WTI Crude Trade Plan (Read this section for suggested entry/exit levels)
Nov 25th 2016 Updated at 11:38 pm EDT on Nov 24th 2016
Trading has been thin on this post-Thanksgiving holiday session since the Globex open yesterday at 6 pm EST.
For the upside forecast today, prices will need to hold 47.20 and while this is looking a bit unlikely today a recovery from these levels will have us heading back over the 89 EMA into about 48.15 initially with reasonably strong resistance immediately above at 48.30~48.40 region. I would perhaps see a HOD print here but being short from here is a tad bit risky and will need a wide 30-point stop in the 48.60 so as not to get stopped out prematurely if you’ve attained a decent trading cushion from profits from an earlier long taken at support. Trending higher from here will have us heading out to 48.95 and above there in the event of any positive news on this post-holiday session I’d be looking initially at 49.50 and then on to 49.90 and onto 50.30.
Initial support now sits at 47.20 and bulls need to protect this price area in order not to cede control to the other side. If we are unable to hold this region of support, I’d be looking for 46.80~46.70 as secondary levels of support and excellent support in the 46.15~46.05 area. Losing control here on thin volume trading may have use looking initially at 45.65 and then on to 45.35~45.25 which form previous support areas and very strong.
Cam Pivots for Nov 25th, 2016
R3=48.26 | R2=48.13 | R1=48.06 <-> S1=47.90 | S2=47.83 | S3=47.70 | S4=47.20 | S5=46.63
News & Analysis (with a focus on the BHI Rig Counts report for Friday)
A calm week in the oil market, but a busy week in the natural gas world with four new rigs in the Marcellus shale. At the moment, all eyes are on OPEC and the outcome of its November 30 meeting. This in turn will determine oil prices and the trajectory of the rig count. If OPEC cuts production and oil prices move to the mid-to-high $ 50’s, then more plays outside of the Permian become viable. If on the other hand, OPEC doesn’t reach an agreement, then oil prices would retreat and the Permian basin would continue to be the only game in town.Crude oil prices increased by about $2.00/bbl or about 4% during the week. Total U.S. oil rig count increased by three, with rig count movements spread out across different regions. This week’s numbers contrast with last week’s 19 rig increase which was 2/3 concentrated in the Permian Basin. With this week’s three rig increase, the total rig count is exactly 50% up from the bottom in late May.
Horizontal rigs increased by five. We believe at least three of them, but possibly four, are natural gas rigs. In total, the horizontal rig count is up by 51% since the bottom in late May. Most of these rigs are oil rigs.
Directional rigs and vertical rigs stayed flat during the week. A calm week in the oil rig count following a 19 oil rig increase the previous week and preceding the OPEC meeting. Depending on OPEC’s decision, a lot of shale basins that have remained semi-dormant so far could see increased activity, or conversely, the Permian could continue to be the only basin to see further drilling.
WTI Crude – Daily Chart