Would the Middle East Conflict Push Gold and Oil Prices Higher?NYMEX: WTI Crude Oil ( NYMEX:CL1! ), COMEX: Micro Gold Futures ( COMEX_MINI:MGC1! )
Over the weekend, military conflict in Gaza between Israel and Palestine shocked the world. I condemn violence against civilians and pray for the victims and their families.
In the following paragraphs, I will discuss how the prices of strategically important commodities, namely gold and crude oil, might respond to the eruption of a global crisis.
Firstly, let’s look back into the recent past for those crises arising to a global scale. In the last five years, the world has witnessed three major crises of very different natures:
• US-China Trade Conflict: from January 2018 to January 2020, the world’s two largest economies imposed import duties to each other in a series of escalating actions and retaliations. A major event occurred on September 18, 2018, where President Trump added 10% tariff on nearly all Chinese-made products. The US-China trade conflict forever altered the global supply chain, with its impact being felt till today.
• Covid-19, the most severe pandemic in a century, from its outbreak in January 2020 to 2021. A big event that sparked market fear occurred on February 2, 2020, where the US imposed travel restrictions on incoming air passengers.
• Russia-Ukraine Conflict: the first military conflict in Europe since World War II, from February 14, 2022, till now.
Secondly, let’s measure how gold and WTI crude oil responded to these crises. For my analysis, I denote the day before Event Day as T0, where we may find last market prices before the impact hit. Event Day will be T+1, and then 1-week after (T+7), 1-month after (1M), 3-month after (3M), all the way through 1-year after (1Y). Here are what I found:
US-China Trade Conflict
• Gold spot price (T0) = $1,201.90 per Troy Ounce
• Price changes by time: -0.1% (T+1), +0.1% (T+7), +2.3% (1M), +3.3% (3M), +8.6% (6M), +11.6% (9M), +25.0% (1Y)
• Comment: Trade tension between US and China could push the global economy into a recession. Gold, a safe-haven asset, saw its market value growing 25% in a year.
• WTI crude oil spot price (T0) = $69.86 per barrel
• Price changes by time: +1.2% (T+1), +6.3% (T+7), +4.3% (1M), -27.7% (3M), -14.2% (6M), -24.6% (9M), -8.4% (1Y)
• Comment: High tariff raised the price consumers had to pay, hence reducing demand. Crude was down 28% three months after the all-in tariff was imposed.
Covid Pandemic
• Gold spot price (T0) = $1,574.75 per Troy Ounce
• Price changes by time: -1.0% (T+1), -0.1% (T+7), +2.6% (1M), +8.5% (3M), +24.4% (6M), +21.2% (9M), +16.6% (1Y)
• Comment: We saw the biggest stock market selloff in March 2020. Gold price was down initially as stock traders needed to raise money and meet margin calls. However, a flight to safety eventually took place, and gold was up 24% in six months.
• WTI crude oil spot price (T0) = $53.09 per barrel
• Price changes by time: -5.0% (T+1), -11.9% (T+7), -77.1% (1M), -61.4% (3M), -23.1% (6M), -31.1% (9M), +0.9% (1Y)
• Comment: Rapid Covid outbreaks stroke fear. Lockdowns put global activities to a pause. The pandemic wiped out oil demand, with WTI falling 80% in a month. April 20, 2020 made history as oil price of the expiring contract went below zero. As storage cost more than selling price, traders were willing to pay others to take away the crude for free.
Russia-Ukraine Conflict
• Gold spot price (T0) = $1,854.60 per Troy Ounce
• Price changes by time: -2.5% (T+1), -2.5% (T+7), +6.5% (1M), -1.8% (3M), -2.8% (6M), -5.0% (9M), +5.0% (1Y)
• WTI crude oil spot price (T0) = $91.25 per barrel
• Price changes by time: +4.7% (T+1), +5.3% (T+7), +30.7% (1M), +12.90 (3M), +1.1% (6M), +0.6% (9M), -17.2% (1Y)
• Comment: A major military conflict in Europe significantly raised the global risk level. Gold, the safe-haven asset, and crude oil, an energy commodity critically important in wartime, both went up in the first month, by 6.5% and 30.7%, respectively.
