Energy

Crude Oil – Bottoming Action Ahead

Posted 11/15/2018 8:59AM CTPhillip Streible

The U.S. has record high production levels while Russia and Saudi Arabia have also increased their output. This has helped offset and near-term supply threat, while the U.S. has given waivers to 8 nations who rely on Iranian crude oil. Looking technically, we have been down 12 straight days with key support at $55.

We should see producers cut back on production which theoretically would lead to support and a turnaround in the market. I think $75 is too high and $55 is too low so $60-65 seems like a favorable target. There was a proposal by Saudi Arabia over the weekend to cut production by 1 M/B/D which could come to fruition. Looking at the top three producers right now, Russia is producing 11.4 m/b/d, U.S. is producing 11.6 m/b/d and Saudi Arabia is at 11.2 m/b/d. The Rig Count is 886 at the highest level since March 2015.

Crude Oil Dec ’18 Daily Chart

Crude Oil Dec '18 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.