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Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

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There’s No Strong Fundamental Reason For Oil’s Decline

The oil markets continue to be gripped with the continuation of violent selling in the last week, displaying what I can only describe as a ‘traditional’ puking:

(Click to enlarge)

Notice, over the last 5 weeks how consistent the pattern has been: a long downwards session candlestick, achieved under normally heavy volume, followed by 2-4 sessions of slower, digestive, lesser volume sessions that might attempt at retracement higher, but ultimately fail with another violent down-move under heavy volume.

This type of action is classic – and yes, it is definitely trend reversing, at least in the medium term. But more than that, it indicates just how convincingly hedge funds and other speculative accounts have been exiting longs, and in fact, begun establishing momentum shorts in the futures markets. This ‘two small steps up, one giant leap down’ is precisely indicative of this lone speculative trading pattern affecting the oil markets at large.

During these moments, you can take the fundamentals – no matter what they might say to you – and toss them. Until you see a stability in hedge fund positions, that selling pressure from longs reversing to shorts will override everything.

This financial pressure on oil has been helped along in every case by widespread media bashing of the oil complex. For example, several articles have delivered bearish headlines of OPEC reducing their demand forecast for 2019,…

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Leave a comment
  • Clyde Boyd on November 04 2018 said:
    What absolute oil price manipulation propaganda.

    Having traders write articles about oil prices? Someone needs to go to jail for attempted price manipulation.
  • The masked avenger on November 05 2018 said:
    The rise of ev's and hybrids continues as does the decline in solar cost and other alternatives cost. Battery efficiency is getting better daily. If oil wants to remain relevant. The price must go down and stay down. Basic economics.

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