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Brent Crude: Looks like downward pressure

Brent Crude: Looks like downward pressure

Do we think Brent Crude will go down:

brent crude oil prices
It looks like it could be heading south and if USA oil stocks continue to be strong it could add to it

This article covers the topic:
https://oilprice.com/Energy/Crude-Oil/Oil-Heads-Lower-On-Small-Inventory-Build.html

What do we think over the next 30 days?

answer
Answer for Brent Crude: Looks like downward pressure
Justin Freeman time-icon1 month ago

@frithster
It’s good to see oil price volatility continuing to offer lots of trading opportunities.  At the current levels of $53 I’m personally looking to put on very small ‘marker’ trades and looking for a few more signs before scaling up into a position.  I do think the most likely next move is another one to the downside it’s just a case of looking for the best time to get some size into the position.

With prices around the $53 mark we’re firmly within the price range channel of $45 – $55 that has been a strong feature of the oil market over several years.

Weekly chart 2014-today
Source: eToro https://www.etoro.com/markets/oil/chart/full

That prices have fallen away so dramatically in just a few months could suggest continued downward pressure but shorting from $53, as justified as it is, has limited scope for profits as the question is, just how low can oil go?  The $50 level is a big psychological support.  Whilst I wouldn’t be surprised if the price to get to $50 and indeed spend some time at lower levels I don’t see it breaking $45.   Potential percentage gains on short positions therefore are, somewhere between 5% and 15%.    Returns of that size would be welcome but there is a chance of a bounce here that could at the very least take out the stops on short positions.

Oil is looking like a good play for the next couple of months so I want to be in it, but just not at current levels.  Marker trade will be looking to Sell short, Stop Loss >$55 and Target Price $50.  I’d fancy my chances of getting that trade on at higher levels than the current $53 and that will allow me to set the SL further away from the $55 price level.  So for me it’s small trades now and looking to make an elegant entrance into the position.

No-one is going to discount the chance of a geopolitical shock event bringing about a spike in oil prices but looking at the usual suspects it’s hard to see where that might come from.

Major producers including OPEC appear unable to align their interests, is that really going to improve in the next few weeks? 
The Venezuelan political situation could deteriorate further but both parties appear to have the sense to direct their protesters to the streets rather than the refinery plants.  The country is a petro-economy so whoever comes out on top will want production levels to be as high as possible as quickly as possible.

The seasonal trends point to the down side, the driving season is the next possible blip and that is a long way off. It doesn’t look like the calendar is going to force any traders out of short positions.

Saving the best till last, it’s clear the consensus opinion is pointing towards a global economic slowdown.   This view has gained such momentum that positive news and market data announcements over the next month are likely to be seen as anomalies rather than reliable signposts. 
 

Answer for Brent Crude: Looks like downward pressure
Justin Freeman time-icon2 weeks ago

@frithster
It’s good to see continued high levels of price volatility in oil, there’s a lot of trading opportunities at the minute but I’m personally sitting on my hands as I can’t make the risk return numbers work.  I think the most likely next move is another one to the downside but it’s not enough for me to want to put capital into play.
With prices around the $53 mark we’re firmly within the price range $45 – $55 that has been a strong feature of the market over several years.
That prices have fallen away so dramatically in just a few months could suggest continued downward pressure but shorting from here, as justified as it is, has limited scope for profits as the question is, just how low can oil go?  The $50 level is a big psychological support.  Whilst I wouldn’t be surprised if the price to get to $50 and indeed spend some time at lower levels I don’t see it breaking $45.   Potential percentage gains on short positions therefore are, somewhere between 5% and 15%. 
 
If I do want to track things more closely I’ll first switch to my Demo account and get a marker trade on.  It’s certainly tempting; oil could be a good play in the next couple of months.  I’d be looking to Sell short, Stop Loss >$55 and Target Price $50.  I’d fancy my chances of getting that trade on at higher levels than the current $53 so would be patient and look to make an elegant entrance into the position.
No-one is going to discount the chance of a geopolitical shock event bringing about a spike in oil prices but looking at the usual suspects it’s hard to see where that might come from.
Major producers including OPEC appear unable to align their interests, is that really going to improve in the next few weeks? 
The Venezuelan political situation could deteriorate further but both parties appear to have the sense to direct their protestors to the streets rather than the refinery plants.  The country is a petro-economy so whoever comes out on top will want production levels to be as high as possible as quickly as possible.
The seasonal trends point to the down side, the driving season is the next possible blip and that is a long way off. It doesn’t look like the calendar is going to force any traders out of short positions.
Saving the best till last, it’s clear the consensus opinion is pointing towards a global economic slowdown.   This view has gained such momentum that positive news and market data announcements over the next month are likely to be seen as anomalies rather than reliable signposts.  

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