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Crude Oil Wrap Up


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The rally in November Crude Oil stalled on Tuesday, October 11, 2016, as confusion over Russias position on production took hold. Yesterday, Vladimir Putin said Russia would support an OPEC freeze in production to stabilize the crude oil market, but today Igor Sechin, chairman of Rosneft ( Russias state oil company), said Rosneft would not freeze or cut production of crude oil. He doesnt believe OPEC nations would actually follow through with any freeze or cuts of their own so Why should we do it? Sechin was interviewed at the energy congress in Istanbul, where oil producing countries are meeting to discuss production limits. He said this in light of data from the IEA that showed OPEC produced record amounts of crude oil in September. They increased production by 160,000 b/d to 33.64 million b/d. Remember OPEC said they will reduce output to between 32.5 and 33 million b/d at their regular meeting at the end of November. If they are having a difficult time reducing production now in preparation for November, do you think they can go cold turkey and cut production all at once? There is only one producer who may be able to go cold turkey and slow production in a meaningful way. Thats right Saudi Arabia. Low prices have hurt them more than they will admit and local demand needs are slowing, so they will reduce production naturally. But, will they want to lose market share to Iran, to Russia, to anybody. Well see Resistance is still at the June high (51.67) followed by trendline resistance at 52.03. A breakout above the trendline could send Crude Oil prices toward the $55 mark. Support is at 50.54, 50.06, 49.36 and then 48.76. The API report comes out Wednesday afternoon at 3:30 CT (delayed a day because of the Columbus Day holiday) and we get our first look at last weeks inventory levels and the effect hurricane Matthew had on supplies.

High 51.54

Low 50.39

Last 50.86

Daily Pivots for 10/12/16:

R2

52.08

R1

51.47

PIVOT

50.93

S1

50.32

S2

49.78


If you are interested in a Managed Futures program for Crude Oil, check out this offering from Walsh Trading:

Walsh Asset Management Introduces Bluenose Capital

For those interested I hold a weekly livestock webinar on Friday, October 14 at 2:30pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.

Sign Up Now

Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163

888.391.7894

Fax: 312.256.0109

bdicostanzo@walshtrading.com

www.walshtrading.com

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.



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About the author


Ben DiCostanzo
Senior Market Strategist
Walsh Trading

I began my career in the Securities industry working as a runner on the floor of the New York Stock Exchange while I attended Pace University. I then started working for Salomon Brothers in their Government Bond Trading arena. After graduating from Pace University with a degree in Accounting, I transferred to Chicago and became a member of the Chicago Mercantile Exchange utilizing my experience to execute trades and manage risk for institutional clients as a broker for Salomon Brothers on the trading floor. I then embarked to trade for my own account in the stock indices pits as a local before moving off the floor to aid and assist individual clients in their trading endeavors. I now work at Walsh Trading holding a series 3 broker’s license whose duties include being the firm’s Chief Market technician.

I understand that every client's needs are different, and I pride myself in tailoring my service to each client's unique circumstances and needs. Individual client experience, risk tolerance, and capital all play a role in how I approach the markets. I am involved in all markets using technical analysis to find opportunities. My approach is driven by the principles of capital preservation.

My trading philosophy is that if you can recognize and manage the risk, you have a better chance to be successful in trading. I advise clients to always use stops as money management in my opinion is the most important ingredient in trading commodities.

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