Nymex Crude Oil Intraday Strategy: Technically Sufficient

Crude Oil Intraday Strategy

The market was disappointed with OPEC’s decision to extend the crude oil output although OPEC has stated the output cut may be extended. The current crisis in Qatar did not aid the bearish pressure on crude oil, which has forced the price lower to current levels. What has provided some comfort to crude oil was a pipeline leak in Nigeria, which may have contained the selling pressure.

The heavy selling emerged on Wednesday after the data revealed domestic crude oil supplies spiked to +3.3 million barrels following a steady decline since May, 2017. The data took the market by surprise, which was reflected in fairly steep declines in crude oil prices across the board.

Technical Analysis

Below is the analysis we carried on crude oil based on the daily, 4hr and hourly chart.

Crude Oil Daily Chart

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Crude Oil Daily Chart 10/06/17

Although this is an intraday strategy we tend to examine the daily chart, especially in commodities to further understand the market trend. Based on the daily chart it appears the downtrend may have come to an end although it is still inconclusive. We can however note that the potential price range for crude oil may be between $45.20 – $48.35.

Although it may appear crude is positioning itself for a rally we must highlight there is no technical entry to long crude oil based on the daily chart at current levels at the time of this writing.

Crude Oil 4hr Chart

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Crude Oil 4hr Chart 10/06/17

The 4hr chart provides a similar outlook to the daily chart, however, we are noting the recent dip in oil may suggest the commodity may correct higher. No firm entry is present in crude oil at current levels. We have noted that the key intraday price level for crude oil is $46.90 (intraday resistance).

We would first require the price to test $46.90. Should the resistance hold at first test it may strengthen the scenario of a resumption of the downtrend, which may drive crude oil below $45.20. A firm break above (preferably a 4hr close) may pave the way for stronger gains towards $48.35.

Crude Oil 60min Chart

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Crude Oil 60min Chart 10/06/17

Before we dive into the hourly chart we must emphasize it is a fairly aggressive entry. We have noted a reversed Head-And-Shoulders (H&S) may have been affirmed on the hourly chart. The technical pattern may suggest crude oil is in fact due to re-test $46.90. In an event crude oil gaps below $46.64 at the opening of the commodity markets on Sunday it may invalidate the hourly entry.

Should crude break below $45.20 before rising towards $46.90 we will be update the  strategy in accordance to intraday time frames.

Crude Oil Fundamentals

The market will pay close attention to the compliance of countries to OPEC’s decision to extend the output cut into 2018. There may be another meeting (although not officially scheduled) in August to review the progress of OPEC’s latest decision. Others factors that may influence crude oil are the Fed monetary policy where an interest rate hike is expected and the US fiscal plan.

We cannot foresee oil pipes bursting across globe but such news as we have seen from Nigeria on Friday may support oil prices across the board.