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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Are We Looking At A Trend Reversal For Crude?

Barrels

The fundamentals have been light this week, but prices have been active. This is because of the increased volatility in other financial markets, specifically the stock market and the U.S. Dollar.

Fundamentally, U.S. inventories continue to fall, but output continues to rise. As far as OPEC is concerned, there are signs that its plan to limit production and trim the global supply appears to be working. However, buyers are skeptical about its long-term success.

Besides the traditional fundamentals, it is suggested that you start to watch other markets because they may have an impact on the price action. Especially important is the U.S. Dollar and the stock market. Wild swings in the dollar could have an effect on demand for crude oil since the market is a dollar-denominated asset.

A major sell-off in the stock market could also have an effect on crude prices if it leads to margin calls. Hedge funds may be forced to choose between exiting stock positions and raising cash to meet their market calls. This may force them to sell their positions in crude oil to raise the money. Crude oil investors need to be aware of this.

Crude Oil

Weekly October West Texas Intermediate Crude Oil Technical Analysis

(Click to enlarge)

The main trend is down according to the weekly swing chart. The series of lower-tops and lower-bottoms confirm this conclusion. The trend is doing to remain down until buyers are able to generate enough upside momentum…




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