There’s been very little change in the outlook for crude oil over the past week.
Fundamental and technical hurdles remain but from a price perspective, traders are awaiting a major “break” in either direction.
Crude Oil Technical Picture
West Texas crude oil (WTI) is trading just above $53 per barrel, as it continues to bounce around between the low $50’s and $55 per barrel. Recent breakout attempts have failed with some pretty bearish reversals or topping tails of late. See chart below.
Going back to the middle of 2016, prices have swung in a wide, loose range. This price action is generally bearish. However, as long as price remains above the recent lows near $50/$51, the market is okay. If this gives way, however, there could be a major correction in crude oil. Commercial hedgers have gotten extremely bearish on crude oil, which is not a good sign. In fact, hedgers are slightly more bearish then in the summer of 2014, right before oil cascaded lower into a major bear market. On the flip side, large speculators are once again extremely bullish on oil. This dichotomy in the COT data has not been a good combination historically.
Note that the chart below is from my Thursday newsletter. Friday’s action saw little change.
Thanks for reading. Reach out to me at arbetermark@gmail.com for inquiries about my newsletter “On The Mark”, if interested.
Twitter: @MarkArbeter
The author is short crude oil via SCO at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
