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- 10 February 2006
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I was looking at WTI smurf.
Is that referring to Brent or WTI?
From a fundamental perspective, one issue is that much of the recent supply growth has taken place in the US and that is reaching the limits of infrastructure. In simple terms, there's a lack of pipeline capacity to move the oil from where it comes out of the ground to anywhere that can refine, export or otherwise use it and alternative means of transport, eg road tankers, are expensive and of limited scale.
So it's not just oil per se but where it is located is becoming a definite issue at the moment which is affecting prices.
Is that referring to Brent or WTI?
From a fundamental perspective, one issue is that much of the recent supply growth has taken place in the US and that is reaching the limits of infrastructure. In simple terms, there's a lack of pipeline capacity to move the oil from where it comes out of the ground to anywhere that can refine, export or otherwise use it and alternative means of transport, eg road tankers, are expensive and of limited scale.
So it's not just oil per se but where it is located is becoming a definite issue at the moment which is affecting prices.
The POO has taken a bit of a wack since I posted my last chart on the 17th of October. The price then was 71.91, now it is down to 63.14 on the last close of 2nd of November. I would have expected a bounce up by now or very soon, but let's see.
View attachment 90143
Okey dokey, the POO held at the 60 level. It had a low on the day of 59.26 and closed at 60.19. The around 60 held as the support/resistance line as I felt it might. Now I am going to be very interested to hear what kind of "fundamental info" will come out to force the price upward. (Nothing to do with the support/resistance line of course. Note sarcasm). However I may be wrong.
Okey dokey, the POO held at the 60 level. It had a low on the day of 59.26 and closed at 60.19. The around 60 held as the support/resistance line as I felt it might. Now I am going to be very interested to hear what kind of "fundamental info" will come out to force the price upward. (Nothing to do with the support/resistance line of course. Note sarcasm). However I may be wrong.
An excellent [technical] call earlier, from which after reversing my position, I took a nice profit. Based on your earlier call I took profits on Friday, so now long.
Fundamentals that could create upward pressure:
U.S. oil production surges. The EIA reported that U.S. oil production skyrocketed to 11.6 million barrels per day (mb/d) for the week ending on November 2. Despite fears that shale output would plateau because of pipeline constraints, the shale industry is firing on all cylinders. The figures also help explain the recent downturn in prices.
Russia could benefit from OPEC+ cut. Russia’s oil production is at a post-Soviet record high, but a cut in output may actually work to the benefit of Russian producers. “Producing less at $80 per barrel is better than producing at current levels and at $70 per barrel,” Alexander Losev, chief executive officer of Sputnik Asset Management, told Bloomberg. “A certain output decline will also help the companies to reduce operating costs and further improve their financials, including free cash flow.”
OPEC+ cut would be third reversal. Saudi Arabia increased production in 2015, 2016 and again this year. The first two times, the kingdom backtracked as oil prices sank amid swelling inventories. The potential third production cut in four years suggests Saudi Arabia once again ramped up too quickly, Bloomberg argues. A technical committee for OPEC+ is set to meet this weekend to consider options for 2019, including a possible production cut.
Chevron considers Venezuela exit. Chevron (NYSE: CVX) is one of a handful of oil majors that have stuck it out in Venezuela even as the country continues to fall apart. The oil major’s assets are no longer profitable, and the Wall Street Journal reports that the company is growing weary of the problems. In response to the article, Chevron denied the potential exit. “We’re committed to Venezuela and we plan to be there for many years to come,” Clay Neff, Chevron’s president for Africa and Latin America, said in an interview late Thursday with Bloomberg. The reporting that Chevron might pack up and leave “is not accurate.”
So my data suggests [in agreement with your technicals] as of 6 Nov, that selling pressure is still high but slowing after very heavy selling pressure in the 23 Oct and 30 Oct reports. I am waiting for the next report which should be due early next week to confirm whether the selling pressure on the 13 Nov has changed significantly.
jog on
duc
Thanks duc, be careful. I have been reviewing both the FAR chart and the BPT chart today and both of those look a bit nasty to me, it has made me a bit more bearish since looking at them. It wouldn't surprise me if that 60 line failed in the next few sessions. I can't find the figures for the COT's OI for November 9 which would have been a help. I had an excellent site for the figures but my computer died a while back with all those links and no backup, sadly.
Well here is the data: https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
The next COT report is due 13 Nov. Certainly the 6 Nov report showed [still heavy] but slightly reduced selling. I'm [guessing, educated] that the commercials, the chaps that matter, are counter-trend traders and that prices are now where they would start to reverse.
We'll see.
jog on
duc
That's a brave call Sdajii.I expect WTI to drop to the low $50s (won't be too much longer) before it bounces, and then I'm tipping it will hit $100 within about 6 months of hitting low $50s.
Fundamentals of supply and demand tells me that the $100 is at least plausible but wondering where the $50 comes from?I expect WTI to drop to the low $50s (won't be too much longer) before it bounces, and then I'm tipping it will hit $100 within about 6 months of hitting low $50s.
That's a brave call Sdajii.
Fundamentals of supply and demand tells me that the $100 is at least plausible but wondering where the $50 comes from?
Why not $60 or $40?
The $50 is based on technical analysis?
I expect WTI to drop to the low $50s (won't be too much longer) before it bounces, and then I'm tipping it will hit $100 within about 6 months of hitting low $50s.
Thanks duc, yes, I know that site. I used to follow the COTs for gold and they published the report quickly. I have found the site again but sadly they don't have the new COT for WTI. http://news.goldseek.com/COT/1541795365.php It is much easier to read.
Well it has now 'bounced', before hitting $50s. I can see $100 [again] but I doubt it will be straight up, there will be the usual wiggles or random walk to get there, if it gets there. That $75 level will probably be [technically] a test area.
jog on
duc
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