Oil price discussion and analysis

I was going to ask a similar question. The red line is a constantly rising metric which I assume means the POO will vary up and down but slowly increase over the next few years as the red line indicates a higher price. Well thats how I read it.

I assume at some point some other marker might show up so a chartist can see that as a variance to some other change, like a declinig price etc.

G'day duc

ducati916 said:

So essentially what you are saying is that as the red line is a rising line, the POO will continue to rise, but just not above [break through] that red line?

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The rising red line was a failed support line from the base of the rising wedge. This is now a resistance line, a barrier which it needs to push back up through. It may do it easily, it may bash at it a couple of times and break through, it may try and fall back. I see the run up to the red line is very rapid and wonder if it has the stamina to break through.

ducati916 said:

So it will either (a) grind higher with the red line over time; or (b) it will rise, pullback, and re-rise to the red line but (c) never break through.

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...or it will just break through the red line and then the red line will resume being a support line for further upward moves. I see the red line as either a confirmation of weakness or a signal of higher levels with an effort to reach and overcome the long term falling resistance line which it failed when it fell from the rising wedge.

ducati916 said:

On that analysis: you would be a buyer of oil?

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Once the red line is overcome and proven to be a support line again with either a retrace touch or a good clear jump up from that red resistance/support level, yes I would be a cautious buyer (if I was a buyer which I am not, other than timing my petrol purchases). If there is no break through of that red line then I would not buy but short (which I don't do either).

ducati916 said:

If none of the above, what is the relevance of the red line?

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As I said early but just to reiterate the relevance of the red line is that it was once a tested support line which was failed and now it is a resistance line which needs to be overcome. If it is overcome, it should offer a degree of confidence to trade into higher prices. However the risk of a bull trap should never be forgotten.

ducati916 said:

Of more interest [long term] would be the $80'ish resistance/support line [horizontal] of a chart based analysis?

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Once the red line is overcome then yes I can see a horizontal level of around $77 could be another resistance area. This level has had a few long term tests of support and resistance. Also I measured it with a Fibonacci retracement and that level has been confirmed as the 38.2% level as well. However the POO is more likely to hit the long term falling resistance line before the horizontal $77 resistance. This will add an extra risk to watch for if it does break above the falling resistance, only to be knocked on the head with the horizontal $77. Edge of seat stuff!

I will put up a chart showing the long term $77 support/resistance line in purple. I won't keep the Fibonacci retracement in place it becomes too messy unless someone wants to see where I took my measurements of course, then I will include them in a chart.

Oil hits 2019 high as supply squeeze looms; Brent nears $70 per barrel

NEW YORK (Reuters) - Oil prices on Tuesday hit their highest level so far in 2019, with Brent crude approaching $70 a barrel, on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an OPEC-led supply cut.

Brent futures reached a session peak at $69.52 a barrel, the highest since Nov. 13. The global benchmark rose 36 cents, or 0.52 percent, to settle at $69.37 a barrel.

U.S. West Texas Intermediate (WTI) crude rose 99 cents, or 1.61 percent, to settle at $62.58 a barrel, after touching $62.75, its highest level since Nov. 7.

The United States is considering more sanctions against Iran, the fourth-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), an official said.

Three of the eight countries to which Washington granted waivers to import Iranian oil have now cut their shipments from Iran to zero, a U.S. special representative said on Tuesday.

Meanwhile, a crude terminal in Venezuela, also under U.S. sanctions, halted operations again due to power problems.

“The latest driver appears to be the idea that tightened supplies are going to create a stronger fundamental picture,” said Gene McGillian, director of market research at Tradition Energy. “The market keeps pushing higher.” More...

Parse said:

I was going to ask a similar question. The red line is a constantly rising metric which I assume means the POO will vary up and down but slowly increase over the next few years as the red line indicates a higher price. Well thats how I read it.

I assume at some point some other marker might show up so a chartist can see that as a variance to some other change, like a declinig price etc.

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Sorry Parse, I missed your post this morning, did I answer all your questions when I replied to duc?

Ann said:

I will put up a chart showing the long term $77 support/resistance line in purple.

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There would seem to be rather a lot of lines around $77 do if it did top out at that point then we might never know which line that could be attributed to?

On the other hand, if the price passes through that level then there's not too many more obstacles in the way above other than the previous actual highs and lows at nominal value?

Ann said:

G'day duc




Once the red line is overcome then yes I can see a horizontal level of around $77 could be another resistance area. This level has had a few long term tests of support and resistance. Also I measured it with a Fibonacci retracement and that level has been confirmed as the 38.2% level as well. However the POO is more likely to hit the long term falling resistance line before the horizontal $77 resistance. This will add an extra risk to watch for if it does break above the falling resistance, only to be knocked on the head with the horizontal $77. Edge of seat stuff!

I will put up a chart showing the long term $77 support/resistance line in purple. I won't keep the Fibonacci retracement in place it becomes too messy unless someone wants to see where I took my measurements of course, then I will include them in a chart.