• However, the impact was short-lived. On March 16, 2022, the Fed begin hiking interest rates, which has become the driving force in global market. Impact from Russia-Ukraine became a secondary factor and sat in the back burner.
To sum up the above examples, I observe that gold prices usually go up in the aftermath of a global crisis. Crude oil has a mixed bag of reactions. If a crisis results in economic recession and a consequential reduction in oil demand, oil prices would go down. However, in the case of a major war, oil price would go up due to its strategic importance.
Review: Event-driven Strategy focusing on Global Crises
In June 2022, I introduced a three-factor pricing model for commodities futures:
Commodities Futures Price = Intrinsic Value + Market Sentiment + Crisis Premium
Intrinsic Value is the baseline cash price of the underlying commodities, determined by available supply, demand, inventory, shipping costs, and factors affecting these variables.
Market Sentiment indicates if investors are bullish or bearish. Whether speculative investors place more money on the long side or the short side affects the price of a futures contract. Market sentiment could be either positive or negative, resulting in a price premium or a discount of the intrinsic value.
The new Crisis Premium factor captures “Event Shock” during a global geopolitical crisis.
Previous trade example:
Russia and Ukraine together accounted for 28% of global wheat export. Wheat price shot up by 75% following the start of the conflict. I designed a Long Strangle options strategy on CBOT Wheat futures, and simultaneously bought out-of-the-money (OTM) call and put options. A “risk-on” outcome could push wheat price higher, making the calls more valuable, where a “risk-off” outcome would pull wheat price back down, making the puts in-the-money (ITM).
Trading Opportunities with Micro Gold
Since the September FOMC meeting, gold prices suffered a 6.3% drawdown, sending the futures price from $1,969 to $1,845. Friday settlement price was nearly 9% below the yearly high.
On the one hand, high-interest money market funds beat out non-interest-yielding gold investment; on the other hand, strong dollar raised the cost of gold purchase by foreign investors. As a result, gold prices have been under pressure.
However, my analysis illustrates that gold prices could rise in response to geopolitical conflicts. Since its founding, Israel had five major wars with its Arab neighbors. We do not know whether this time it would be contained as a regional conflict or spark a chain reaction of a global war. By the intensity of how it started, it doesn’t seem like a short one.
To express a view of rising gold prices, we could consider a long position in COMEX Micro Gold Futures ( AMEX:MGC ). The December contract (MGCZ3) was settled at $1,845. Each contract has a notional value of 10 troy ounces, or $18,450 at market price. CME Group requires an initial margin of $780 per contract.
Hypothetically, if gold futures go back up to $2020, its yearly high, the $175 ($2020-$1845) price increase would translate into $1,750 for a long futures position. If gold price goes down instead, each dollar of decline would result in a loss of $10 per contract.
Alternatively, we could consider the newly launched Micro Gold Options. A Long Strangle Options Strategy, where simultaneously buying OTM calls or puts, could be deployed if we expect a big move in gold price, but not certain of its direction.
Trading Opportunities with WTI Crude Oil
Since June, WTI crude oil first staged a nearly 40% rise, from $67 going to $93. However, it has seen a 9% drawdown since the Fed meeting on September 20th.
A major military conflict in the Middle East, the world’s most important oil producing region, threatens to interrupt oil supply and push up oil price. If the conflict is escalated to involve major oil exporting nations, the situation could be dire.
To express a view of rising crude price, we could consider a long position in NYMEX WTI Futures ( NYSE:CL ). The December contract (CLZ3) was settled at $83.18. Each contract has a notional value of 1,000 barrels, or $83,180 at market price. CME Group requires an initial margin of $6,186 per contract.
Hypothetically, if WTI futures go up above $100, which we saw from February to July 2022 in the first months of the Russia-Ukraine conflict, the $17 price increase would translate into $17,000 for a long futures position. If crude oil price goes down instead, each dollar of decline would result in a loss of $1000 per contract.
