To receive Tyler’s analysis directly via email, please SIGN UP HERE
Crude Oil Price Forecast Talking Points:
- WTI Crude Oil Technical Analysis Strategy: buying dips above support $54.85/bbl
- EIA Crude Oil Inventory Report shows US production continues as headwind to OPEC
- Trader Sentiment Highlight from IG UK: bearish bias developing from contrarian indicator
The price of Crude Oil continues to trade higher for the month of December but has retreated ~2.5% from the intra-weekhigh of $58.56 on December 12 after reports that a key pipeline in the North Forties could be offline for weeks until a crack is repaired.
Surge in Gasoline Inventories Concerns Oil Bulls
The persistence of Crude Oil production is not as concerning thanks to falling inventories as is the rise in refined products. Gasoline stockpiles moved higher again after falling last month as a potential indication that demand is slowing. However, you should be aware that refiners have been running and producing refined products at historical levels, which makes sense that stockpiles would build outside of outlier demand levels.
Oil Price Chart Looks Set to Continue Above $54.85/bbl for WTI Crude
The oil chart for WTI Crude continues to hold in the recent high range of $56/$58 per barrel, which is where the price of WTI crude began the year before falling to $43/bbl in June. The price has oscillated sideways after touching $59/bbl on November 24 ahead of the OPEC confirmation of a production curb extension. However, traders may do well to see this consolidation as a phase before trend continuation.
Volatility has crept up at year end for Crude thanks in large part to the fundamental developments. However, a higher price floor looks to be developing. Going back to the October low of $49.73/bbl, the market continues to see a series of higher highs and higher lows, and an inability to break this pattern favors holding off on bearish exposure in anticipation of a sharp price fall.
The recent price floor that attracted buyers was $55.82 on December 7 followed by $54.85 on November 14. Additionally, a clean trendline can be seen when drawn from the October low that shows price may soon find support. If the price breaks above the Wednesday high at $57.83 before the EIA data and the December 12 high at $58.56, traders would do best to cede the point that the Bulls remain in control.
Only a break and close below $54.85 would help the bears case to have anything other than short-term price drops.
Unlock our Q4 forecast to learn what will drive trends for the Euro and the US Dollar through year-end!
Chart Watch: Trendline & Price Support Arriving at $55/56 per barrel
Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions
WTI Crude Oil Insight from IG Client Positioning
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.
---
Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com
To receive Tyler's analysis directly via email, please SIGN UP HERE
Contact and discuss markets with Tyler on Twitter: @ForexYell
