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
Bullish
GBP/USD
Bullish
USD/JPY
Mixed
Gold
Mixed
Oil - US Crude
Bullish
Bitcoin
Mixed
More View more
Real Time News
  • video of today's webinar archived and ready to go -> https://t.co/6AN5JgFJBD
  • Commodities Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Silver: 0.39% Gold: 0.23% Oil - US Crude: 0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/iAnM8l2y2N
  • $USD: US Dollar Outlook Hinges on FOMC Guidance, Fed Balance Sheet Full Analysis: https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2019/12/10/us-dollar-outlook-hinges-on-fomc-guidance-fed-balance-sheet.html -via @DailyFX https://t.co/1kDzd3IcPY
  • $CAD $MXN https://t.co/JtihyAuAhY
  • Senator Mcconnell says the Senate will not finish the USMCA before 2020 $SPX $DXY $CAD $MXN -BBG
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.16%, while traders in US 500 are at opposite extremes with 76.96%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/PYu9xhQXLN
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.09% France 40: 0.09% US 500: -0.01% Wall Street: -0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/8jftlGtYTv
  • Here is my scenario table for the #FOMC rate decision tomorrow. Will be covering it live if you want to come and join (starting 15mins before the decision): https://t.co/d6QBYyVd9N https://t.co/zZzdCwXMFa
  • Update on #Cryptocurrencies #BITCOIN -2.00% #BITCOINCASH -1.14% #ETHEREUM -1.87% #RIPPLE -1.34% #LITECOIN -1.23%
  • RT @CVecchioFX: A question I frequently get asked these days is, "Is it realistic to believe that the US Dollar can lose its role in the gl…
Crude Oil Price Forecast: Oil Rises For 5th Day on Huge Stockpile Drop

Crude Oil Price Forecast: Oil Rises For 5th Day on Huge Stockpile Drop

2018-08-22 16:57:00
Tyler Yell, CMT, Currency Strategist
Share:

Crude Oil Price Forecast Talking Points:

  • The ONE Thing: Backwardation is rising again, and that’s good news for bulls. The spread between December 2018 and December 2019 has widened in favor of Dec. 18 showing a demand premium that will likely continue to support the bullish argument. The rise came after the largest stockpile drawdown of crude in the US in four weeks per weekly EIA data.
  • Iran sanctions remain the elephant in the trading room as to whether or not we could see a massive supply shock in the global oil market. While China is set to side with Iran, the release of the US’ strategic oil reserve could show they’re seeing material effect on the physical market that is aligning with >4% US GDP and <4% US unemployment all of which favor demand staying healthy as a major supplier (OPEC’s 3rd largest) is taken out by sanctions.
  • WTI Crude Oil Technical Analysis Strategy: Crude oil is finding solid ground after the large drawdown to the tune of six million barrels may help to support the front-month contract and take the spot price above the 50-DMA and Ichimoku cloud. Access our latest Crude Forecast for Q3 2018 here

Key Technical Levels For Crude Oil Traders:

  • Resistance: $69.19 – August high
  • Spot: $67.66
  • Support: $63.89– August low

The US Remains Thirsty For Black Gold

Please add a description for the image.

Source: Bloomberg, DoE

Weekly EIA data showed a bigger-than-expected draw of nearly six million barrels against an expectation of two million barrels making for a bullish read on the weekly inventory report. The US’ strategic petroleum reserve (SPR) was a part of the petroleum report that showed a drawdown of 2.5 million barrels.

Markets are in high demand-season in late-August, but in prior weeks the trade war rhetoric had taken over to make fears of lower global demand the running theme that markets were pricing. WTI & Brent now is only trailing the NASDAQ as the best performing global asset showing it holds a similar resilience as equities despite concerning narratives that continue to float.

Looking to the DOE data on Cushing Oklahoma stockpiles, there has been a 62.5% drop from the late 2017 high of 64.5million barrels to the current 24.2m level. Aggregate supplies per the DOE show a 41 million excluding the SPR down from 47m last September.

Front-Month WTI Premium May Keep Bears Disappointed

Please add a description for the image.

Data source: Bloomberg

The chart above shows the premium of the December oil futures contract relative to the December 2019 contract. Should the front-month trade at a discount to later-dated month (it hasn’t since September), bears likely be emboldened. However, the premium through the divided global political scene has kept the front month premium near $3, which would likely limit the downside to crude oil.

Daily NYMEX WTI – Has Crude Found Broad Support At $63

Please add a description for the image.

Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT

There’s been a favorable development in crude via a rally in December 18-December 19 spreads alongside a drop in brent implied volatility that has fallen to the lowest level in 4 weeks all of which is alongside a massive drawdown in US oil supplies.

This trifecta has aligned with a jump higher in Crude for five straight days, and now traders are wondering if we’ll soon see a move back to $70/bbl in WTI. While oil is ~8.5 percent below the three-year high reached in early July, traders have seen strong support near $63, which aligns with the all-important 200-DMA.

Additionally, MACD (5,34,5) may also be showing a basing of bearish momentum while the spot price of crude oil has moved above the bearish channel. Technically, this combination of bearish momentum basing alongside a bullish breakout will now turn focus to $69.19, the August high. A break above here may mean that like stocks, rumors of the death of the current bull market (at least in the US) are greatly exaggerated.

Unlock our Q3 18 forecast to learn what will drive trends for Crude Oil

Forex Trading Resources To Support Your Strategy

DailyFX offers a surplus of helpful trading tools, indicators, and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions.

Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities, and our real-time news feedhas intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we watch.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

Talk markets on twitter @ForexYell

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

DISCLOSURES

News & Analysis at your fingertips.