Similarly, the newly launched Micro WTI Options could express a view that a big move in oil price is expected, without knowing its direction.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Crude Oil
THE WORLD IS CHANGING, SO IS THE OIL PRICE MOVEMENTSCAPITALCOM:OIL_BRENT
On the fundamental side, Brent oil prices have been supported by a number of factors in recent months, including:
Strong global economic growth, which has boosted demand for oil.
Supply disruptions caused by the ongoing conflict in Ukraine.
The decision by OPEC+ to cut production by 2 million barrels per day.
The war in Iran, which has raised concerns about further supply disruptions.
However, there are also some headwinds facing Brent oil prices, including:
The potential for a global economic recession, which would reduce demand for oil.
The release of oil from strategic reserves by the United States and other countries.
The increasing popularity of electric vehicles, which could reduce demand for oil in the long term.
Overall, the fundamental outlook for Brent oil is bullish. The factors supporting prices are likely to outweigh the headwinds in the near term, but there are some risks to the upside potential.
Technical analysis
On the technical side, Brent oil is currently in an uptrend. On the 30-minute chart, the price is above the 50-day and 200-day moving averages, and the RSI indicator is above 50. This suggests that the bulls are in control and that the price is likely to continue to rise in the near term.
On the 4-hour chart, the price is also above the 50-day and 200-day moving averages, and the MACD indicator is giving a bullish crossover signal. This further confirms the uptrend on the 4-hour chart.
On the daily chart, the price is also above the 50-day and 200-day moving averages, and the RSI indicator is above 50. This suggests that the uptrend is likely to continue on the daily chart as well.
Elliott wave analysis
Elliott wave analysis suggests that Brent oil is currently in the fifth wave of a five-wave Elliott wave sequence. This means that the price is likely to continue to rise until it reaches its target, which is around $100 per barrel.
Conclusion
Overall, the fundamental and technical outlook for Brent oil is bullish. The price is likely to continue to rise in the near term, with a target of around $100 per barrel. However, investors should be aware of the risks posed by a potential global economic recession and the ongoing war in Iran.
Additional thoughts on the war in Iran
The war in Iran is a significant wildcard for the oil market. If the war escalates, it could lead to a major disruption in oil supplies, which would send prices soaring. However, it is also possible that the war will be resolved quickly, with minimal impact on the oil market.
Investors should closely monitor the situation in Iran and be prepared to adjust their positions accordingly.
I am deeply saddened by any war and the conflicts happening around the world. My heart goes out to all those who have been affected by this violence.
I know that words alone cannot heal the pain of those who have lost loved ones or been displaced from their homes. However, I want to express my solidarity with all those who are suffering and to let them know that they are not alone.
I believe that peace and understanding are essential for a better future. I hope that we can find a way to resolve these conflicts peacefully and build a more just and equitable world for all.
This being said, coming back to our analysis, good luck everyone in your financial decisions.
CRUDE OIL (WTI): Will The Gap Be Filled?!🛢️
WTI Oil opened with a huge gap up due to the Israeli - Palestinian conflict.
As you know, the is always up to 80% chance that the gap will be filled.
For us, it can be a nice shorting opportunity.
To trade that with a confirmation, focus on 84.5 - 85.0 area.
That is a minor intraday support that is based on gap close level
and recent historical price action.
My bearish confirmation will be a 4H candle close below that - its breakout.
I will anticipate a bearish movement to 83.1 - gap opening level.
As always, pay close attention to events.
A new higher higher higher close will indicate the escalation of the conflict.
❤️Please, support my work with like, thank you!❤️
Crude Oil (WTI): Preparing For Reversal 🛢️
WTI Crude Oil closed, testing a major horizontal daily support.
The price formed an inverted H&S pattern on that on an hourly time frame.
Your bullish confirmation next week will be a bullish breakout of 83.37 level - its horizontal neckline. Hourly candle close above will confirm the violation.
