Oil Prices Set To Rebound

November 23, 2022

Contents ▾

The Technical Picture Is Weak (for the bears)
The Risks

Unanalyzed Sell Murder Overextended And Ready To Lose it-Back

The global vim markets have been under a good deal of pressure lately As mounting oversupply worry and deceleration GDP growing combine to skitter the 2022 rally. WTI and Brent are both down more than 30% from their 2022 highs and May continue lower in the dear-term as traders wait to see just how far oil prices can fall.

The spark that set off the decline was a massive rise in U.S. production. The US has been steadily raising production over the past 2 years and hit an all-prison term luxuriously over 11 million barrels per day within the last cardinal months. A slight down pat-tick in production during October is blamed on a round of destructive hurricanes and non expected to pose a long-term problem, a trouble that has OPEC talk up another product cut. The last time OPEC cut production the price of WTI and Brent advanced nearly 100% ahead top-hole out.

According to EIA projections for production and consumption some are expected to steadily rise over the next few years. The agencies estimated cost for WTI in 2022 is $64.85 which represents a minimum 20% increase over the course of the next xii months. Along with Organization of Petroleum-Exporting Countries cutting yield (expectedly), on that point are some demand issues that wish help drive prices higher as healed, the first existence onrush of winter weather conditions.

Based on the Farmers Almanac and other weather predictions the 2022 winter season is going to be a unenthusiastic one. The EIA is expecting 2022 winter heating bills to be slightly higher than they were for winter 2022 which suggests prices will rise in the near future. Another agent traders deman to consider is accelerating economic growing in emerging markets in Africa, Asia, and South America.

The Technical Picture Is Sick (for the bears)

The technical picture does not support the sell-bump off in oil. The Leontyne Price of both WTI and Brant have reached strong support targets ($50-$52 for WTI and $60-$62 for Brent) and the indicators are consistent with that support. Both MACD and stochastic are diverging from the new lows and receive been the duration of the Oct/Nov sell-off and stochastic is indicating reversal.

The stochastic has non only diverged from the lows, it is trace out a Head and Shoulders reversal pattern (yes, indicators can act up that too) that has the indicator erect to fire a strong bullish crossover. The caveat for traders is that near-full term bearish press May keep on, waiting for a massive confirmation of subscribe and reversal signal in the candles is all important. Erst support is unchangeable, a call up back to $60 or straight-grained $66 is expected.

The Risks

The risk is geopolitical. United States of America Chairperson Donald Trumpet has been supportive of the Saudi Governing during the Jamal Khashoggi Murder scandal and that may result in concessions from the Asian nation's. One such conceding would be support for lower oil prices. President Trumpet wants bring dow oil prices, has asked (Tweeted, bullied and badgered) the Saudi's and OPEC to maintain prevalent production levels operating theater level increase them, and if they do oil prices will make a harder time rebounding.