WTI Crude intraday trade plan – Jan 9th 2017 Updated at 10:23 pm EST on Jan 8th 2017
WTI Crude recovered 61.8% of Tuesday’s losses to test resistance at 5400/10. I’d stated that shorts needed stops above the high at 54.37~54.51. Well these did not trigger.
For any upward move the initial resistance at 54.00~54.10 is a pivotal level. Shorts need stops above the December highs in the 54.37 region. If we break higher, it should trigger a buy to target the December high initially at 54.51 above 5460 we are likely to retest the Tuesday high at 55.20~55.24.
WTI Crude failure to beat resistance at 54.00~54.10 targets 53.70 (we are in this price region as I write this report) and initial support at 53.35~53.30. Digging any deeper below will perhaps be the best area for support which is 52.85~52.80. I would expect a bounce if we got here in order for the bulls to keep control. In the event that selling is overwhelming here and we break below 52.60 expect 52.16~52.10 to be not too far away in the downward move.
Pivots for Jan 9th, 2017
R3=54.84 | R2=54.18| R1=53.91 <-> S1=53.36 | S2=53.08 | S3=52.62
WTI Weekly Chart
An outlook on prices for the week of 1/9/2017
Jan 9th 2017 Updated at 10:29 pm EST on Jan 8th 2017
Crude oil futures capped a volatile week with a firm trade on Friday as investors tightened up long positions established earlier in the week ahead of the week-end. A stronger dollar, due to the reaction to the U.S. jobs report, may have helped limit gains as well as general concerns over the adherence to OPEC’s deal to cut production. March West Texas Intermediate crude oil closed at $54.87, up $0.19 or +0.35%. For the week, it was up $0.21 or +0.38%. International Brent crude oil finished on Friday at $57.10, up $0.21 or +0.37%. For the week, Brent closed up $0.28 or +0.49%.
We’re going to be watching for more volatility today and intraday changes in direction. On the bullish side, investors are likely to support prices as long as they continue to see compliance with OPEC’s output production plan. Last week, for example, Saudi Arabia, Abu Dhabi and Kuwait showed signs they were reducing production in line with the agreement. At some point, investors are going to want to see production cuts beyond January. Despite adherence to the program, there are still doubters out there and those who expect some cheating especially from non-OPEC members. As far as OPEC members are concerned, the bull’s-eye seems to be on Iraq.
You saw last Tuesday how fast investors can take this market lower so if you are going to protect yourself in this market, do it to the downside. I think investors will not hesitate to sell out long positions or short this market heavily if there is even a slight hint at non-compliance. Other bearish factors include a rising U.S. Dollar, which can lead to lower demand, and increased production from Libya, Iran and Nigeria.
So while we can build a bullish long-term outlook if OPEC’s strategy goes as planned, we are extremely concerned about the downside at this time. We’ll know more about compliance issues when an OPEC committee meets on January 21 -22.