Crude Oil: Like Watching Paint Dry... Until It Broke

[MichelGJulien 10]

Besides the usual 1h30-2h00pm ramp by the algos designed to lure everybody into thinking something's finally happening, trading the crude oil market today was like watching paint dry. At around 11h30am I tweeted: "Here's the wti market recent electro-cardiogram... declared dead"!

 

 

Without any significant news from the Middle-East, a 3-day weekend coming and the end of the month tomorrow, a lot of traders' books are going to be flattened, therefore there cannot be any real conviction in the market. Talking about the situation in the Middle-East and Syria, it looks more and more likely that the Obama administration will have to down tone its official assurance that the Assad regime indeed used chemical weapons a couple of weeks ago, therefore crossing the proverbial US red line. Will it change the outcome of what's to come? Don't know, but it could temper the US retaliation actions and consequently influence the actual "war premium" reflected in the price of crude oil. Interesting times we are living in.

 

We are probably going to range trade between 106 and 110 for a little while

 

The market opened this morning at 109.56, below and slightly outside of yesterday's range and value area. Open gaps were located above at 110.07 and below at 109. As of this writing, only the one at 110.07 had been filled. The initial balance came in at 68 ticks this morning, or 12% below its 10-day average. With an average like this, volatility can usually rise suddenly to break the prevailing tight trading range. Without surprise, it took the usual suspects (algos) high frequency strategy to break the rut and filled the open gap. Once the operation was completed, price came back down (at edition time, I should add it came crashing down in the last 5 minutes). Free markets you said? For tomorrow, it's a tough call as virtually anything can happen overnight. One thing is relatively clear for me right now, the uptrend is not as strong as it looks. Be careful. By the way, I didn't take any trade today.

 

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[Ammeo 10]

The Brent crude oil find it difficult to stay above 117 US $ per barrel. It is mostly due to decreased expectations for Syria attack in the coming days, but the pressure still stays present and possible new bullish wave on Crude Oil is very possible. The development could start as early as Monday morning..

[MichelGJulien 10]

The Brent crude oil find it difficult to stay above 117 US $ per barrel. It is mostly due to decreased expectations for Syria attack in the coming days, but the pressure still stays present and possible new bullish wave on Crude Oil is very possible. The development could start as early as Monday morning..

 

Personally, I think we will revisit 105 on WTI (110-111 on Brent) before the end of next week, especially if the US doesn't strike syria next week. Even if they do bomb them, impact will be limited cause already priced in IMO.

Michel

[Ammeo 10]

OPEC's influence on oil prices will diminish as domestic United State shale oil production ramps up, and member of the cartel are divided on the course of action: much is at stake for OPEC..