A bullish continuation will be expected to 84.51 / 85.41 levels then.
❤️Please, support my work with like, thank you!❤️
WTI Crude Oil All Time Chart. Does History Repeat Itself..?!I'm writing this article, because of the striking resemblance with Today's oil and the one that has been a lot of times before..
I believe that history repeats itself, and there are lessons to be learned. And since this boom and bust cycle are not new, it might also provide some understanding on where we are heading.
I hope you enjoy.
The time of dinosaurs
In the 1850s the whale fisheries had failed to keep pace with the mounting need for illuminating oil, forcing the price of whale oil higher and making illumination costly for ordinary Americans. Only the affluent could afford to light their parlors every evening.
There were many other lighting options such as lard oil among others but no cheap illuminant that burned in a bright, clean, safe manner.
George Bissell, considered as the father of the American oil industry, had the intuition that oil that was plentiful in western Pennsylvania could be a first rate illuminant. The slimy liquid was so ubiquitous that it tainted well water and plagued local contractors drilling for salt.
In 1855, Professor Benjamin Silliman from Yale produced a report that vindicated Bissell's hunch that oil could be distilled to produce a fine illuminant (like kerosene), plus a host of other useful products. As a result, Bissel and his company, Seneca Oil Company (formerly the Pennsylvania Rock Oil Company) needed to dispatch someone to Pennsylvania to look for large pools of oil.
First oil drilled in America
That man was Colonel Edwin Drake, known as the first to successfully drill for oil. Drake arrived in Titusville, Oil Creek Valley. Oil was known to exist here, but there was no practical way to extract it. Its main use at that time had been as a medicine for both animals and humans. Natives used it for war paint and for soothing skin liniment. It took a couple years but Drake struck oil in 1859.
This was the beginning of a pandemonium. Bands of fortune seekers and speculators streamed into Titusville and other oil-related businesses quickly exploded on the scene.
I guess we can call this the Klondike of oil, as a beginning of Global Industrialization Era.
Mr. Rockefeller was known as the co-founder of the Standard Oil Company and was the world's richest person. Crude oil jumped multi X times in 1860s from approximately 50cents per barrel in early 1860s to over 3 dollars in late 1860s.
Additionally, I would like to note that crude oil fluctuated between $10 and 10¢ a barrel in 1860! Adjusted for inflation, Mr. Rockefeller fortune upon his death in 1937 stood at $336 billion according to Fortune (in 2008 U.S. dollars).
Similar how crypto enthusiasts built their wealth in 2010s, right? 😉
Pump and Dump
By the late 1860s, there was a slump in the oil industry, keeping it depressed for the next five years. Low kerosene prices, a boon to consumers, were catastrophic for refiners, who saw the profit margin between crude and refined oil prices shrink to a vanishing point.
Worse, the oil market wasn't correcting itself according to the self-regulating mechanism described by neoclassical economists. Producers and refiners didn't shut down operations in the expected numbers.
John D. Rockefeller said "So many wells were flowing that the price of oil kept falling, yet they went right on drilling." Rockefeller tirelessly mocked those "academic enthusiasts" and "sentimentalists" who expected business to conform to their tidy competitive models.
One Hundred Years of Resistance for $4
According to the standard model of competition, as oil prices fell below production costs, refiners and producers should have shutdown.
But the oil market didn't correct itself in this manner because refiners and producers carried heavy bank debt and other fixed costs and by operating at a loss they could still service some debt. Each refiner, pursuing his own self-interest, generated collective misery.
Does it sound like today's crypto news, right? 😉
The U.S. drilling activity didn't slow down after hot 1860s as much as expected and a lot of producers are still pumping oil to avoid defaulting on their loans..
There was World War I in 1914-18, and total number of military and civilian casualties was around 40 million - around 20 million deaths and 21 million wounded. 😓
There was World War II in 1939-45, and total number of military and civilian casualties estimated around 50 - 56 million.. 😓
Crude oil prices jumped again, and again. But still remained below $4 until 1970s, as there were no all time peaks in crude oil after super hot 1860s.
