Crude Oil range bound or flagging?

December 21, 2017 3:10PM CST

While this may sound redundant, crude oil continues to see the same range of trading as the past month, remaining for the most part in the $57/barrel range aside from brief dislocations with a $56/barrel and $58/barrel handle. 

It is interesting to note that since the passage of the tax bill and this week’s EIA report showing yet another draw in inventories, the market has been bid among the resumption of the forties pipeline and talks of Russia and Saudi Arabia possibly abandoning the OPEC production cut quotas in the future.

For traders looking to buy the rip and sell the dip, crude has likely been friendly with this range bound action and mean reversion and short term dislocations.  As we have previously noted, OPEC wishes to maximize price without bringing in too much competition from shale producers.  Some reports this week have noted the increase of shale production, which, when factored in with the prospect of increased global growth amid tax cuts and inventory draws, could favor the bull case, in addition to increasing uncertainty in Venezuela.  The bear case may note a reversion to the mean and increased range bound trading.

Those trading calendar spreads in the futures contracts have also likely noted the basis narrowing over the past month between the front month and further out summer months.

To discuss trade possibilities within this range or to position for a break out, please contact me at your convenience.

Crude Oil 240min Chart

crude_oil_daily_chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.