WTI Crude Oil - Update 22 July

Daily chart.

Recap, in the last update dated on 16 July. it stated that the continuation of upward trend requires relatively above average or higher volume to breakthrough the resistance zone.

On 19 July, the price action successfully closed within the resistance zone associated with relatively above average volume. The following day, it managed to break above the zone but failed to close above it. 

Then came the following news on Friday, 21 July - after a tanker-tracking firm reported supply from OPEC is rising.

OPEC's July oil supply was set to rise by 145,000 barrels per day (bpd) compared to June, Reuters reported citing data from PetroLogistics, a company that tracks OPEC supply forecasts. The increase in oil supply would push production above 33 million barrels per day.

Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month's gains, according to PetroLogistics.

More news, US crude tumbles 2.5%, settling below $46, after report of rising OPEC oil output 

Take note that the overall price action is still weak - death cross situation.

Note : S-Trader indicators/tools are not part of Metastock software package. It is our proprietary system/tools. If you have any further inquiries, please feel free to Contact Us. 

Source : 
1) Metastock
2) www.cnbc.com
3) Reuters

JP Morgan Slashes Its 2018 Oil Price Forecast By $11

JP Morgan slashed its 2018 WTI forecast by US$11—from US$53.50 to US$42. The price projection for Brent was also axed, by US$10, from US$55.50 to US$45.

The US shale-vs-OPEC-cuts tale has been the predominant theme in oil markets this year, and like the cartel's output cut, it will be rolling over into next year as well.

Major banks, the same that at the time of the initial OPEC deal were seeing the markets tightening and glut eliminated as soon as the second or third quarter this year, have started slashing their oil price forecasts for this year and next, as the 6-month OPEC deal failed to rebalance the markets and cuts were extended into March 2018. 

US shale production is expected to continue growing through this year and into next year. Meanwhile JP Morgan sees OPEC's extension deal as having no exit strategy, with the cartel not communicating what its end game is.

Source :

1) www.oilprice.com

U.S. shale firms more exposed to falling oil prices as hedges expire

Cash-strapped U.S. shale firms scaled back their hedging programs in the first quarter, leaving them more vulnerable to tumbling spot market prices just after OPEC reached a landmark deal to curb global supply.

The pullback in hedging was driven by rising service costs and expectations that prices would continue to rally after the Organization of the Petroleum Exporting Countries extended those cuts in May, analysts said.

However, rising U.S. production has stymied OPEC's efforts to rebalance markets. Crude oil futures LCOc1 have lost 15 percent of their value since February, raising the risk that unhedged companies are more exposed to market weakness.

More news, U.S. shale firms more exposed to falling oil prices as hedges expire


Source :
1) www.reuters.com

WTI Crude Oil - OPEC's thorn in the flesh

 
A local paper published an article titled "OPEC's thorn in the flesh" in their weekly business section and caught my attention.

"A few key things have changes in the oil industry over the last few months.

One , US shale players are adapting to lower oil prices.

Two, technology is enabling shale players to extract so much more oil with less drilling - hence less capital expenditure.

Three, the efforts by the OPEC to cut supply is in fact helping the competition.

The conclusion is that oil rising above the US$55 level is going to be tough from now.

Here's the reality. US shale oil production has definitely rebounded, and this is one of the major reasons why oil prices are falling below the US$50 level.

This recovery in production has been boosted by falling production costs and efficiency gains within the US shale oil industry."

More news on Opec’s thorn in the flesh

Back in early 2016,  Bloomberg reported a news on their website latest information on US shale oil break-even cost.

"Texas has a message for $30 crude doomsayers. Bring it on."

" A handful of shale patches in the state, which would be the world's sixth-largest oil producer if it were a country, are profitable with crude below $30 a barrel, according to an analysis by Bloomberg Intelligence. In De-Witt Country, which produced more than 100,000 barrels a day in November from the Eagle Ford formation, the average well can be profitable with a U.S. benchmark crude at $22.52 a barrel, $4 below the lowest level this year."

Click below link for more detailed news :
Texas Isn't Scared of $30 Oil 


Source :
1) www.thestar.com.my 
2) www.bloomberg.com

WTI Crude Oil - Crashes Into $40's As Hedge Funds Sell Off

Oil prices fell fast on Friday afternoon as traders see the rising rig count as yet another sign that the markets are still grossly oversupplied.

Detailed news, Oil Crashes Into $40’s As Hedge Funds Sell Off 
 
Prior to the decline, there were two articles which caught my attention. 

The first one was reported on 11 April 2017 raising the concern on oil majors' dilemma - how quickly should they seek to replenish reserves ?

For detailed news, Oil majors' reserves are shrinking and investors don't mind

Followed by report on 18 April 2017, Citigroup Inc. joined Goldman Sachs Group Inc. in backing commodities, saying it's the season to have faith in raw materials and oil will probably rally to the mid-$60s by the end of the year.

For more news, Citi Sees Oil Surging $10 as OPEC Combats Roaring U.S. Shale

For those who followed this blog, a question was raised on 13 April 2017 in the post - Does the price action has momentum to go higher ?
 
Daily chart of West Texas Intermediate (WTI) Crude Oil.

Here is the latest S-Trader Trend Tracker resistance and support levels.
Resistance = USD 52.77
Support      = USD 49.38


Source :
1) Metastock 
2) www.oilprice.com
3) www.reuters.com
4) www.bloomberg.com