Money-printing Era Breaks the Rules
The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the late 1920s to 1932 as well as from 1944 until 1971 when the United States unilaterally terminated convertibility of the US dollar to gold, effectively ending the Bretton Woods system, that has been resulted with huge inflation all over the world within further decades..
Technical pictures at the main WTI crude oil chart illustrates, oil price are on the sustainable path since then, with huge bullish accelerations within local and global conflicts, like Arab-Israeli War in 1973, 9/11 attacks in 2001 and Russia-Ukraine conflict in 2022.
Nowadays
Knee-jerk surge’ happens again, and again, so oil experts repeatedly predict market impact of new 2023 Israel-Hamas conflict.
Crude oil price sees a spike on early Monday trading Oct 9, 2023 so the overall impact of the attack on Israel by Palestinian militants Hamas has yet to consider...
In a conclusion.. Does history repeat itself..
Certainly "Yes". As lessons of history still remain unlearned.
WTI To 78.9$WTI oil is opening with green gap this week, Probably it’s going to go down to 78.9$ level this week testing this level. Therefore we will wait to test this level then take another look at chart.
✅USOIL BUYING OPPORTUNITY|LONG🚀
✅USOIL is going up from the
Horizontal support level of 81.76$
Because it was oversold and
I think that we will see a
Further local move up
LONG🚀
✅Like and subscribe to never miss a new idea!✅
USOIL Trading IdeaBased on Simple Technical Analysis ( Trendline + Support & Resistance )
Risk Disclaimer:
Please be advised that I am not telling anyone how to spend or invest their money. Take all of my analysis as my own opinion, as entertainment, and at your own risk. I assume no responsibility or liability for any errors or omissions in the content of this page, and they are for educational purposes only. Any action you take on the information in these analysis is strictly at your own risk. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. Good luck :-)
US Oil Analysis 🛢️ / --> HapHazrd Pairs Series #3Oil Dropped heavy last week as we began Q4. Ultimately looking for higher prices for this quarter and as we enter the coming week. I talk about my favorite prices and reflect on past price behavior.
WTI Crude Oil Fundamental Analysis + Trading Plan WTI Crude Snaps Two-Day Slump Amid Shifting Global Dynamics and Weaker USD
The West Texas Intermediate (WTI) crude oil benchmark showed signs of resilience, bouncing back from a two-day decline to reach $82.85 per barrel, marking a 0.40% gain. This uptick came as the US Dollar (USD) experienced a retreat, ending its 12-week rally. While robust US job growth figures impressed with a 336,000 rise, hints of a potential pause on rate hikes by Federal Reserve officials added an element of uncertainty. Russia's decision to lift its diesel export ban and a dip in US oil rigs further complicated WTI's supply-demand dynamics.
WTI Benefits from USD Weakness and Russian Supply Shifts
At the time of writing, WTI was trading at $82.85 per barrel, with modest gains of 0.40%. The resurgence in oil prices was attributed to the broader weakness in the US Dollar (USD). USD buyers booked profits ahead of the weekend, causing the US Dollar Index (DXY) to post weekly losses, ending its 12-week rally.
While recent US economic data was supportive of the US Dollar, the overextended uptrend indicated a potential mean reversion. Notably, US job growth in September soared by 336,000, a figure that exceeded estimates and the previous month's data.
Federal Reserve officials have remained relatively reserved in response to the US Nonfarm Payrolls report, which could justify the need for higher interest rates. However, San Francisco's Fed President Mary Daly suggested that the recent increase in Treasury yields might already be addressing some of the Fed's concerns. She noted, "The recent rise in Treasury yields is doing some of the work for the Fed, and if that doesn't reverse and inflation continues to cool, the Fed can leave rates on hold."
Russia's Move Eases Supply Concerns
Russia played a crucial role in providing some relief to oil prices as it lifted its ban on diesel exports, particularly for supplies delivered to ports via pipelines. This decision had a cushioning effect on WTI's upward movement, as it introduced a potential increase in supply.
