RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

As of mid-day Tuesday, the crude oil market has been down as much as over $4 per barrel and currently sits at $52.77.  Looking at the chart below of the continuous contract, one may see that it takes going back to over a year ago to see trading at these price levels and the fall from the multiyear high of $77.08 on October 3rd.  Also noteworthy, and possibly a painful lesson for many, is that today’s break lower comes after 4 positive days, although the 4 positive days were inside days, meaning that they traded within the range of the last day with a large leg downward in price action one week ago today.

Many, myself-included, have noted the factors coinciding with this price action, such as record production, builds in inventory, waivers on Iran sanctions, interest differentials which favor a stronger dollar, trade tiffs and their outlook on growth, the growth outlook in general, etc.

While these factors are priced in to this point and the averages pictured below (100 DMA and 200 DMA) have been sloping negative, we also see some indicators at oversold levels. Traders may also be monitoring developments at the upcoming OPEC+ meetings in December for production cuts, which are typically disputed among members, although the recent price action may spur Russia and others to cuts.  Market participants in oil and a number of other markets will also be closely watching any developments at the upcoming G20 and reported meeting between Chinese Premier Xi and U.S. President Trump.

Barring any developments on these fronts and others, the market will also be taking the former range of years past into consideration.

Crude Light Daily Chart

Crude Light Daily Chart

Michael O'Donnell

Mike started his career in the markets on the floor of the Chicago Board of Trade as a trade checker for a local market maker in the Dow Futures pit. This led to interning with an independent introducing broker and going on to work with a number of market participants including: speculating clients, hedge clients, introducing brokers, futures commission merchants, commodity trading advisors, proprietary traders, trading educators, system creators, and a number of international financial market participants.