Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.
Trading positions
- Crude Oil [CLZ21] No position currently justified on a risk/reward point of view;
- Natural Gas [NGX21] Long around $4.766-4.920 support (yellow rectangle) – with stop below $4.615 – which can now be lifted just below 4.825 (or at breakeven) – and targets at $5.311 (already hit!) and $5.663 (almost hit…) – level slightly lifted from $5.604 (the level given last Thursday) – See Fig. 2 and read my last trade review in details…
Did you miss my last article about the spiciest MLP to trade? No problem, you can have a look at my selection through the dynamic stock watchlist…
Fundamental Analysis
Oil prices broke new multi-year records on Monday (Oct. 25) because of statements by the Saudi Energy Minister over the weekend, leaving little room for an upcoming increase in supply from OPEC and its allies. The latter, interviewed on Saturday (Oct. 23) by Bloomberg on the side-lines of the "Saudi Green Initiative" forum, also added that the crisis was somehow contained but not over yet, and particularly in some regions like Russia, where Moscow is in fact preparing for an eleven-day shutdown of all its non-essential services (restaurants, beauty salons, clothing or furniture stores, gyms, etc.) from this upcoming Thursday, in the hope of stemming the serious outbreak of the Covid-19 epidemic that is hitting the country. On the other hand, Minister of State for Petroleum Resources of Nigeria Timipre Sylva, also interviewed by Bloomberg during the same forum, estimated that the market was still too fragile.
Figure 1 – WTI Crude Oil (CLZ21) Futures (December contract, daily chart)
Figure 2 – Henry Hub Natural Gas (NGX21) Futures (November contract, daily chart)
In summary, we should not expect a further increase in supply beyond the expected level from OPEC+ in the near future, despite a strong recovery in demand, as estimated by Goldman Sachs in a note on Sunday, saying that it could soon reach its pre-Covid-19 level, i.e., 100 million barrels per day!
As always, we’ll keep you, our subscribers well informed.
Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.
Trading positions
- Crude Oil [CLZ21] No position currently justified on a risk/reward point of view;
- Natural Gas [NGX21] Long around $4.766-4.920 support (yellow rectangle) – with stop below $4.615 – which can now be lifted just below 4.825 (or at breakeven) – and targets at $5.311 (already hit!) and $5.663 (almost hit…) – level slightly lifted from $5.604 (the level given last Thursday) – See Fig. 2 and read my last trade review in details…
Did you miss my last article about the spiciest MLP to trade? No problem, you can have a look at my selection through the dynamic stock watchlist…
Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