On the front of oil data, the number of US oil rigs decreased by five to reach 497 during the week, marking the lowest level seen since February 2022. This development, reported by the energy services firm Baker Hughes, added to the evolving dynamics in the oil market.
As WTI navigates a complex landscape of supply dynamics, global economic headwinds, and shifting USD trends, the oil market remains a focal point for investors and analysts alike. The balance between supply and demand, coupled with external factors like currency movements, will continue to influence WTI's price trajectory in the near future.
Our preference
Short positions below 91.30 with targets at 77.50 & 74.00 in extension.
When the price Will reach the 74.00 Extension target , than :
Go Long.
Gold Is Testing 1800 Support As US Yields Moving Into ResistanceHey traders,
Strong jobs data caused some bounce for the USD. But we are seeing some limited reaction as a lot of hawkish bets can be priced in. So I am even prepared on the reversal patterns. I like gold down here around 1800; its a nice technical support. In this video I will also also look at crude oil, eth and pound.
Have a nice weekend.
Grega
ps. see you in webinar on Monday, here on tradingview.
Dirty practices of corporate forecasts portrayed in the mediaOn Tuesday, we touched on the subject of corporate forecasts in the oil market portrayed in the media. In fact, we remarked how the recent announcements of ultra-bullish forecasts were very reminiscent of the 2022 oil market top and that we were pretty skeptical about the rally's sustainability (though we warned about this on a different platform three weeks sooner). Fast forward to today, and we can see that oil is down from nearly $95 a week ago to less than $84 today (down more than 12%). With this price action following recent upgrades for the oil price by various financial entities, we would like to point out a few similar news articles in the past, which often preceded the trend reversal to the opposite direction of the forecast. While we can only speculate whether it is intentional or not, we have seen these practices taking place for years, with big players coming to tell retail investors to buy near the market top or sell near the market bottom. The following presentation aims to advocate that one should always do their own research rather than rely on the opinion of others whose true intent or trading strategy is unknown.
Illustration 1.01
Illustration 1.01 shows some of JP Morgan’s forecasts in the past year or so, written as articles published by various media outlets (keep in mind that we are not showing all of the forecasts; there were some that were actually fulfilled).
Illustration 1.02
Illustration 1.02 displays more corporate forecasts from JP Morgan.
Technical analysis
Daily time frame = Bearish
Weekly time frame = Neutral (turning slightly bearish)
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
CRUDE OIL (WTI): Top-Down Analysis & Your Trading Plan 🛢️
Have you seen that sell-off on WTI?!
The market was falling like crazy, breaking one key level after another.
Now the price is on a key daily horizontal support.
I see a nice double bottom on 1H time frame that can give us a perfect confirmation to buy.
Wait for 1H candle close above 82.92 - its neckline.
Then buy aggressively or on a retest with goal - 84.4
Alternatively, if the price sets a new lower low, the setup will become invalid.
❤️Please, support my work with like, thank you!❤️
US Oil 06/10 MovePair : US Oil - Crude Oil
Description :
Completed the Breakout of the Corrective Pattern " Exp FIAT " and Daily Ascending Trendline in Short Time Frame if it Retest then it will Reject from the Trend Line and if it Breaks then it can Reject from Previous Support Zone
USOIL || Price AnalysisUpdate:-
USOIL is losing its momentum but it looks like it will retrace back before going below 89$.
Detailed analysis is marked on the chart.
Note: This is purely based on my analysis and not a financial advise.
Crude Oil - Elliott Wave CountCrude Oil - Elliott Wave Count
Crude appears to be completing wave 4 near 78.5$, with an impulse wave 5 up move expected.
Remember that if the price drops below 78, it is considered invalid.
This information is for educational purposes only, so trade with caution.
