Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.
Trading positions
- WTI Crude Oil [CLF22] Long around $ 65.70-66.21 support (yellow band) with targets at $ 71.07 / 74.25 / 77.23 and stop just below $ 63.02 – See the chart section
- Natural Gas [NGZ21] No position currently justified from the risk-to-reward point of view.
Did you miss my last article about biofuels to diversify your portfolio? No problem, you can have a look at my selection through the dynamic stock watchlist.
Let’s Have a Look at Some Fundamentals!
By losing $10 a barrel on (Black) Friday, crude oil prices had their deepest dive in 17 months (since April 2020). The OPEC+ group has therefore postponed its technical meetings to the end of next week to assess the impact of the new Omicron variant on energy demand and thus on oil prices.
The rebound in black gold prices was finally contained yesterday after Friday's plunge, with the fears of the Omicron variant on the global economy robbing the market of momentum and slowing down the demand. Meanwhile, Morgan Stanley also reduced its Brent price forecast for Q1 of 2022 to $ 82.50 per barrel, down from the previously expected $95.
(Source: PunMemes.com)
Trade Plan Explained
The market is currently facing further downward pressure due to fears maintained by the mainstream media and their apocalyptic headlines — after all, they rediscover the mutating capabilities of viruses every winter, even though mutations are, by nature, the core functions of these microbes. I anticipate a lower drop onto the $ 65.70-66.21 yellow band.
The recommended objective would be the $ 71.07, 74.25, and 77.23 levels. My recommended stop would be just below the $ 63.02 level (below the July swing low). Alternatively, you can use an Average True Range (ATR) ratio to determine a different level that might better suit your risk profile.
WTI Crude Oil (CLF22) Futures (January contract, daily chart)
That’s all folks for today. Happy trading!
As always, we’ll keep you, our subscribers, well-informed.
Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
