Crude Oil shorts are feeling the squeeze, as both Brent and WTI Crude Oil contracts bounced off their bullish trends around $47.00 and $43.60, respectively. This ahead of the US stockpiles reports this week and after a 4.5-day sell-off.
Though it is too early to say if the bounce will turn into a rally, similar rebounds recently have quickly faded.
The sentiment continues to be Bearish the Crude Oil market, with the International Energy Agency (IEA) suggesting in its closely-watched annual outlook that the price of Crude Oil will only recover to 80 a barrel no sooner than Y 2020.
The IEA expects non-OPEC supply to fall sharply next year as Oil companies continue to cancel or postpone exploration and development projects.
Traders are probably booking some profit ahead of the US Crude Oil stockpiles data from the American Petroleum Institute (API) later on Wednesday. The official Energy Information Administration (EIA) supply data won’t be released until Thursday because of the Veterans Day Wednesday.
From a technical outlook this bounce in Crude Oil prices makes sense.
Crude Oil reached short-term oversold levels after a 4.5-day fall, and both contracts had reached their respective Key support marks.
Brent Crude Oil has been finding good support around the 47 handle in recent months it is no different so far. There is also a short-term Bullish trend line that goes through 47 providing additional support.
WTI Crude Oil the corresponding trend and support came in around 43.60, which is roughly where it bounced from.
While both Crude Oil contracts could bounce strongly off these support marks, the long-term downward trends remain in place.
Prudent traders should treat this latest bounce with caution.
The technical outlook for Crude Oil is grim as I see it, as it is unlikely will see high price levels soon even on a break of the Bearish trend.
Note: if Key supports break, then the selling will likely continue pushing prices further South.
Crude Oil has fallen this year and US gasoline demand softened. WTI Crude Oil could fall to as low as 10 bbl as the Organization of Petroleum Exporting Countries (OPEC) engages in a “Price War” with rival producers, testing who will cut output 1st.
Iran is soon to release 53-M bbl to the market and will be producing up to 1.5-M BPD in 6 months or so.
Long term technical and fundamental outlook for both Brent and WTI Crude Oil is due South.
OPEC says it will cut production but is not doing that, and are going to see who can stand lower prices longest, since October of 2014 HeffX-LTN sees that Crude Oil is likely is headed for 20 – 22 bbl in the mid term.