MCX:CRUDEOIL1! NYMEX:CL1! TVC:USOIL MCX:CRUDEOILM1! CAPITALCOM:OIL_CRUDE FX:USOILSPOT TVC:USOIL BLACKBULL:USOIL.F
USD/CAD - Canadian dollar stops nasty slideThe Canadian dollar has steadied on Thursday. In the North American session, USD/CAD is trading at 1.3728, down 0.12%.
The Canadian currency has stabilized after a nasty four-day slide, in which it declined 1.9%. The US dollar continues to look strong against the majors, as "US exceptionalism" continues to make the greenback attractive to investors.
The Canadian dollar is also getting squeezed by falling oil prices, as oil is a major export for Canada. Crude oil prices slid around $5 on Wednesday, its biggest daily drop in over a year, and fell further on Thursday before recovering. The rise in bond yields, which have raised fears of a global economic slowdown are weighing on investor sentiment towards oil.
On the economic calendar, the Canada Ivey PMI eased slightly in September to 53.1, down from 53.5 in August, but easily beat the market consensus of 50.8. The PMI has indicated expansion in economic activity in eight out of the past nine readings. As well, the job creation component rose from 58.5 to 54.8 in August, marking a six-month high.
These are encouraging figures for the Canadian economy, which has run into some headwinds, such as a flatlined GDP in August. Canada's economy contracted in the second quarter, and a repeat in Q3 would indicate a technical recession.
The Canadian dollar could show some volatility on Friday, with the US and Canada both releasing employment reports for September. Canada is expected to have added 20,000 jobs in September, which would be half of the gain in August of 39,900. The Bank of Canada will be keeping a close eye on wage growth, which is projected to rise to 5.5% y/y, compared to 5.2% in August.
All eyes will be on the US nonfarm payrolls, which is showing signs of cracks, with three straight releases below the 200,000 mark. The August release came in at 187,000 and the consensus estimate for September stands at 170,000. Wage growth is expected to tick up to 0.3%, compared to 0.2% in August. An unexpected reading in the NFP or wage growth reports could have a significant effect on the US dollar on Friday.
USD/CAD faces resistance at 1.3806 and 1.3864
1.3695 and 1.3638 are the next support lines
CL1! Crude Oil Day Trade 5-Oct-2023TRADE DIRECTION: SHORT; as indicated by the downward trendline (red line) and the market structure.
KEY LEVEL: Round numbers S&R with 50 ticks range between each level.
TRIGGER SIGNAL: Broke bearish pennant with the confluence from 2 trend continuation candles (red arrows).
RR: 1:1.7
SL: 88 Ticks
TP: 150 Ticks
CRUDE OIL - Entering Sideways Mode ✔️✔️Previously at FxProfessor:
✔️Perfect Long:
✔️Perfect Short:
News:
Oil continues to tumble after previous session's slide
Here's the scoop:
📉 Prices took a tumble, with Brent crude down $1.19 to $84.62 a barrel and WTI crude dropping $1.31 to $82.91. Ouch!
📉 Yesterday, we saw a massive $5 drop, the biggest in over a year. The reason? A gloomier economic outlook and concerns about dwindling fuel demand after an OPEC+ meeting.
🛢️ OPEC+ decided to stick to its oil output policy. Saudi Arabia's holding onto a 1 million bpd cut until the end of 2023, and Russia's keeping a 300,000 bpd curb until December. No rush to boost supply, it seems.
🛢️ Russia also said, "No hurry" to lift the ban on fuel exports to tackle high local gasoline and diesel prices.
📉 National Australia Bank analysts are staying cautious, saying the market's still in deficit this quarter. Softening prices may mean OPEC won't ease supply restrictions anytime soon.
💶 On the flip side, the euro zone's facing economic challenges, with demand dropping in September due to rising borrowing costs and prices.
🇺🇸 In the U.S., gasoline demand hit a low not seen since the start of the year, coming in at 8 million bpd, according to the EIA.
📈 With all this uncertainty and weaker U.S. economic data, oil bulls might have a tough time pushing prices higher.
📊 Keep an eye on the market, and as always, trade wisely!
One Love,
The FXPROFESSOR 💙
Crude Oil (WTI)This looks like it is poised to head back into a well established $70-$80 range (and then some!). Anticipated long-term USD strength, as well as extended Global economic weakness bodes well for an enduring price weakness outlook.
Technically, Crude is at a major pivot, both, at the top of a rising daily channel, as well as at the top of a descending weekly channel trend line, resulting in a significant confluence region - both of those having price-negative connotation.
The Daily (main signal);
SHORT on any reversal!
... and the 240 min. (secondary signal);
Oil (CL) Aggro/Oversold Fade BUYQuick take/analysis, but consider scooping some low-risk crude contracts here (break above 84.84). Better demand zones are lower, but we've had a sizable downdraft into buy areas + are testing a key support/resistance area (~84-85), so those traders may be at our backs. The US dollar has finally taken a pause at the supply zone we ID’d in posts from earlier this week/last week, so that may help commodity, including CL, longs. Keep this one a tight leash; the bounce we’ve had thus far has been tepid, a micro timeframe higher high/higher low hasn’t yet been put in , and daily/weekly “demand” is lower still (low-80s/upper-70s). That said, CL is certainly a trade to put on your radar. Given the technical structure of the recent selloff, consider taking any profits at 1:1, then 86, 87, and 88+. Again, better buys are lower, but start paying attention/stalking longs as remaining profit margin for short sellers is a lot smaller than it was at the beginning of the week (though there is still some downside risk)!
Happy trading!
Jon @ LionHart Trading
Odd things in the oil market, reminiscent of 2022 market topRecently, more and more financial institutions have been upgrading their price targets for oil. Mostly, these forecasts were upward of $100 per barrel, with JP Morgan and some other financial entities forecasting prices as high as $150 in the coming months. About three weeks ago, we tweeted that these statements are very reminiscent of those made in the second quarter of 2022 when many of the same corporations upgraded their forecasts right at the market top (to $150, $200, etc., depending on the entity). While $100 per barrel could be in play if OPEC and OPEC+ (mainly referring to Saudi Arabia and Russia in this regard) manage to maintain production cuts and the U.S. stops releasing oil from the Strategic Petroleum Reserves, we are very skeptical about the ultra bullish calls out there.
The first reason for our view is that if the global economy continues slowing down and heads into recession, we will likely see oil demand falling. The second one, which surprises us, is that the Biden administration has not started filling up Strategic Petroleum Reserves despite planning to do so earlier this year (plus, despite oil falling below $70), which makes us wonder why the administration is not buying. Could it be that they completely miscalculated their game and missed the chance, or are they expecting a better opportunity to come (supposedly better than $64 per barrel)? We honestly do not know, but it is very odd, to say the least.
Illustration 1.01
The picture above shows the monthly chart of U.S. crude oil production. From the start of 2023 through June 2023, U.S. crude oil production has grown by more than 500,000 barrels per day (by more than 4%).
Illustration 1.02
Illustration 1.02 displays the daily chart of USOIL and simple support/resistance levels.
Technical analysis
Daily time frame = Bearish
Weekly time frame = Neutral
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Crude Oil: Ongoing Elliott Wave Corrective Drop Can Be DeeperCrude oil has been on the rise over the last view weeks, which is the main reason why inflation is still the main global problem, so we have seen some positive correlation between dollar and crude as speculators believe that rates will stay here higher for longer. Well, what’s interesting now is that after that after a lot of crude oil bull calls for 100 dollar and higher, the energy is turning south. Looking at the current intraday drop, we can see some sharp move down now, it looks like an ongoing intraday impulse with room for more weakness after Crude inventory data shows decline of 2.2 million barrels last week. From an Elliott wave perspective that’s going impulse for wave A, so more weakness can be seen after subwave iv rally, or even after wave B bounce. Resistance is at 86.75 and 88.30.
In fact, lower energy can also mean that inflation can slow down, and this can then at some point puts limited upside for the USD and yields.
Grega
