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Bear Machine Oiled And Ready As Crude In A Free Fall -

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Feb, 11th 21:25


US Crude Oil price tumbled 2.30 percent on Thursday as Crude Oil inventories released on Wednesday revealed that Cushing inventories struck all time highs just shy of 65 million (64.697 million) barrels​​ during the week ended Feb. 5. The overwhelming supply glut fuelled the current selloff further. Crude Oil has plunged about 20 percent in February so far. While OPEC countries and fundamental non members are trying to reach a consonance on Oil price freezing, one of OPEC member Iran is offering cheaper crude to Asia than its rival OPEC member Saudi Arabia.​​ 

While the fall in crude oil has been such that the market has become used to reading the headline “Crude Oil Falls Further Owing To Concerns About A Supply Glut” day after day, it may be pertinent to report that crude oil has fallen close to 30% since January 2016, from decade low prices even at that point in time. While the market may think otherwise, it may be considered prudent to get cautious at this​​ stage, since there has to be a floor to the price of every commodity, let alone a lifeline of the global economy, such as crude oil.

While low energy prices may be a good thing, destabilizingly low prices such as the ones we are now close to or already witnessing, can cause the reverse of the “demand destruction” scenario that was witnessed at $150.00 per barrel prices.


Fig: USOil Daily Technical Chart

Crude Oil initiated the current leg of its selloff on 28th​​ January after being rejected by the 34.80 resistance level near the 50 day moving average. ​​ Crude Oil is currently approaching towards the 13 year low at 25.04 after breaching the strong interim support at 29.40 on 9th​​ January,2016. Yesterday it tested the broken 29.40 resistance level ​​ and peeled back strongly from there, to below the 27.00 level breaching the 20th​​ January low at 27.53. It formed five consecutive bearish bars in the last 5 trading days​​ and is approaching the sixth bar today. Still there is no sign of a strong retracement. Rather any​​ rebound is being welcomed by the bears to send it lower still. Stochastic on the daily chart, is also indicating the resumption of strong bearish momentum. If current bearish momentum sustains it might hit the significant 20.00 level soon.​​ 

Trade Suggestion

Buy Digital Put below 24.80 and Digital Call at 22.00


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