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Crude Oil Price Forecast: Saudi Shake Up Supports Oil to 2 Year High

Crude Oil Price Forecast: Saudi Shake Up Supports Oil to 2 Year High

2017-11-06 17:10:00
Tyler Yell, CMT, Currency Strategist
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Talking Points:

The price of both WTI & Brent Crude broke to the highest levels since July 2015. The price of Brent is coming into the 200-Week Moving Average at $62.90 per barrel, which price last touched in 2014. The break below the 200-WMA in 2014 preceded the downtrend that would eventually take the price of Brent from ~$115 in mid-2014 to $27.1 in early 2016 before beginning the rebound that we’re now witnessing.

The most recent catalyst for buying energy was a sweep through Saudi Arabia to rid the country of corruption has taken the global energy market by surprise. The global oil benchmark, Brent Oil broke above $62/bbl as the clearing of accused corrupt individuals is seen as a nod to increased probabilities of OPEC+ ( a moniker for OPEC and strategic allies) pushing forward with production curbs past the March 2018 program end date. Energy ministers involved in the production curb, which has been responsible for tightening oil supplies in closer respect to growing global demand are set to meet in Vienna later this month to decide the time extension of the production curb. The start of the

The price of WTI Crude oil is expected to attract buyers above $53.11 (September 28 high) on dips. Initial resistance was expected at previous equality targets at 54.08-54.23 and $56 (and ABC from August / 1.618 from September,) but price aggressively broke through to above $57. Buying dips remain the preference.

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

Crude Oil Price Forecast: Saudi Shake Up Supports Oil to 2 Year High

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

WTI Crude Oil Insight from IG Client Positioning: Retail traders join Crude Oil rally

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.

Crude Oil Price Forecast: Saudi Shake Up Supports Oil to 2 Year High

Oil - US Crude: Retail trader data shows 43.5% of traders are net-long with the ratio of traders short to long at 1.3 to 1. In fact, traders have remained net-short since Oct 25 when Oil - US Crude traded near 5214.9; theprice has moved 9.2% higher since then. The number of traders net-long is 16.9% higher than yesterday and 19.3% higher from last week, while the number of traders net-short is 15.0% lower than yesterday and 10.0% lower 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. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current Oil - US Crude price trend may soon reverse lower despite the fact traders remain net-short (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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