Saturday, November 14, 2015

WTIC West Texas Intermediate Crude Oil Weekly Chart

Oil has fallen out of bed as global deflationary forces continue to extract pounds of flesh. Commodities are in collapse. The Baltic Dry Index is in the cellar. Global economic activity is weak. At the same time, concerning oil, OPEC producers will not back off of production rates, and the Baker Hughes oil rig count is up 2 rigs in North America, so the world is awash in oil. There is no place remaining to store the stuff. Save all your milk and soda containers so oil can be stored in them as well. Higher supplies and lower demand drive prices lower.

The Paris terrorist attacks and other Middle East and northern Africa unrest provides a counterbalance and support for oil prices. The green lines show the positive divergence that bounced price higher in August. The possie d was universal among the indicators so there was really no reason for price to come back down in this weekly time frame but it did. The monthly chart is basing and agreeable to a base into the new year and lots of sideways ahead.

As price sneaks lower the thin green lines show positive divergence remaining. Typically, price will pierce lower since it came all the way down to the August support but the chart is more enthusiastic for a recovery rather than further deterioration. The lower pink standard deviation band is at 38.8. Keystone's 80/20 rule is 2's typically lead to 8's so the rupture of 42 opens the door to 38. The expectation is for WTIC to bottom in the current 37-41 area likely to bump around in here into the new year and then move sideways through 2016. Once the lower band is violated a move back to the middle band at 46 and dropping is on the table.

The chart hints that if you are short oil take the money and run. There is no long play as yet it is best to wait to see if that lower band violation occurs at 37-39; in this range a long play may be in order to take advantage of the possie d that should remain in effect (thin green lines). Brent oil is the same chart set up and should hold support in the current 42-45 area and recover higher. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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