Short term
/
Sell
Trade view / 05 July 2017 at 14:06 GMT

Russia ruins oil rally

Managing Partner / Spotlight Group
United Kingdom
Instrument: CLQ7
Price target: 45.70
Market price: 46.62
Background

Maybe my title is a little misleading as I do not think oil has ever really rallied, after all it has been on the backfoot since June 2014 and found itself trapped in a corrective wave since February this year.

WTI
 
Source: www.investing.com, Spotlight Ideas

The chart above shows the corrective channel that has the classical hallmark of downward rotation as traders have worked the range, yet never pushed the spot price too far. 

They have recognised that every measure Opec has taken to curb production has simply encouraged ever more shale rigs to come onstream in the US.

The technical outlook does not register a single buy signal... but why is the outlook so gloomy?

Blame the Russians

Oil has traded lower during Wednesday, however, it is off intraday lows amid reports that Russia opposes deeper output cuts. Russia wants to continue with the current deal and any further supply curbs would send the wrong message to the market, according to government officials.

Opec and non-Opec producers, including Russia, have agreed to rein in output by 1.8 million barrels/day and recently extended the restriction through to March. The curbs did not apply to Libya or Nigeria and have failed, so far, to make a significant inroad into global inventories amid higher output by the US.

Indeed, Opec exports are rumoured to have risen in June despite the agreement to curb output. One has to question how steadily the output restriction is being adhered to?

Investors now look ahead to weekly data from the US on stockpiles of crude and refined products.
The American Petroleum Institute is due to release US crude stocks figures for the latest week. These will be followed Thursday by official Energy Information Administration figures. 

The EIA is forecast to report a fall in US crude inventories of about 2.8 million barrels. This figure, if revealing a deeper decline could lift prices, however, it really would mark just another opportunity to open new shorts at slightly higher levels.

I am looking to sell WTI on a short-term basis.

WTI six-year chart:
WTI
Source: Spotlight Ideas

Parameters (CLQ7)

Entry: sold 46.62 at 1317 GMT.

Targets: 46.38... 46.12... 45.86... 45.70.

Stop: 47.00.

Time horizon: short-term.

— Edited by Michael McKenna

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here
2y
SierraPt. SierraPt.
Unfortunately your trade idea realized faster than posted here.
2y
Stephen Pope Stephen Pope
I am so sorry that the idea posting missed the market swoop lower.

I know the editorial team work as quickly as possible to post all ideas in a timely manner.

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