Jump to content

Crude Oil Price Plummets as New Variant Triggers Risk-Off Sentiment


MongiIG

Recommended Posts

BRENT CRUDE OIL (LCOC1) ANALYSIS

  • South African variant adds to crude oil price woes.
  • SPR release augments price drop.
  • Brent tests key support.
Oil Forecast

CRUDE OIL FUNDAMENTAL BACKDROP

COVID-19 FEARS HAMPER OIL DEMAND FORECASTS

The new COVID-19 variant has plagued financial markets on Friday causing mayhem with broad-based losses throughout most asset classes. Safe-havens were the only winners during midday trading and will likely remain until market close. Brent crude was roughly 6% down on the day (at the time of writing) due to contagion concerns around economic growth should the virus become a systemic risk. Demand forecasts may be revised lower should the new strain increase fourth wave complexities and further downward pressure on crude oil prices.

Learn more about Crude Oil Trading Strategies and Tips in our newly revamped Commodities Module!

U.S. TAPS INTO STRATEGIC RESERVES

Earlier this week the U.S. declared the release of 50MMbbls of crude oil while other countries have pledged to take part in a synchronized release of varying quantities. India, China, South Korea, Japan and the U.K. are currently included. For more details around the announcement, take a look at my colleague Richard Snow’s overview.

The release will cause previously unexpected supply to flood the market in hopes to restrain climbing crude oil prices which has been represented in both WTI and brent price action.

NEXT WEEK’S CHINESE PMI KEY FOR CRUDE OIL

Chinese PMI data has been steadily declining MoM with October hitting yearly lows. Oil bulls will be looking at next weeks print to give some hope for further upside. A print above 50 generally points to an expanding manufacturing sector and vice versa. Anything above 50 should give some short-term respite to falling oil prices.

china NBS PMI

Source: DailyFX Economic Calendar

TECHNICAL ANALYSIS

BRENT CRUDE (LCOc1)DAILY CHART

daily brent crude chart

Chart prepared by Warren Venketas, IG

Brent crude has now firmly cemented the $80.00 psychological level as resistance after plunging in early trading on Friday. The long-term trendline support level (black) is now being tested coinciding with the September swing low at $76.48. The bullish flag (blue) pattern may still be under consideration if bulls can push Friday’s daily candle back within the flag.

The Exponential Moving Averages (EMA) may be suggesting a bearish signal as the 20-day EMA (purple) crosses below the 50-day EMA (blue arrow). Known as a bearish crossover, the signal often results in ensuing price depreciation.

The Relative Strength Index (RSI) reads around the 40 level which is indicative of bearish momentum and has leeway to push lower into oversold territory.

Key resistance levels:

  • $80.00
  • 100-day EMA (yellow)

Key support levels:

  • $76.48/Trendline support
  • $75.00

IG CLIENT SENTIMENT TENTATIVE

IGCS shows retail traders are marginally net long on Crude Oil, with 55% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment however, the change in recent shorts and longs effect a mixed signal.

 

by Warren Venketas, Analyst, 26th November 2021. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,180
    • Total Posts
      90,704
    • Total Members
      41,294
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    vlloyd
    Joined 30/01/23 00:00
  • Posts

    • Maximize Your Stock Market Returns: Latest News on SP500, Top Tech Stocks with Elliott Wave Analysis and Trading Strategies Stay Ahead of the Stock Market with the Latest News and Analysis on SP500, Top Tech Stocks, US ETF Sectors and Trading Strategies. Get up-to-date insights on the bullish weekly cycle, Elliott wave analysis and profitable trading opportunities in the finance sector with top companies like Apple, Tesla, Amazon, Microsoft, JPMorgan and more. Stock Market Content: SP500, AAPL, AMZN, NVDA, TSLA, GOOGL, BRK.B, SQ, META, NFLX, ENPH, MSFT, BAC, JPM. US ETF Sectors. Elliott Wave Analysis US Stocks News: Apple (AAPL),Tesla (TSLA), Amazon (AMZN), Nvidia (NVDA), Microsoft MSFT, Berkshire Hathaway (BRK/B), Block, Inc (SQ), Meta Platforms, Netflix (NFLX), Enphase (ENPH), Alphabet GOOGL. XFL Finance Sector ETF, JPMorgan JPM & Bank of America BAC, Goldman Sachs Group Inc (GS) Stock Market Summary TradingLounge Bullish Weekly Cycle in play, Bullish Monday Profit Taking Tuesday Elliott Wave Analysis: (iii) of iii) of 3 Trading Strategies: Long Video Chapters 00:00 SP500 04:45 Apple (AAPL) 08:01 Amazon (AMZN) 11:00 NVIDIA (NVDA) 11:34 Meta Platforms (META) 17:47 Netflix (NFLX)  18:59 Enphase (ENPH) 22:04 Tesla (TSLA) 24:06 Alphabet (GOOGL)  29:16 Microsoft (MSFT) 34:52 Berkshire Hathaway (BRK.B) 35:56 Block Inc. (SQ)  37:28 Bank of America BAC 25:22 TRIAL Buy 1 Month Get 3 Months  Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge com  
    • Does anybody know the BIL (SPDR Bloomberg 1-3 Month T-Bill ETF) equivalent with a GBP currency hedge? I want the interest yield but I don't want the currency risk.
    • Capital, win loss ratio. If you have a trading edge and you can consistently win 50% of your trades, so your winning 5 trades out of 10. So if your risking 1% of your capital per trade, out of your 10 trades 5 would be losers, so that’s 5% loss and realistically out of the 5 winning trades, some would make small profits, some break even and 1, 2 or 3 could run nicely IF you can let your profits run, basically your making money out of 2 trades out of the 10 trades (80/20 Rule Pareto principle) So a $20,000 acct risking 1% is $200 per trade, this will keep the trader with his trade risk based on being able to win 50% of his trades. A long term trend trader can win with 30% wining trade. Basically you need to know your numbers. Rgds Pete
×
×
  • Create New...