Energy / Oil Prices

• Crude Oil Analysis for the Week of October 24, 2011

  December Crude Oil futures closed higher for the third consecutive week. This statement is a little deceiving since this market was down three out five days. Thursday’s close put the market in an extremely weak position, however, a change in investor sentiment on Friday fueled a sharp recovery, leading to the slightly better weekly close. Technically the main trend is still down on the weekly chart. A breakout above the swing top at $90.96 will turn the main trend to up. Before this occurs, crude oil has to clear the downtrending Gann angle from the $115.45 top at $90.45. The…

• This is no Normal Recession: Are we Prepared for $100 Oil

  David Cameron describes the economic downturn as "no normal recession" UK Prime Minister David Cameron to party conference, 5th October 2011. This is the fourth post in the series following the oil price, markets and general health of the global economy examining the simple theory that OECD recession may result from annual average oil price exceeding $100 / bbl. The annual average price (AAP) of Brent went through $100 on around 16th August 2011 and the AAP stood at $105.3 on 12th October. The AAP high point in the 2008 price spike was $104.8 on 9th October that year. Below…

• Crude Oil Analysis for the Week of October 17, 2011

  Last week December Crude Oil surged to the upside after confirming the previous week’s closing price reversal bottom at $75.15. Although the move was impressive, the main trend remains down until the last swing top at $90.96 is violated. Minor Gann angle resistance at $87.96 may slow down the rally, but once this angle and the main top are cleared, traders should look for a rally into the major downtrending Gann angle from the $115.45 top at $91.75. Based on the main range of $115.45 to $75.15, the first upside objective is the retracement zone of this range at $95.30…

• Crude Oil Analysis for the Week of October 10, 2011

  December Crude Oil closed higher for the week after reversing earlier weakness. The market stopped breaking at 75.15, slightly above the May 2010 bottom at 75.01. Although the price was relatively low at that level, traders didn’t seem too interested in the market at this price until a bullish supply and demand report surprised traders. The ensuing rally following the bottom reached a downtrending Gann angle that had provided resistance for the past four weeks. This week the angle drops down to 80.96. Since the market closed at 83.04, December Crude Oil is effectively on the bullish side of this…

• Crude Oil Analysis for the Week of October 3, 2011

  November crude oil futures finished the week slightly lower on fears that slowing global economic growth will curtail demand. Not only was the week lower, but the quarterly loss was one of the largest in at least two years. The strong rally in the U.S. Dollar fueled the break as Europe’s debt crisis continued to worsen. The possibility of a default by Greece was also a major weight on crude oil prices. The rise in the Greenback encouraged investors to flee commodities priced in dollars. Despite building negative sentiment, crude oil has held up quite well compared to other asset…

• Crude Oil Analysis for the Week of September 26, 2011

  November Crude Oil finished sharply lower this week in a move driven by the U.S. Federal Reserve’s assessment of the economy. On Wednesday, September 21, the Fed stated in its monetary policy committee statement that the U.S. economy faces “significant risks”. This spooked traders enough to trigger a flight to liquidity into the U.S. Dollar while driving down equities and commodities. Crude oil which is priced in dollars faced heavy selling pressure as traders drove down prices to levels not seen since early August. With traders adjusting to the possibility of a slow down in the economy, the supply and…

• Changing Behavior of Crude Oil Futures Prices

  I've just finished a new research paper with my former student (and now University of Chicago Professor) Cynthia Wu. In our new paper, we study how increased purchases of crude oil futures contracts by financial investors may have affected the prices on those contracts. A crude oil futures contract is an agreement between two parties to purchase oil at a future date at a price agreed upon today. For example, on Friday the November contract closed at a price of $88.18, meaning that if both parties were to hold on to the contract until expiry (which for this contract happens…

• Crude Oil Prices Drop Ahead of federal Reserve Meeting

  Crude oil futures edged lower on Wednesday, as traders positioned themselves ahead of the outcome of the Federal Reserve’s monetary policy meeting later in the day and a government report on U.S. crude supplies. On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at USD86.36 a barrel during European morning trade, retreating 0.64%.    It earlier fell as much as 0.75% to trade at a daily low of USD86.28 a barrel. The Fed’s Open Market Committee was to conclude its two-day policy meeting later in the day, amid speculation that the central bank could introduce…

• Crude Oil Analysis for the Week of September 19, 2011

  What promised to look like a bullish week on Tuesday, failed as the rally in November Crude Oil fizzled with a series of narrow trading days. The trading action became so weak that the market couldn’t even exceed the previous week’s high at 90.69 and instead produced an indecisive inside week. To be fair, although an inside week indicates indecisiveness, it is often indicative of impending volatility, setting up the market for a breakout in either direction. With the main trend down on the weekly chart, there is still a slight bias to the downside. Most of this week’s action…

• Crude Oil Analysis for the Week of September 12, 2011

  November Crude Oil finished the week slightly better after ping-ponging between a pair of Gann angles at $87.39 and $86.61. Volatility was also high, helping to form an outside move for the week. The main trend remains down on the weekly chart and will turn up on a trade through the swing top at $101.39 or reaffirm on a trade through the last swing bottom at $76.61. The narrowing of the range between the two previously mentioned Gann angles indicates the market is setting up for a breakout. A move through $87.39 is likely to run into immediate resistance at…