Daily Crude Oil Analsys · Uncategorized

Crude Oil Analysis for Tue Nov 1, 2016

Analysis for Crude Oil day traders (How & why prices moved big earlier today)

Nov 1st 2016 Updated at 10:40 pm EDT on Oct 31st 2016

Oil prices have edged a bit higher from one-month lows in early trading in Asia while it is still late here on Monday, after OPEC agreed on a long-term strategy that was seen as an indication the cartel was reaching a consensus on managing production. But the gains have been limited as the market is weighed down by further indications of record output from the group, a sign the glut that has kept a lid on prices is not draining away as fast as the oil bulls would like. WTI futures are about up 9 cents at $46.95 a barrel at the time of this writing. They plunged nearly 4 percent earlier today to $46.86 during the post close session. Brent for January delivery, ( yes, the Brent is already trading into the new front-month contract), was up 31 cents at $48.92. The previous front-month contract fell nearly 3 percent before expiry earlier today.

OPEC approved a document on Monday outlining its long-term strategy, a sign its members are achieving consensus on managing production. But the oil grouping had setbacks earlier, raising questions over their ability to control prices that have knocked their economies hard. Representatives met on Friday in Vienna, and then again on Saturday with their counterparts from non-member producers. They did not reach any specific terms, and sources said Iran has been reluctant to even freeze output. Oil prices had risen as much as 13 percent since OPEC announced on Sept. 27 a production cut to support prices after the slump that began in mid-2014. “The lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30,” Goldman Sachs said in a research note. OPEC’s oil output likely hit a record high in October, rising to 33.82 million barrels per day as Nigeria and Libya partially resumed output after disruptions and Iraq raised overseas sales, according to a Reuters survey.

Today’s Analysis & trade plan

Nov 1st 2016 Updated at 10:40 pm EDT on Oct 31st 2016

For Monday Oct 31st, I’d written “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….”. Well, we stopped about 32 tics below here at 46.68 right after the pit close for Crude and have cycled back up about 25 odd tics in the Globex session.

The analysis today flips resulting from the big drop during the pit session today as crude tests 100-day moving average support at 46.60~46.50 and as we become oversold. In my opinion and after having analyzed the patterns and the news some more, it is still a bit outstretched to try being long here. Potentially, we could head lower from here to test firmer support at 46.25~46.15 (refer to Cam pivots below) and it may be worth covering your shorts here if you were still biased short in the post-close from earlier today. If we continue lower we test strong Fibonacci support at 45.80~45.71. This is the 50% Fib retracement on the 3-month chart from the low made on Aug 3rd @ 39.19 and the high made on Oct 19th at 52.22.

Initial resistance sits now at 47.10~47.15 (R1) isn’t quite strong in oversold conditions with stronger resistance being range bound at 47.40~47.53 (R2). Gains are likely to be limited but above here I would seek out levels at 47.70 and then 47.90~47.95 which is likely to see a high for the day, if there is a concerted move by bulls to tag upper levels.

Cam Pivots for Nov 1st, 2016

R3=48.23 | R2=47.53 R1=47.10   ||   S1=46.24 | S2=45.81 | S3=45.11

cl-daily-11-01-16

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