Oil’s uptrend remains intact

CNBC

  • Oil’s price hasn’t rebounded, but many features of the commodity’s performance suggest the bear is not in command of this market, Daryl Guppy writes.
  • The longer-term trading band target for NYMEX oil is near $76, but that may take four or five months to be reached.

A heavy crude oil pump.

Jsmes Hall | EyeEm | Getty Images
A heavy crude oil pump.

A little over a month ago I wrote about NYMEX oil and suggested that the pullback was a buying opportunity. Investors watch for the opportunity to add to long positions as the price rebounds from any of the three support features on the oil price chart.

To date, the price has not rebounded. Does that analysis still hold as oil falls towards $65?

The short answer is “yes,” but with the repeated caveat that traders need to wait for evidence of a rebound before taking a long position. The analysis holds because the technical structure of the NYMEX oil market remains the same.

The fall below the long-term uptrend line is potentially bearish, but other features suggest the bear is not in command of the market. The future importance of the uptrend line is the way this will now act as a resistance level for future rallies.

Extending the line into the future suggests that it may be early 2019 before there is a serious challenge to the $76 price level. The extended line acts as a resistance level. That time frame changes if oil is able to move above the trend line and again use it as a support level.

The first support feature of the chart is the long-term support level near $65. That was the support base for the most recent strong rebound rally. That level is currently under test.

Oil has a well-established pattern of moving in trading bands around $11 wide. The current price activity is testing the lower edge of the trading band. Applying trade band projection methods gives a long-term target near $76. Achieving that target is hampered by the way the projected uptrend line now acts as a resistance level.

The second trend feature is shown with the Guppy Multiple Moving Average indicator. Despite the price retreat, the long-term group of averages is well separated, which shows strong and consistent investor support for a rising trend. When price retreats, then investors come into the market as buyers. This is the most consistent trend support behavior shown in the GMMA indicator on the oil chart in nearly a decade.

Compression in the group shows the development of a trend change and compression is currently not developing.

The degree of separation between the long-term and short-term GMMA is largely steady. The consistent degree of separation is a characteristic seen with stable trends, which again suggests that the current extended retreat is temporary rather than the beginning of a trend change.

The short-term group of averages reflects the way traders are thinking and its shows an appetite for short-term trade opportunities.

Those support features and the trend strength features all continue to suggest that the oil price is experiencing a temporary retreat. The longer-term trading band target is near $76, but it may take four or five months to achieve.

We use the ANTSYSS trade method to extract good returns from this trend behavior.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found atwww.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.

Oil prices edge down on concerns of slowing economic growth

CNBC

  • Oil prices fell on Monday over concerns of slowing economic growth.
  • International Brent crude oil futures were at $71.59 per barrel at 0413 GMT, down 24 cents from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were down 24 cents, at $65.67 per barrel.

Oil prices fell on Monday as concerns over slowing economic growth weighed on markets.

Brent crude futures, which act as a benchmark for international oil prices, were at $71.59 per barrel at 0413 GMT, down 24 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 24 cents, or 0.4 percent, at $65.67 per barrel.

Reuters technical commodity analyst Wang Tao said Brent and WTI would likely come under pressure soon, testing support at $70.62 per barrel and $64.83 per barrel respectively.

“Disappointing industrial data out of China along with concerns over emerging market economies centered on Turkey weighed on commodities,” Edward Bell of Emirates NBD bank said in a note on Sunday.

In the United States, U.S. energy companies last week kept the oil rig count unchanged at 869, according to the Baker Hughes energy services firm.

“The recent softening in benchmark prices should temper the pace of growth in U.S. exploration and production activity, and lead to slower overall output growth,” Bell said.

Outside the United States, traders said U.S. sanctions against Iran could soon impact prices.

The U.S. government has introduced financial sanctions against Iran which, from November, will also target the country’s petroleum sector.

Iran produced around 3.65 million barrels per day of crude in July, according to a Reuters survey, making it the third biggest producer within the Organization of the Petroleum Exporting Countries (OPEC), behind Saudi Arabia and Iraq.

Crude oil is getting crushed, but one expert sees year-end rally

CNBC

Oil expert sees oil heading higher after a volatile week for crude

Oil expert sees oil heading higher after a volatile week for crude  

Crude oil just posted its worst week since July as a surging dollar, slowing emerging markets and supply concerns have all weighed on the commodity. But despite the price declines, one commodities trader sees a rally in the cards.

Bill Baruch, president of Blue Line Futures, told CNBC’s “Trading Nation” on Thursday what investors can expect next. Here’s what he said.

· A bearish inventory report earlier in the week pushed oil down to its lowest level since June, but crude bulls still have reasons to feel good. For instance, it’s easy to forget crude oil is still trading near multiyear highs, with a gain of 9 percent year to date and 40 percent in the last 12 months.

· One of the biggest stories weighing on crude may be set to dissipate and take some pressure off the commodity: trade tension between the U.S. and China. We may see meaningful headway on trade over the coming weeks, and fears of slowing growth in China may be alleviated.

