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Corrective trends in oil..


786Trader

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WTI and gasoline have been heavily correcting this month. Since 31/07 til now, WTI crude has lost 16%, gasoline 15%, heading toward a possible 19-20% retracement. It has dropped past the 200 day MA and the RSI is less than 28.  All this on falling inventories of crude. Demand has reduced slightly, but not as significantly as the price betrays. So why the large fall? Seasonal shift in blends is a part reflection in the price of gasoline, shifts in confidence in all markets regards efficacy of vaccines in front of exposure to new Delta variant and its effect on future demand, also a factor, big players (China and India) drawing down reserves instead of restocking at higher prices, also a factor. Or is it simply the market correcting itself ahead of the change in season and in tandem with equities? Are hedge funds becoming reticent regards future growth? Is the patched balloon that is the  equity market sinking? Has Jerome's talk of taper given markets the willies? 

Oil stocks are reducing, not expanding, demand is remaining steady as movement metrics return to previous norms. Cushing's levels are comparatively low. Shale producers are back to April 2020 levels of production. Opec + is holding supply steady. Oil is in a new bull market since bottoming out April 2020 and this would be the second significant correction subsequent to those lows. As the worlds economies trend towards eventual, belated carbon neutrality, the addiction to the black stuff is hard to quell. Big oil, seeing this as a protracted last hurrah, is certain to try to extract as much value as possible until that end is reached and we only use oil for important stuff like advanced plastics and the price of oil is $500 a barrel. Which is what it should be, as it's a truly remarkable commodity and shouldn't be utilised for mundane uses, such as burning it for locomotion or single use plastic packaging. Which is pretty dumb, when one thinks about it.

I digress,  My position is; Oil is falling, it will rise again. Not financial advice. Happy, profitable trading all..

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1 hour ago, 786Trader said:

WTI and gasoline have been heavily correcting this month. Since 31/07 til now, WTI crude has lost 16%, gasoline 15%, heading toward a possible 19-20% retracement. It has dropped past the 200 day MA and the RSI is less than 28.  All this on falling inventories of crude. Demand has reduced slightly, but not as significantly as the price betrays. So why the large fall? Seasonal shift in blends is a part reflection in the price of gasoline, shifts in confidence in all markets regards efficacy of vaccines in front of exposure to new Delta variant and its effect on future demand, also a factor, big players (China and India) drawing down reserves instead of restocking at higher prices, also a factor. Or is it simply the market correcting itself ahead of the change in season and in tandem with equities? Are hedge funds becoming reticent regards future growth? Is the patched balloon that is the  equity market sinking? Has Jerome's talk of taper given markets the willies? 

Oil stocks are reducing, not expanding, demand is remaining steady as movement metrics return to previous norms. Cushing's levels are comparatively low. Shale producers are back to April 2020 levels of production. Opec + is holding supply steady. Oil is in a new bull market since bottoming out April 2020 and this would be the second significant correction subsequent to those lows. As the worlds economies trend towards eventual, belated carbon neutrality, the addiction to the black stuff is hard to quell. Big oil, seeing this as a protracted last hurrah, is certain to try to extract as much value as possible until that end is reached and we only use oil for important stuff like advanced plastics and the price of oil is $500 a barrel. Which is what it should be, as it's a truly remarkable commodity and shouldn't be utilised for mundane uses, such as burning it for locomotion or single use plastic packaging. Which is pretty dumb, when one thinks about it.

I digress,  My position is; Oil is falling, it will rise again. Not financial advice. Happy, profitable trading all..

Hi @786Trader

Thank you for sharing this information, it was a good read and so helpful indeed.

Crude prices did extend their losses into a sixth day on Thursday, hovering near 3-month lows, hurt by growing fears over slower fuel demand amid a spike in Covid-19 cases worldwide while an unexpected rise in U.S. gasoline inventories added to pressure.

What levels are you monitoring for both commodities to find some support levels if the strong downward trend continues, short-medium term and long term ? 

 

Regards

MongiIG

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