View attachment 93512

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I would have thought that it made more sense from a charting perspective to place the red line below the low of $42 [or whatever] and then extend it, forming, eventually a triangle. The rising red line, drawn where it is seems more confusing than useful.

Anyway, the COT chart: which looks to indicate [currently] a weakening in commercial support for higher prices.

jog on
duc

Smurf1976 said:

There would seem to be rather a lot of lines around $77 do if it did top out at that point then we might never know which line that could be attributed to?

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From the perspective as if the POO was going to challenge that convergence of lines imminently but that isn't the case, POO is traveling at its own pace as are the falling and rising lines. When the price gets to one of those lines they will be far enough away from the other lines to be able to tell which one has had an effect on the POO, if in fact there is an effect.

Smurf1976 said:

On the other hand, if the price passes through that level then there's not too many more obstacles in the way above other than the previous actual highs and lows at nominal value?

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If it gets past this immediate red line then the next challenge will be the long term falling overhead resistance line and then the $77 line. After that there will be a number of horizontal resistance lines it will need to overcome. I don't want to start drawing more lines on the chart yet for fear it will just look like a 'cat's cradle'.

ducati916 said:

I would have thought that it made more sense from a charting perspective to place the red line below the low of $42 [or whatever] and then extend it, forming, eventually a triangle. The rising red line, drawn where it is seems more confusing than useful.

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The red line wasn't always a red line, it was a support line for two touches. The touches (or low points of a retrace) formed the lower rising support for a rising wedge pattern which is a bearish pattern and which did result in a fall out of the bearish rising wedge. The red line is not a random line but made up part of a pattern which resolved in the expected bearish outcome. The upper line of what became the rising wedge was drawn as a bullish symmetrical triangle, then it became a bullish Ascending Triangle at an earlier time before becoming a bearish Rising Wedge. The lower red support stayed in place through all the upper line incarnations. I hope this makes sense? I will draw a chart on the weekly POO and show how it evolved into various patterns over time and each pattern resolved as I would have expected. I wasn't posting on the forum at that time I was just watching it myself and readjusting the upper resistance line.
I have drawn a chart using the weekly POO to illustrate why the red line was a constant and important support line as it remained in place over a number of proven chart patterns.

Looking at the POO from the long term Big Picture perspective, I can see a Bearish Descending Triangle forming.

ducati916 said:

Anyway, the COT chart: which looks to indicate [currently] a weakening in commercial support for higher prices.

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That is a really interesting COT chart with the bars showing the + and -
The Net Positions still appear to be broadening which I see as bullish. Where did you find the chart?

Oil prices edge lower after U.S. inventories build

TOKYO (Reuters) - Oil prices dipped on Thursday, with Brent edging away from the psychologically important $70 level after easing in the previous session on data showing a surprise build in U.S. inventories.

Brent futures eased 2 cents to $69.29 by 0100 GMT. On Wednesday, Brent dipped 6 cents, after touching $69.96, the highest since Nov. 12, when it last traded above $70.

U.S. West Texas Intermediate (WTI) crude was down 14 cents, or 0.2 percent, at $62.34 a barrel. The contract fell 12 cents in the previous session after briefly hitting $62.99, also the highest since November.

Crude oil inventories in the United States rose by 7.2 million barrels last week, as net imports climbed, the Energy Information Administration said on Wednesday. Analysts had forecast a decrease of 425,000 barrels. [EIA/S] More....

ducati916 said:

I would have thought that it made more sense from a charting perspective to place the red line below the low of $42 [or whatever] and then extend it, forming, eventually a triangle. The rising red line, drawn where it is seems more confusing than useful.

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I should have mentioned I will move that red line eventually once it is out of play as a potential resistance/support line. Currently it is still in play, so I will leave in place. Once it is no longer a potential line of support or resistance I will move it down under the recent retrace to around $42 as you mentioned. At that stage I will also remove the upper resistance line from the ageing rising wedge.

This is a chart for Brent Crude. It is heading toward a long term overhead horizontal resistance line just slightly above $70. That same resistance line is sitting right on the Fibonacci retracement line of 38.2%.

Ann said:

Looking at the POO from the long term Big Picture perspective, I can see a Bearish Descending Triangle forming.



That is a really interesting COT chart with the bars showing the + and -
The Net Positions still appear to be broadening which I see as bullish. Where did you find the chart?


View attachment 93539

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In the long term I would guess oil will average somewhere in the mid 60's. This guess would be based on the fact that the US shale oil will produce enough to keep the price down below the spike levels that we have seen viz $100+ and that the economies that are reliant upon oil revenues [currently] will continue to sell oil at those sorts of prices [Arabs, Russians and South Americans]. Which accounts for the supply side of the equation.

Re. demand, I am assuming [possibly incorrectly] that demand will continue to grow, but at a much slower rate than previously. The growth will come from India and Africa potentially as they increase their per capita wealth.

On that basis, the technicals that you refer to are probably accurate.

