For this week the prices seem to be going down. There seems to be a month-long downtrend in contrast to the 6-month long uptrend. It is pretty confusing to me where this is going to go. Not forgetting that I am trying to forecast within 1-2 months into the future.

Forecasting Checklist

• Oil industry news
  • Political Plays?
    • More sanctions, see below.
    • On the supply side, I think countries are still going to taper their needs to the level of demand. There is unlikely going to be an oversupply situation. Countries seem to have the motivation to keep the prices up, or at least stable where they are at now. ^
  • Level of uncertainty?
    • Pretty high now with sanctions on Iran, Turkey, Russia, and trade war with China. The market seems to finally be pricing these in. v
  • Upcoming events/meetings?
    • Nothing major for now
• Check status of economies
  • Oil demand
    • It seems that the downward force in price this week is due to the demand not being as strong as predicted. This was shown last week when it was revealed that Saudi had cut their production in July as they couldn’t find enough buyers for their oil. The reason given for the lack of demand is the high uncertainty due to sanctions and trade war. v
    • It is easy to see why demand is low right now, but I find it really hard to predict it. I think nobody really knows right now, which is why uncertainty is high. One ‘surprise’ crude oil stock increase and the price can move down slightly. v
    • Still, these things are pretty short-term (week to week basis) and things might change soon with the different level of political plays. It could be that these uncertainty scares are just scares, but the underlying market forces are still there.
• Check other charts for movement
  • USD
    • USD is going up. Strange that it goes up despite the uncertainty in the world, but I’m no currency trader. v
  • Gold
    • Gold is continuing its long-term slide. v
• Technical analysis
  • TTM_LRC ranges
    • The price is touching the 6month 1SD line. I don’t think there is enough downward force to force the price to go lower than a certain point, but there doesn’t seem to be to be enough force to it to bounce back. Still, it will probably stay here for a while. ^
• Check Chart discrepancies
  • Quarterly expiry of futures and next futures chart
    • The next futures chart starts in 6 days and the price is about 50 cents lower than the current one. v

Other Things of Note

I still cannot figure out the end game of these sanctions and trade war. Knowing the end game will make me confident in the forecasts.

The Forecast

I still have a bullish view of prices, but I do have to say I am not too confident this week about my forecast. I do think that this time around, I will make a range bound type of prediction as I think the price is going to trade range bound and I don’t want to lose out in terms of paper losses on my trades if I were to make a single leg vertical spread trade.

• I am 75% confident that the price of WTI oil will not be below $59 and not be above $72 on the 18/09/2018