• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 51 mins China's Blueprint For Global Power
  • 7 hours Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 6 hours IMO 2020:
  • 53 mins Here's your favourite girl, Tom!
  • 7 hours Brexit agreement
  • 2 hours The Problem Is The Economy, Not The Climate
  • 3 hours Idiotic Environmental Predictions
  • 2 hours The Ultimate Heresy: Technology Can't Fix What's Broken
  • 6 hours Australian Hydroelectric Plant Cost Overruns
  • 1 day World Stocks Drop And Futures Tread Water After China Reports Worst GDP Growth In 30 Years
  • 1 day Deepwater GOM Project Claims Industry First
  • 9 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
Alt Text

This Supermajor Is Leading The Energy Sector

This supermajor has been standing…

Alt Text

What The Market Is Overlooking In The Occidental Deal

Occidental Petroleum has caught a…

Chris Grosvenor

Chris Grosvenor

Chris earned the Chartered Market Technician designation. He is earning the Chartered Financial Analyst designation and graduated with honors in Economics. Also, he has managed…

More Info

Premium Content

Crude Oil to Decline

Peaks and Troughs Progression
Light sweet crude oil formed a lower minor low and may form a lower minor high. The intermediate trend is towards lower prices. The crude oil market formed a minor low last week. This could be a good entry level for traders looking to get short crude oil.

Peaks and Troughs

Moving Averages
Crude oil is trading above the flattening 9 and 18-day simple moving averages: the short-term trend is towards higher prices, however, the signal isn't reliable. The commodity is trading below the flattening 50-day simple moving average: the intermediate trend is towards lower prices, however, the signal isn't reliable. Crude is trading in the middle of the Bollinger bands after bouncing off of the lower band.

Moving Averages

Momentum Indicators
The 12-day rate of change is declining, however, the rate of change indictor advanced over the last few days. Crude oil is below where it was 12 days ago and the difference is shrinking. The 14-day slow stochastic indictor is above equilibrium and increasing after reaching the oversold zone below 20. The 14-day RSI is near the equilibrium level after bouncing off of the 30 level.

Momentum Indicators

Investor Sentiment
The non-commercial traders were net long 268,199 contracts of light sweet crude oil on October 9, 2012. The number of longs declined 231 contracts and the number of shorts increased 9,628 contracts compared to the prior week's reading. Investors are becoming less bullish on crude oil, however, investors remain net long the commodity.

Supply and Demand
The International Energy Agency is forecasting higher supplies and declining oil consumption. The 2012 outlook for demand growth was cut 100,000 barrels a day to 700,000 barrels a day. 

Consumer Sentiment
On Friday, the latest consumer sentiment reading came in better than expected and above the prior reading: the reading of 83.1 is higher than the previous reading of 78.3 and the expectation of a 78.1 reading. Consumer sentiment has improved recently and may be nearing a peak. My expectation is for worse than forecasted economic data in the weeks to come which should act as a short-term catalyst to drive light sweet crude oil prices lower.

Crude Oil Inventories
Crude oil inventories increased by 1.7 million barrels from the previous week, according to the EIA report released last week. Crude oil inventories are above the upper limit of the average range for this time of year. The elevated level of inventories should weigh on the price of crude oil in the coming weeks.

Conclusion: Neutral
The fundamentals of the crude oil market are reflecting tepid economic growth as inventories are above the upper limit of the average range for this time of year. Further, the IEA cut the demand forecast. The market action in crude oil is reflecting the weak fundamentals. Also, fundamentals may get weaker in the weeks to come. That said, traders should be short the market and investors out of the market.   

By. Chris Grosvenor

Members of www.proproptrading.com will get research notes e-mailed to them with the purchase of an annual membership. Research notes will combine the technical and valuation perspectives, initially.

Disclaimer: This article is not meant to establish or continue an investment advisory relationship. Before investing, readers should consult their financial advisor. Christopher Grosvenor does not know your financial situation and ability to bear risk and thus, his opinions may not be suitable for all investors.




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play