· My biggest concern, however, is spare capacity. Saudi Arabia promised to ramp up crude production in July, but it actually fell 200,000 barrels per day. Still, the U.S. estimated that production in the lower 48 states has stalled over the last three weeks, and tighter spare capacity can be extremely bullish.

· During this seasonally weak time for crude, investors should look to buy pullbacks; the technical picture should support this strategy. There is tremendous support from $62.50 to $64.50 per barrel, and oil should be positioned to rally back up to between $70 and $80 per barrel later this year. The key level to the downside would be $62.

Bottom line: Despite a 3 percent decline in crude oil this week, Baruch sees the commodity surging into year-end.

Oil rises as China, US set for trade talks, but markets weary of slowing demand

CNBC

  • Oil prices on Thursday recouped some of the previous day’s losses.
  • Beijing said it would send a delegation to Washington to try to resolve trade disputes between the United States and China that have roiled global markets.

Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.

Getty Images
Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.

Oil prices on Thursday recouped some of the previous day’s losses after Beijing said it would send a delegation to Washington to try to resolve trade disputes between the United States and China that have roiled global markets.

Brent crude oil futures were at $71.03 per barrel at 0455 GMT, up 27 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 5 cents at $65.06 a barrel, held back somewhat by rising U.S. crude production and storage levels.

Both benchmarks lost more than 2 percent during the previous day’s trading.

Traders said Thursday’s markets were pushed up by news that a Chinese delegation led by Vice Minister of Commerce Wang Shouwen will hold talks with U.S. representatives led by Under Secretary of Treasury for International Affairs David Malpass later in August.

China and the United States have implemented several rounds of tit-for-tat tariffs on each others goods and threatened further tariffs on exports worth hundreds of billions of dollars.

Sentiment in oil markets was also cautious due to the rise in U.S. crude production and storage levels as well as weakness in emerging market economies, especially in Asia, that could limit demand growth.

Oil prices sink to lows not seen since June

Oil prices sink to lows not seen since June  

Output of U.S. crude rose by 100,000 barrels per day (bpd) in the week ending Aug. 10, to 10.9 million bpd, according to the U.S. Energy Information Administration (EIA) weekly production and storage report.

At the same time, U.S. crude inventory levels climbed by 6.8 million barrels, to 414.19 million barrels, the EIA said.

“This build certainly hasn’t helped market sentiment,” Dutch bank ING said after the release of the EIA report.

While supply rose in the United States, Asia’s markets were showing signs of economic slowdown due to trade disputes with the United States and currency weakness, dragging on oil market sentiment.

“Oil prices continue to exude for bearish signals as investors worry on weaker global demand and rising production levels,” Benjamin Lu of Singapore-based brokerage Phillip futures wrote in a note.

In Japan, official data on Thursday showed a slowdown in export growth as well as a decline in crude oil imports.

Asia’s currencies also remained under pressure, with the dollarholding near 13-month peaks on Thursday as political turmoil in Turkey and concerns about China’s economic health continued to support safe-haven assets.

Providing Brent crude with some support were looming U.S. sanctions against Iran’s oil exports, set to start from November, with Asian buyers including India, South Korea and Japan already scaling back orders in anticipation.

“The might of U.S sanctions has shown… as petroleum importers have reduced purchase orders from Tehran,” Lu said.

Oil dips on rising US crude inventories, darkening economic outlook

CNBC

  • Oil prices fell on Wednesday, pulled down by a report of increased U.S. crude inventories.
  • A darkening economic outlook stoked expectations of lower fuel demand.

Oil pumps wells Monterey Shale fracking

Getty Images

Oil prices fell on Wednesday, pulled down by a report of increased U.S. crude inventories and as a darkening economic outlook stoked expectations of lower fuel demand.

Front-month Brent crude oil futures were at $72.33 per barrel at 0408 GMT, down by 13 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 25 cents, or 0.4 percent, at $66.79 per barrel.

U.S. crude stocks rose by 3.7 million barrels in the week to Aug. 10, to 410.8 million barrels, private industry group the American Petroleum Institute (API) said on Tuesday. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.6 million barrels, the API said.

“Oil prices … fell after the API inventory data showed an unexpected crude build last week,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

Oil prices down on demand fears amid Turkey crisis

Oil prices down on demand fears amid Turkey crisis  

Official U.S. fuel inventory data is due to be published later on Wednesday by the Energy Information Administration.

Sentiment was also clouded by a darkening economic outlook which could start impacting oil demand, traders said.

The OECD’s composite leading indicator, which covers the western advanced economies plus China, India, Russia, Brazil, Indonesia and South Africa, peaked in January but has since fallen and slipped below trend in May and June.

World trade volume growth also peaked in January at almost 5.7 percent year-on-year, but nearly halved to less than 3 percent by May, according to the Netherlands Bureau for Economic Policy Analysis.

BMI Research said oil markets would “struggle for direction, as uncertainty around both the impact on supply from the Iranian sanctions and escalating trade tensions between the U.S. and China persists.”