Nov 14, 2017 – Weekly Commodity: Did the Crude bulls run too far?

After the spectacular rally since September crude bulls are taking a brake recently. The main reasons of the rally were partially old news about the extension of OPEC and Non-OPEC production cut beyond March 2018. The geopolitical tension on the Middle East added further support to the bulls and the spread between the Brent and WTI widened to over 7$. Another strong support that helped the market rally were news about dropping inventories. However some analysts started to question this drop, especially the one reported from the Middle East.

Now with elevated speculative positioning where net longs are close to records seems that traders lost confidence a little. We have ahead this weekly oil reports and Monthly oil report from IEA and later the month from EIA which will be closely watched. However be aware of the fact that geopolitical tension could fuel a rally far beyond the levels that fundamentals would justify.

Technically WTI seems to have completed the 5th wave (or could be close to the end) and the 38.2% of Fibonacci level seems to be a good reason for a correction. I expect the prices to retrace somewhat toward the $52.50 support and then we will see if prices rally one more time ahead of a deeper correction.

Good Luck and remember to watch your risk and be consistent

Mr. Tech Man

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom