Dear Subscribers,
On June 21st, I notified you of a temporary pause in the publication of our Oil Trading Alerts and that as soon as the situation was rectified, I would let you know. That day has arrived. I’m pleased to announce that Paul Rejczak will now be taking the reins of the Oil Trading Alerts. He will dissect and make sense of crude oil markets so that you don’t have to.
Paul has authored many articles and analyses for Sunshine Profits over the years and is currently at the helm of the Daily Gold News. You can find out more about Paul here, including links to his latest publications.
You could say that oil has had an incredible year thus far and investors have had to contend with a plethora of unknown variables. And, as always, you can’t analyze the black gold without examining global affairs. So, can oil prices still rise? Can the existing OPEC+ agreement remain intact? Where to next? If you have questions, Paul will have answers. Let him know by writing to us!
Thank you.
Best regards,
Dominik Starosz
Managing Editor
Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): No positions are currently justified from the risk/reward point of view.
As I emerge from looking at today’s yellow gold, I dive straight into the black gold, with a cup of coffee at hand, sitting at my desk. They’re all commodities. I can’t eat gold, I can’t drink oil, but I can definitely taste my cup of joe. For many of us, mornings begin with the irresistible aroma of the coffee bean. But an entirely different smell permeates the air around oil rigs and wells. The smell of crude. And the smell of volatility.
Crude oil reached a new medium-term high on Tuesday (July 6) when it hit the $76.98 level. The black gold rallied following a failed OPEC output deal that happened earlier this week. Eventually, the sellers took over and the price retraced about $6 or 8% from the above-mentioned high in the course of three trading days. So, it looks like we experienced a typical ‘buy the rumor, sell the news’ price action.
Short-Term Upward Reversal Ahead?
Today oil is trading sideways slightly above the $72 price level. The market is waiting for Crude Oil Inventories release at 11:00 a.m.; the expected number is -4.0M, a rise from the previous value of -6.7M.
From the technical standpoint, it looks like an attempt at a short-term upward move. However, a month-long uptrend has been broken to the downside, as we can see on the daily chart (the graph includes today’s intraday data):
Breaking Lower in the Long Term
Crude oil has broken above its pre-Covid price levels recently – the market has come back from last year’s historical plunge in April. Since May we have seen an acceleration of the uptrend, but this week’s decline may be seen as a negative medium-term signal.
The weekly chart of the Light Crude Oil Continuous Contract is also showing clearly negative technical divergences between the price and the indicators (chart by courtesy of http://stockcharts.com)
Conclusion
Crude oil has
suffered an 8% decline from its new medium-term high this week. The market may
be shifting, and it is possible that we are witnessing a medium-term reversal
to the downside. However, oil will likely remain above the $70 support level
for some time. Thus, no short-term positions are justified from the risk/reward
point of view, as there may be some volatility
ahead.
As always,
we’ll keep you, our subscribers, well-informed.
Trading position (short-term; my opinion; levels for crude oil’s continuous futures contract): No positions are currently justified from the risk/reward point of view.
Thank you.
Paul Rejczak,
Oil Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
