December Crude Oil continued its breakdown below trendline support on Thursday, November 3, 2016, trading down to 44.37 as traders continue to trade out of long positions. Liquidation continues to push prices down as traders’ belief in the OPEC agreement continues to decline. OPEC has had a difficult time getting its members to actually agree to real cuts in their individual production after agreeing in Algiers as a group to cut production. We all know by now that Iran, Libya and Nigeria were given exemptions at the Algiers meeting. Iraq and to a lesser extent Venezuela have been balking at cutting their production since the meeting in Algiers ended. Iran has been very supportive of the agreement for obvious reasons. Saudi Arabia was able to complete it $17.5 billion auction on the rally in crude oil and at the moment isn’t desperate for cash. The odds for a freeze/ cut going through at the OPEC meeting at the end of November are low. OPEC hasn’t attempted to come up with any bullish stories recently. Producers put hedges on during the rally, so they have protections in place in case of a major downturn. The latest EIA report showed a record build of 14.42 million barrels. The supply glut doesn’t seem to be going away as many assumed. Demand remains subdued. A breakdown from the Thursday low could lead to a test of the 200 DMA at 43.32. Support is at 43.00, 42.10 and 41.10. Trading above the Thursday high (45.90) could lead to a test of the trendline at 46.38. A close above the trendline could lead to a rebound to 47.35. Resistance is at 48.35 and 49.15.
High 45.90
Low 44.37
Last 44.67
Daily Pivots for 11/4/16:
R2 |
46.51 |
R1 |
45.59 |
PIVOT |
44.98 |
S1 |
44.06 |
S2 |
43.45 |
|
If you are interested in a Managed Futures program for Crude Oil, check out this offering from Walsh Trading:
Walsh Asset Management Introduces Bluenose Capital
For those interested I hold a weekly livestock webinar on Friday, November 4 at 2:30pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
www.walshtrading.com
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.