Trading position (short-term; our opinion; levels for crude oil’s continuous futures contract): long position with possible entry around $67.61-68.82, with $66.66 as a stop-loss and $71.00, $72.93, $74.23 as potential price targets.

Fundamental aspects

Today, the IEA released its forecast figs:

• 2021 global oil demand growth forecast down by 100,000 barrels per day (bpd).
• 2021 non-OPEC supply growth forecast raised by 270,000bpd to 1.1Mbpd.
• 2022 global oil demand growth forecast increased by 200,000bpd.
• 2022 non-OPEC supply growth forecast raised by 840,000bpd to 2.9Mbpd.

OPEC sticks to 2021, 2022 oil demand forecasts.

Both IEA & OPEC still expect the global thirst for oil to return to the pre-pandemic highs in the second half of 2022 by surpassing the 100Mbpd threshold – to reach 99.9Mbpd on average for the whole 2022.

Also, Washington’s request yesterday for OPEC to boost production might not be taken seriously. (Source: Bloomberg Market Podcast)

Technical Analysis

Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.

The overall long-term trend remains bullish so far. Apparently, the bulls are taking over to push CL prices back into the cloud (daily kumo), which we consider the current equilibrium.

In yesterday’s report, two scenarios were mentioned. It looks like it’s the optimistic one that is currently developing; the market closed at $69.25,higher than on the previous day (Aug. 10). Therefore, we can see that the long-term trend line (black dotted line) has been sustained so far. The prices are now overlapping the closest dynamic resistance level ($69.27) formed by the flat Kumo (SenkouSpanB/median price over the past 52 periods).

The RSI (14) shows a new developing uptrend in the short-term, as long as its trend line remains unbroken.

Regarding the monthly volume profiles, we can observe that the current volume point of control (VPOC) is located around $68.31 (where buyers started accumulating) and the one for the previous month around $71.76 – with a volume gap in between which is likely to be filled. This brings some confluence into our current bullish scenario.

Today we assessed the zone displayed by the yellow rectangle as a good area to enter. To reduce the risk, we may set a stop just below the pin bar formed by yesterday’s candle ($66.66). Depending on your entry, in order to maintain a well-balanced profit-risk ratio, the first target could be placed around $71 (same as yesterday’s suggested TP1), the second around $72.93, and, eventually, the third one around $74.23 (last swing low).

Figure 1 - Brent (CL) Crude Oil Futures (Continuous contract)

In summary, oil prices are getting back to the point of equilibrium, ready to bounce up.

As always, we’ll keep you, our subscribers, well informed.

Trading position (short-term; our opinion; levels for crude oil’s continuous futures contract): long position with possible entry around $67.61-68.82, with $66.66 as a stop-loss and $71.00, $72.93 & $74.23 as potential price targets.

Thank you.

Sebastien Bischeri
Oil Trading Strategist