• 3 hours UK On Track To Approve Construction of “Mini” Nuclear Reactors
  • 7 hours LNG Glut To Continue Into 2020s, IEA Says
  • 9 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 12 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 14 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 15 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 4 days New Video Game Targets Oil Infrastructure
  • 4 days Shell Restarts Bonny Light Exports
  • 4 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 5 days Rosneft Signs $400M Deal With Kurdistan
  • 5 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 6 days Conflicting News Spurs Doubt On Aramco IPO
  • 6 days Exxon Starts Production At New Refinery In Texas
  • 6 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 7 days VW Fails To Secure Critical Commodity For EVs
  • 7 days Enbridge Pipeline Expansion Finally Approved
  • 7 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 7 days OPEC Oil Deal Compliance Falls To 86%
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

Crude Oil to Decline

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.




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News