Crude Oil Analysis for Oct 31st 2016

Analysis for Crude Oil day traders (Weekly perspective with inventory legend)

Oct 31st 2016 Updated at 10:58 pm EDT on Oct 30th 2016

Oil prices faltered in the second half of this past week, on deteriorating expectations of an OPEC deal. Prices regained some ground last Thursday following EIA data showing a surprise drawdown in crude oil stocks after the market predicted an increase. Gasoline stocks also fell by more than expected. Adding a bit more buoyancy to the market were comments from OPEC officials suggesting that the cartel would be willing to cut production by 4 percent.

The markets initially took the announcement as positive news, but in what has become a familiar script from the oil cartel, the lack of details or hard commitments ultimately meant the price impact wore off. OPEC is meeting today and tomorrow to discuss the technical details of the Algiers accord, ahead of its official meeting at the end of November. Swing traders should take every OPEC utterance with a giant grain of salt, and wait to see what happens in a month’s time. WTI hovered slightly below $50 per barrel in early trading on Friday and collapsed below 49 as expected as this market is looking to find a newer plateau. In other news, the following headlines have gained a spot to be of noteworthy mention:

  • Exxon considers setting up trading division.The Financial Times reports that ExxonMobil is looking into setting up an oil trading unit, which would mark a dramatic shift in its strategic focus.
  • Iraq angles for data revision, eyes higher output.Iraqi officials are not only demanding that they be exempt from any OPEC production cut, but they are also pushing the cartel and energy watchers to see its side of the story. OPEC uses data from “secondary sources” to calculate each member’s production levels, and Iraq is disputing the accuracy of that data. It is not an academic argument – Iraq does not want its production to be restrained by inaccurate production figures.
  • Protests heat up in Venezuela.After Venezuelan President Nicolas Maduro cancelled a public referendum to recall him, the opposition took to the streets. Hundreds of thousands of people protested on Wednesday, and the fracas took a disturbing turn.
  • Nigerian militants hit Chevron pipeline. The Niger Delta Avengers proved that they have not gone dormant, announcing the successful attack against the Escravos pipeline, a 100,000 barrel-per-day oil export pipeline operated by Chevron in Nigeria. The attack puts an end to a three-month ceasefire, and threatens to derail Nigeria’s efforts to bring back lost oil production. Nigeria’s oil minister said recently that output is up to 1.9 million barrels per day, not far off from the 2.2 mb/d the country produced before the attacks started earlier this year.
  • Dakota Access pipeline protest turns violent.On Thursday, more than 200 police officers forced protestors of the Dakota Access pipeline in North Dakota away from a barricade along the pipeline’s construction route. Authorities arrested more than 140 people. The controversial pipeline, owned by Energy Transfer Partners, is quickly becoming the sequel to the Keystone XL saga.
  • GE considers merging oil unit with Baker Hughes.GE has reportedly approached Baker Hughes about merging their oil and gas units, a deal that could be worth around $20 billion. The idea would be that the merged company would be spun off from GE’s core business.

Today’s Analysis & trade plan

Oct 31st 2016 Updated at 10:58 pm EDT on Oct 30th 2016

I had no report for this past Friday due to my travel commitments and my sincere apologies – I will persevere to deliver a more exhaustive report today which as every Monday tends to do, includes an a more in depth picture of relevant Oil stories around the globe and a tabular look at the storage levels for Oil and Oil products.

In the overnight session, we are flirting with our buying opportunity from yesterday at 4830/20. This is the best chance of a low for the overnight session and if you are long here I’d place some stops at or below 47.90 to protect your investment. An unexpected break lower in the pit session is possible and targets 47.50 47.30~47.25 initially and a failure of that level takes us perhaps below the 47.05~47.00 price and from there under, into the $ 46 price handle.

Holding that initial support at 48.30~48.20 will perhaps targets 48.55 then 48.85~48.89 and then encounter initial resistance at 49.00~49.05. This is as high as I would see us going today but shorts if we are going on an uptrend intraday would be a bit bold in my opinion. A break higher targets 49.35 then very good resistance at 49.60/49.65. If we popped to this level, I would try shorts with stops above 49.90.

Cam Pivots for Oct 31st, 2016

R3=49.97 | R2=49.37   ||  S2=47.93 | S3=47.33




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