Energy

Crude Oil: Bearish or Bullish

Posted 05/10/2019 7:39AM CTPhillip Streible

Oil futures are undergoing a capitulation point where arguments for the bull side and the bear side are starting to go head to head. Prices have remained firm since the start of the year rising 36% however over the past two weeks we have seen a pullback down to the 200 DMA which is acting as critical support. Any selloff below this level could trigger a larger washout down to the 100 DMA at $57.23 while a move back above $63 would reignite the next round of buying.

Here are the arguments for both sides

Bullish factors

  • Iran’s output is set to decline
  • Instability in Venezuela
  • Chinese oil imports are at record highs
  • Strategic petroleum reserve is in a drawdown
  • Net imports to the U.S. are rising
  • Instability in Libya

Bearish factors

  • OPEC has spare capacity
  • U.S. production has pushed to record highs
  • EIA inventories are back above the 5-year average

Crude Oil Jun ’19 Daily Chart

Crude Oil Jun '19 Daily Chart

Phillip Streible

Early in his career Phillip began trading his own account as a screen trader focusing on the metals, grains and stock indices. He then became a Series 7 licensed financial consultant with A.G. Edwards. Later, he expanded his trading experience into a Series 3 licensed commodity broker with Investment Analysis Group. Most recently he was a senior market strategist at MF Global before joining RJO Futures in October 2011 as a senior commodities broker. As a senior commodities broker his goal is to show clients how to anticipate, recognize and react to bull and bear market conditions through the use of technical analysis techniques that help them to define risk.