What The Freeze Talks Mean For Crude Oil Now

October Crude Oil made a new low for the recent decline on Thursday, September 15, 2016, trading down to 43.26 and then rebounding to the day’s high at 44.34.  The decline was sparked by Libya and Nigeria revealing they were about to resume exports of approximately 840,000 barrels per day of Crude Oil. The resumption of lost exports will be great for the two countries but will they be able to actually follow through and then keep it up? If they can, this will add to the supply glut and could put more downward pressure on prices. With the internal strife each country has to contend with, it may be difficult to sustain. I hope they can remain stable and provide much needed revenue for their countries. This development will make the “informal meeting” in Algeria at the end of September more interesting. How does OPEC – NOPEC deal with actual production from these two countries instead of potential production during the “freeze” talks? This news couldn’t put pressure on the September 1st low of 43.00 making a higher low instead. Crude Oil formed a Doji candle and a 7 day narrow range which showed indecision in the market, in my opinion. A breakout above the high could lead to a nice rally for Crude Oil and see it test resistance by the converging 21 and 100 DMA’s (46.17 and 46.21 respectively). A breakdown through the low could test trendline support at 42.56 and then support at the August 5th high (42.10).

   High    44.34            

 Low     43.26

 Last     43.70

Daily Pivots for 9/16/16:           

R2

44.82

R1

44.26

PIVOT

43.78

S1

43.22

S2

42.74

     

                           

                                        

                          
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Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING.  THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT.  WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.

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