Correction Approaching Support - https://t.co/XCkrdESFN4 https://t.co/wlvI0myFZm
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: -0.01% 🇨🇦CAD: -0.02% 🇯🇵JPY: -0.18% 🇳🇿NZD: -0.43% 🇬🇧GBP: -0.77% 🇦🇺AUD: -0.84% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/rAo0MfnXVB
  • Heads Up:🇺🇸 Fed Bullard Speech due at 16:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-05-27
  • Indices Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.91% US 500: 0.14% FTSE 100: 0.12% France 40: 0.06% Germany 30: 0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/hZuIomNwSE
  • The United States will not certify the autonomy of Hong Kong, putting its trade status in danger - BBG
  • RT @Lagarde: I am heartened to see this common European answer to the economic difficulties resulting from the coronavirus pandemic. #Stron…
Crude Oil Price Forecast: Record Inventory Build Breaks Support

Crude Oil Price Forecast: Record Inventory Build Breaks Support

2016-11-02 15:35:00
Tyler Yell, CMT, Currency Strategist
Share:

Access Free Oil Trading Guide from DailyFX Analysts HERE!

Talking Points:

  • Crude Oil Technical Strategy: Price breakdown accelerating toward 200-DMA (43.63)
  • Aggregate Crude Inventories in U.S. rise by largest on record (since 1982)
  • Output is expanding at the same time as doubts of OPEC accord

The fundamental data surrounding the price of Crude Oil continues to put doubt in the upward direction of Crude Oil. On Wednesday, the EIA Crude data confirmed what many traders had feared. Namely, the rise in the price of Oil would cause the production from active rigs in still-profitable shale regions to aggressively turn on the spigots to help service liabilities. The expectation ahead of the 10:30 am ET release was ~2M Barrels, and API data had forecasted ~9M barrels. Therefore, the 14M build in U.S. inventories caused a sharp sell-off in Oil taking the price lower by nearly 3.5% after the report.

Interested In a Quick Guide about OPEC, Click Here

After the data released and the continuation of the market beginning to price in the failure of an OPEC deal to cut production is feeling like a crash after trading at 15-month highs. We shared yesterday how the relative number of bulls as seen in the recent CoT report that shows the difference between net speculative positioning and net commercial positioning measured is at 98% of the 52-week percentile, and US Dollar is at 100% of the 52-week percentile. This relative extreme doesn’t imply a top but can be indicative that there could be a significant unwind if disappointing data emerges such as a failed OPEC deal.

As the picture comes together, you can see the reasons for the sell-off in Crude Oil. Despite the soft promise from OPEC to making progress to an accord, nearly everyone in OPEC is increasing production while Rosneft, the oil company owned by the Government of Russia, is bragging about excess capacity and U.S inventory rises by the largest amount on record. There is the bright side of U.S. & China demand, but the supply glut issue remains as prevalent as ever.

D1Crude Oil Price Chart: Breaking Below Rising Trendline & Pressuring Ichimoku

Crude Oil Price Forecast: Record Inventory Build Breaks Support

Chart Created by Tyler Yell, CMT Courtesy of TradingView

Crude Oil has retraced below the 61.8% of its rally from mid-September that started at $42.72/bbl and went as high as $51.92/bbl in mid-October into the Ichimoku Cloud. The next, and some would argue last-Fibonacci worth watching is the 78.6% retracement that sits at $41.71/bbl. Now that we’ve broken below the Trendline shown above, it’s fair to think we could see a further unwind of the relative extreme on a 52-week basis in the CoT differential index.

Because the price has broken below this zone of support that is comprised of the Trendline drawn from February and now sits in the Ichimoku cloud, we will likely see a much deeper correction as confidence is broken. The next downside levels to watch are the 78.6% retracement followed by the base of the Ichimoku cloud at $44.13/bbl, and lastly the September low at $42.72/bbl. Due to the stretched relative positioning, as explained in the CoT note, we could see a further breakdown of these technical support points that may provide a wave of selling pressure that drops price closer to $40/bbl.

Given the ~13% drop in ten days, a bounce is expected now that we’re trading within the Ichimoku Cloud. However, another break below the Cloud could, in fact, have this move pinned from August to October as a double top pattern, which would be validated on a close below $39.15%.

The resistance level that we’ll be watching from here is the current November opening range high at $47.34/bbl followed by $49/bbl. Until the break of resistance surfaces, we’ll be anticipating any move higher to unfold in three waves in a corrective fashion that resumes lower. The burden of proof is now on the Bulls, and we’ll continue to doubt their arguments if the price of Oil to fails surpass $47.34-49/bbl before anticipating new 15-month highs anytime soon.

Key Levels Over the Next 48-hrs of Trading As of Wednesday, November 2,2016

Crude Oil Price Forecast: Record Inventory Build Breaks Support

T.Y.

To receive Tyler’s analysis directly via email, please SIGN UP HERE

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.