Fundamental Forecast for USOIL: Bullish
- Inventory drawdowns in a US keep hopes alive while a Oil cost stays above $58/60
- IEA forecasts tellurian supply necessity in H2 2018 notwithstanding US shale due to Venezuelans prolongation drops
- Downside risk stays in miss of bearish positioning, though fundamentals support upside for now
- Per BHI, U.S. Oil Rig Count rises by 4 to 800, US Total Rig Count during 990
- IGCS shows flourishing net-long sell positioning in WTI – US Oil, bearing downside vigour
Despite trade good subsequent a Jan 25 arise of $66.58/bbl, WTI appears staid for serve gains. This week, traders were treated to dual auspicious elemental developments that wanton oil trade and shutting above a $60/bbl mark.
Crude Oil Product Draw offsets Crude Inventory Build
The weekly EIA Crude Oil Inventory Report displayed a serve rebate in polished product stockpiles that reached their lowest levels given Spring 2015. At a same time, refinery function is ramping adult intake during a gait leading prior years that was adequate to ease sellers who saw a initial wanton build in inventories during a Cushing, OK storage heart in 12 weeks.
The title information saw a 6.27 million tub decrease in gasoline inventories and a incomparable than approaching 5.02 million boost in wanton inventories. In short, while upstream continues to produce, downstream continue to buy gripping a Bulls happy.
IEA Forecasts Crude Supply Deficit in H2 2018
The International Energy Agency (IEA) upheld a tellurian oil marketplace by observant shale expansion is assisting to balance, as against to drown a market. The IEA’s concentration in their monthly news was a descending supply of oil from Venezuela that has cut behind on high levels of relations prolongation due to their domestic mercantile crisis. As such, a tellurian oil save over-abundance is approaching to waste by year-end putting a oil marketplace in a wilful necessity assisting to support wanton oil cost further.
Data Source: Bloomberg, Chart combined by Tyler Yell, CMT
The draft has an conceal of a cost of a 10 Year Venezuela Bond to a prolongation outlay data. The draft shows a pointy decrease in both a cost of a Venezuela emperor bond display a poignant luck of default and a capital-intensive routine of extracting oil. Oil outlay in Venezuela, an OPEC country, is during a lowest levels given 1940 per Bloomberg data.
The IEA forked to a decrease of a blue line as a pivotal means for a supply necessity alongside a arise in pragmatic direct by 90,000 barrels a day to 1.5 mbpd in 2018.
Futures Positioning Hangs High With Sellers Remaining Absent
At DailyFX, we’re always penetrating to see patterns and insights in institutional positioning. As we can see in a draft below, sell wanton oil bulls need institutional wanton oil bulls as a net positioning has shown shorts demeanour to have thrown in a towel for now.
The cost in orange naturally follows institutional positioning with a rolling 40-day association during 0.95 (scale -1.0 to +1.0) display that if institutions are buying, offered can be difficult.
Data Source: Bloomberg, Chart combined by Tyler Yell, CMT
There’s a tellurian arise in oil demand! Click here to see a Q1 foresee on what outcomes we’re watching!
Technical Focus for Crude Oil – Bullish Resumption
The technical concentration on WTI Crude Oil stays a reason above trendline support off a Aug and Feb low that now sits nearby $60/bbl. A mangle subsequent a trendline would open adult a approaching exam of a 200-DMA during ~$56/bbl.
The bullish concentration is on a dermatitis on a tighten above $63.62/27, a Jan 30 low and Mar 6 high respectively. A pierce and tighten above $63.62/27 would align with a Bullish dermatitis per a Ichimoku cloud (not shown.) The longer-term bullish targets are a Jan high during $66.58 and a 100% Fibonacci prolongation of a whole pierce off a Jan 2016 low during $70.16 as prolonged as cost binds above a 200-DMA.
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Crude Oil Price Holds Support As Stocks and US Bond Yields Rise Post-NFP
Chart Source: ProRealtime, IG UK Price Feed. Created by Tyler Yell, CMT
Next Week’s Data Points That May Affect Energy Markets:
The elemental focal points for a appetite marketplace subsequent week:
- Sunday, Russia votes for boss with Vladimir Putin approaching to be re-elected
- Monday, Day 1 of 3 – FT Commodities Global Summit in Lausanne
- Monday: JODI issues universe oil exports, outlay data
- Tuesday: China’s National People’s Congress binds a shutting event with a debate by President Xi Jinping
- Tuesday: Saudi Crown Prince MBS meets with US President Donald Trump
- Tuesday 04:30 PM ET: API issues weekly US Oil Inventory report
- Wednesday 10:30 AM ET: EIA issues weekly US Oil Inventory Report
- Wednesday 2:00 PM ET: Federal Reserve Interest Rate Decision (Rate travel 100% labelled into a market)
- Thursday 05:00 AM ET: IEA monthly Oil Market Report
- Fridays 1:00 PM ET: Baker-Hughes Rig Count during
- Friday 3:30 PM ET: Release of a CFTC weekly commitments of traders news on U.S. futures, options contracts
Crude Oil Insight from IG UK Client Sentiment:: Contrarian perspective of sell positioning favors bullishness
We typically take a contrarian perspective to throng sentiment, and a fact traders are net-short suggests Oil – US Crude prices might continue to rise. Traders are serve net-short than yesterday and final week, and a multiple of stream view and new changes gives us a stronger Oil – US Crude-bullish contrarian trade bias.
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—Written by Tyler Yell, CMT
Tyler Yell is a Chartered Market Technician. Tyler provides Technical research that is powered by elemental factors on pivotal markets as good as t1rading educational resources. Read some-more of Tyler’s Technical reports via his bio page.
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