Signal Update: Light Crude Oil (CL) Big Move, Following Unexpected Remark from President Trump Regarding Solving The Oil Supply War Between Saudi Arabia & Russia
Crude oil (CL) made a big move Thursday, following an unexpected remark from Pres. Trump saying that he expects Saudi Arabia and Russia to solve soon the oil price/supply war between them. “I have confidence in both that they’ll be able to work it out,” Trump said at the White House press briefing yesterday afternoon. In addition, he set a meeting with oil industry executives schedule for today.
While this is exactly the type of news that oil market needed in order to recover and be positive about a future OPEC meeting that will reduce supply and increase oil prices, there are still many open issues that investors need to consider. First, the cut in production, even if it will happen might not be enough to offset the decline in demand due to potential economic recession caused by the corona virus. Second, the long-term demand growth continues to decline as new technologies comes to market. Last, there are no guaranties for successful negotiation between Russia and Saudi Arabia.
Looking at the chart, we have seen Crude Oil declining to the $20 long term support level and breaking down to $19.20 lows before President Trump came to the rescue of American Oil companies. The long-term chart remains in a declining trend, but further optimism regarding talk agreements can easily push oil prices back to the $30-35 price level (post March 9 price gap down). Traders looking to speculate on further up move in oil prices should be extra carful and use a lower time frame charts to make decisions on the long side of the trade as the long term is still in a declining mode. On the Short side of the trade, traders can wait to short price resistance as it forms under the declining 50 day moving average and/or on a decline below prior support level $20.
March, 30 Signal Update:
Light Crude Oil (CL) Future Price at 20.15 after hitting $19.92 lows today. Crude Oil completed its first move to our 20-20.50 profit price quickly, as the oil market continue to struggle with over supply due to the Corona Virus crises as Predicted in Our March 24th Signal. In addition, we still don’t see much buying interest it it is possible that we will continue strait to our next profit target at$17.0 without any real bounce. Check our chart below to see trade update on chart.
Crude Oil Chart - Click for large clear view
March 25 Signal:
Crude Oil price went back and forth on Monday. The $20 price level underneath should be a support and it is a nice large round number which makes it psychologically significant. Second, the price war between Saudi Arabia and Russia continues to cause major issues and lastly, the global economy is falling off a cliff and therefor the demand for oil is going to continue to be negative. While there are technical reasons to think we may get a price bounce from current level, it seems to be unlikely when considering current reality. While most traders are bracing for the dumping of about 4 million barrels of crude oil on the market starting April 1 by Saudi Arabia and Russia, other are holding out hope that a weaker U.S. Dollar and a truce to end the price war between the Saudis and Russians will stabilize prices and lead to a massive short-covering rally. It’s hard to conceive of any reason for a rally unless Saudi Arabia and Russia agree to a truce that temporarily stops the price war and the release of millions of barrels of crude oil on the market. I would be especially interested in seeing the reaction to the $25 level, and the $27.50 as more supply and sellers are at that price level. A sustained move under $24.50 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the main bottom price level at $20-20.52, followed by the November 2001 lows at $19.44.and further lower price support levels at $17 & $15.00 level.