Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Stock Market Increasing Technical Weakness - 22nd July 19
What Could The Next Gold Rally Look Like? - 22nd July 19
Stock Markets Setting Up For A Volatility Explosion – Are You Ready? - 22nd July 19
Anatomy of an Impulse Move in Gold and Silver Precious Metals - 22nd July 19
What you Really need to Know about the Stock Market - 22nd July 19
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Crude Oil Price Declines Slightly

Commodities / Crude Oil Feb 22, 2014 - 03:07 PM GMT

By: Nadia_Simmons

Commodities

Trading position (short-term): In our opinion no positions are justified from the risk/reward perspective.

On Thursday, crude oil moved lower as the U.S. dollar strengthened after solid U.S. economic data and stocks of distillates fell less-than-expected. Despite this small drop, light crude still remains near a 4-month high, slightly below $103 per barrel.


Yesterday, market research group Markit said that its preliminary U.S. PMI increased to 56.7 in February from a final reading of 53.7 in January (while analysts had expected a drop to 53.0 this month). Additionally, the Labor Department said in its report that initial claims for jobless benefits fell by 3,000 to 336,000 (slightly below expectations for a decline of 4,000), while U.S. consumer prices rose 1.6% on a year-over-year basis in January and core consumer prices (without food and energy costs) were also up 1.6% on a year-over-year basis (both in line with expectations). These solid U.S. economic data pushed the U.S. currency higher, making light crude more expensive for holders of other currencies and sending the price of the commodity lower.

Later in the day, the Federal Reserve Bank of Philadelphia said that its manufacturing index declined to -6.3 in February from January’s reading of 9.4 (while analysts had expected a drop to 8.0 in February). This weaker-than-expected number fueled concerns that U.S. recovery still faces headwinds and may demand less fuel and energy, which was an additional bearish factor for light crude.

Also yesterday, the U.S. Energy Information Administration showed in its weekly report that U.S. crude oil inventories rose by 973,000 barrels last week, less than market expectations for a gain of 2.01 million barrels. Although this was bullish news, inventories of distillates (which include diesel fuel and heating oil) disappointed market participants. The report showed that stocks of distillates fell by 339,000 million barrels, far less than market expectations for a loss of 1.89 million.

Having discussed the above, let’s move on to the technical changes in crude oil (charts courtesy of http://stockcharts.com).

As you see on the daily chart, the situation hasn’t changed much as crude oil remains between Tuesday high and low. If the 127.2% Fibonacci extension level based on the Dec.-Jan. decline (around $103.34) encourages oil bears to act, we may see a pullback in the coming day (or days). In this case the first downside target for the sellers would be a support zone created by the December peak, the previous February high and the upper line of the rising trend channel. Although this scenario is reinforced by the current position of the indicators (they are all overbought), none of them generated a buy signal, which means that another attempt to reach the 61.8% Fibonacci retracement level can’t be ruled out.

Having discussed the current situation in light crude, let’s take a look at WTI Crude Oil (the CFD).

Looking at the above chart, we see that the situation hasn’t changed much as WTI Crude Oil remains in a consolidation slightly below the monthly high, which corresponds to the 127.2% Fibonacci extension level (based on the Dec.-Jan. decline). Taking these circumstances into account, what we wrote in our last Oil Trading Alert is still up-to-date.

(…) If this strong resistance encourages sellers to act, we will likely see a pullback in the coming day (or days) and the first important support will be the previously-broken upper border of the rising trend channel/rising wedge. This scenario is currently reinforced by the position of the indicators - the CCI and Stochastic Oscillator are not only overbought, but there are also negative divergences between them and the CFD (…) Nevertheless, from this perspective, the situation is still bullish (a current decline is much smaller than the previous one) and if the CFD reverses, the next target for the buyers will be the 61.8% Fibonacci retracement, which corresponds to the October high.

Please note that the RSI climbed above the level of 70 once again, while the Stochastic Oscillator generated a sell signal, which provides us with bearish implications.

Summing up, the current situation in crude oil hasn’t changed much as light crude remains below the 127.2% Fibonacci extension level, which is a strong resistance level. As mentioned earlier, all indicators are overbought (also in the case of the CFD), which
suggests that a pause or a pullback is just around the corner. Please note that even if crude oil climbs once again, it seems that the space for further growth will be likely limited by the 61.8% Fibonacci retracement level.

Very short-term outlook: mixed
Short-term outlook: bullish
MT outlook: bullish
LT outlook: mixed

Trading position (short-term): In our opinion, opening long positions at the moment is not a good idea as the space for further growth seems limited and the position of the indictors suggests that we may see a correction in the coming days.

Thank you.

Nadia Simmons

Sunshine Profits‘ Contributing Author

Oil Investment Updates
Oil Trading Alerts

* * * * *

 

Disclaimer

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons’ reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules