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WTI Crude Oil Working On Highest Close of 2017 On Demand Growth

WTI Crude Oil Working On Highest Close of 2017 On Demand Growth

2017-10-31 17:56:00
Tyler Yell, CMT, Currency Strategist
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  • WTI Crude Oil Technical Strategy: Buying Dips Above $49.10/bbl
  • Crude Oil may approach extended price channel target near ~$56/bbl
  • Sentiment Highlight: positioning continues to favor a broadly bullish bias in the near term

The price of WTI Crude Oil has risen 8% overOctober, and the physical markets are showing signs that gains could continue. In the opening weeks of 2017, the price of WTI crude oil found resistance near $54/55 and would trade as low as 42.05 on June 21. However, upgraded growth and demand forecasts with multiple signs that production is slowing from the Paris-based IEA, OPEC, & the EIA are given buyers confidence that the gains could continue and may take the price above the 2017 intraday high of $55.24 and the closing high on February 23 at $54.45.

What traders see in the physical hedging market is near-term demand exceeding near-term supply via the December 2018 to December 2019 oil curve spread as well as the December 2017 to December 2018 both supporting the current price appreciation. The curve at the close of October is at the widest point since early 2014 showing contracts for near-term futures are at a larger premium showing tightening supply thanks in large part to OPEC’s supply cuts.

From current pricing, a hold of a daily close above the $50.90 figure (Oct. 20 low) opens the door for a challenge of $55.24/bbl (YTD high). Alternatively, a reversal and close back below $50.90 exposes $49.13 (October low, trend line pivot.)

Unlock our Q4 forecast to learn what will drive trends for the Euro and the US Dollar through year-end!

WTI Crude Oil Working On Highest Close of 2017 On Demand Growth

Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

WTI Crude Oil Insight from IG Client Positioning: Pickup in short positioning favors price advance

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

WTI Crude Oil Working On Highest Close of 2017 On Demand Growth

Oil - US Crude: Retail trader data shows 36.5% of traders are net-long with the ratio of traders short to long at 1.74 to 1. The number of traders net-long is 3.2% higher than yesterday and 17.5% lower from last week, while the number of traders net-short is 8.2% higher than yesterday and 24.6% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil - US Crude prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Oil - US Crude-bullish contrarian trading bias (emphasis added.)

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Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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Contact and discuss markets with Tyler on Twitter: @ForexYell

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

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