The COT charts are found here: http://commitmentsoftraders.org/cot-charts/


jog on
duc

Baker Hughes Crude Oil Rigs Count .....


increased to 831 from 816 up 15 this week.

Trump tries fresh approach with long-delayed Keystone XL pipeline

WASHINGTON (Reuters) - U.S. President Donald Trump on Friday signed a new permission for TransCanada Corp to build the long-delayed Keystone pipeline for imports of Canadian oil, replacing his previous permits in a fresh attempt to get around the blocking of the $8 billion project by a court in Montana.

In granting the permission in an executive order, Trump revoked a previous permit for the pipeline issued in March 2017 and an executive order approving the project he issued two days after taking office in January that year. More...

In this article it mentions the Sierra Club. This is a very old and established environmental group who get involved in politics. They endorsed Hillary Clinton in the 2016 election.

Hillary Clinton is a supporter of Nuclear Power Plants.
Clinton wants to renew permits for existing nuclear power plants that are safe to operate and increase public investment in advanced nuclear power.

The Sierra Club also supporters of Nuclear Power Plants...

Although the Club had played the leading role blocking PG&E's nuclear power plant proposed for Bodega Bay, California in the early 1960s, that case had been built around the local environmental impact and earthquake danger from the nearby San Andreas fault, not from opposition to nuclear power itself. In exchange for moving the new proposed site from the environmentally sensitive Nipomo Dunes to Diablo Canyon, the board of directors voted to support PG&E's plan for the power plant. A membership referendum in 1967 upheld the board's decision. Link...

https://oilprice.com/Energy/Energy-General/Sharp-Rise-In-Rig-Count-Pressures-Oil-Prices.html
Sharp Rise In Rig Count Pressures Oil Prices

Potential turmoil in Libya threatens supply. The head of the Libyan National Army, Khalifa Haftar, ordered his troops to march on Tripoli on Thursday, dramatically escalating the risk of turmoil in the country. If oil production in the country is disrupted, it would “noticeably increase the pressure on Saudi Arabia to open up the oil tap again, as it did in the autumn”, Commerzbank said in a note.

Possibly putting upward pressure on price.

jog on
duc

...and just as the chart resistance levels for both the Brent and WTI get to their resistance lines, in comes the Russians to tell us they won't be doing the cuts they said they would, in fact they may raise output. I wonder if the POO will begin to fall away from resistance now? My bet, yes! Let's see.

Russia signals OPEC and allies could raise oil output from June

MOSCOW/LONDON (Reuters) - One of the key Russian officials to foster a supply pact with OPEC, Kirill Dmitriev, signaled on Monday that Russia wanted to raise oil output when it meets with OPEC in June because of improving market conditions and falling stockpiles.....

........
“It is quite possible that given the improving market situation and falling stocks, (OPEC and its allies) could decide in June this year to abandon supply cuts and subsequently increase output,” Dmitriev told a conference in Moscow.

“This decision will not mean the end of the deal, but a confirmation that participants continue their coordinating efforts when it is important not only to cut but to increase output depending on market conditions,” he told the conference.

Speaking to reporters on Monday evening, Dmitriev added that it could be appropriate for Russia to increase output by 228,000 barrels per day, by which it had previously cut production, “and maybe even further”. More..

Another little bit of confirmation of POO getting flushed!

American Drivers Set to Pay Less at the Pump This Summer

American drivers will probably pay less to fill up this summer as oil prices are forecast to be lower than last year.

Retail gasoline prices are expected to average $2.76 a gallon, down from $2.85 last year, according to the Energy Information Administration. Brent crude, the world benchmark, is seen averaging $7 a barrel lower this season than last. More...

https://www.spglobal.com/platts/en/...es-rangebound-amid-gloomy-imf-growth-forecast
Crude oil futures rangebound amid gloomy IMF growth forecast

MARKETWINNER said:

https://www.spglobal.com/platts/en/...es-rangebound-amid-gloomy-imf-growth-forecast
Crude oil futures rangebound amid gloomy IMF growth forecast

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It will be interesting now that Robert Mueller’s investigation is over Putin and Trump can resume international relations again. One wonders if that will affect the POO. It is well known Trump wants oil cheaper.

Putin Hopes For Fresh Start With Trump After "Notorious" Mueller Commission Found Nothing

Ann said:

It will be interesting now that Robert Mueller’s investigation is over Putin and Trump can resume international relations again. One wonders if that will affect the POO. It is well known Trump wants oil cheaper.

Putin Hopes For Fresh Start With Trump After "Notorious" Mueller Commission Found Nothing

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Hi Ann: It is going to be very interesting. I like to see everybody get together and bring down oil prices and then bring peace and sustainable development.

The EIA forecast that Brent crude oil spot prices would average 65 U.S. dollars per barrel in 2019 and 62 dollars per barrel in 2020, compared with an average of 71 dollars per barrel in 2018. If that is so WTI crude would average 57 dollars per barrel in the first half of 2019 and 53 dollars per barrel in the second half of 2019 and in 2020.