Contributed by Rohit Goel
Crude Oil prices have been on a wild ride over the last couple of years, dropping from $100+ in late-2014 to $26 in early-2016, then miraculously doubling over the next few months. As the Energy Information Administration (EIA) explains, there are several factors influencing oil markets, such as production, economic growth, geopolitical and economic events, supply disruptions, speculator and money manager positioning etc. In addition, US Dollar also has a significant inverse relationship to oil prices.
However, the major reason for oil’s plunge since late-2014 was Saudi Arabia blocking an OPEC output cut in November 2014, with the intent of pushing oil prices lower, inflicting serious pain on the US shale oil industry (which needs high oil prices to break even) and increasing their own market share – so essentially, increased supply. The best gauge of how this increased supply has caused an imbalance in the global oil market is the EIA inventory report, which is released every Wednesday morning and has a big impact on oil prices. So let’s compare the price of WTI with the EIA inventory, starting in Jan 2013 when the market was in a steady state and remained so for the next year and a half (the period highlighted in yellow denotes the peak summer driving season – more on this later):
(Note from Tim: there appeared at this point a very large table, which I’m going to leave out, since the information is expressed in graph form anyway). (more…)
I have a “moment of truth” every morning when I grab my iPad, bleary-eyed, from the side of the bed, to see what the ES is doing. This particular morning, I was bracing myself for +30 on the ES considering the Clinton momentum, but, happily, it’s only up 3 measly points at the moment. More important to me, crude oil is getting its shiny black bottom spanked, down about 2.7%. Some ridiculous rumor should be along any moment now.
The high window opens on SPX today and runs through to Monday 3rd October. During this period Stan and I are expecting to see a very significant high made that would then be followed by a decline that would be considerably larger than the modest retracement just completed. We are looking for a likely full retest of the all time high, with an eye on higher targets in the 2203, 2206/7 and 2210 areas.
On the daily chart SPX confirmed the break back over the daily middle band with another close above it yesterday. This opens a possible test of the daily upper band, currently at 2202. I’d generally expect to see a retest of the middle band from above today or Monday, and that is currently in the 2161 area. SPX daily chart:
All charts and video today done last night or this morning for subscribers at theartofchart.net.
SPX spent much of Friday under the 5dma, but rallied to close on it, so the three day rule was not triggered. Bears have a second and last chance today to close more than two handles below the 5dma, currently at 2138.10. If they can then the rule states that we see a retest of the current retracement low at 2119 and likely go lower. If they can’t then the retracement low may well already be in and SPX likely rallies into the high window that opens on Thursday 23rd September, ideally retesting the current all time high or going a bit higher into the 2210 target that Stan and I are looking at. SPX daily 5dma chart:
Good morning (well, technically) everyone. This is mostly a comment cleaner, as you chatty Slopers have racked up about 400 comments from my last post yesterday. My dogs are staring at me, though, eager for their way-too-early-every-morning stroll through the pitch black streets of Palo Alto. Thus, I will share this one chart of crude oil, which has the new front month of November. My view is that breaking 43.59 is the next important event, since that’ll slice us through a trendline that’s been in place the entire year.
As I was typing this, a slew of economic data came in, and early reaction seems to be not-so-thrilled. I certainly hope it sticks, since it’ll mean my prediction of a “second trap” (mentioned in the prior post) will have proved itself prescient.
So – – is this how it’s going to be then? Friday, DOWN. Monday, UP. Tuesday, DOWN. Wednesday. UP. If so, I guess it makes our collective jobs easier. Anyway, regarding crude: