The next set of forecasts have moved in the November expiry date. Considering that this date is after the USA elections and Iran Sanctions, these events will have a big impact on the prices. The following is what I think will happen after these two events:

• China will continue buying Iran oil
• USA allied countries will be in slight disarray as their find new sources to purchase from
• Saudi and Russia will attempt to catch market share by pumping more oil, selling it to the countries that complied with Iran sanctions and probably charge these countries a little more
• USA will probably try to do the same with their shale oil

I don’t think the loss of Iran production is actually a big impact of itself, USA, Russia and Saudi can make up for it. But the market reaction to the sanctions will be overblown to the upside, along with Saudi’s desire to raise the prices.

Forecasting Checklist

• Oil industry news
  • Political Plays?
    • The USA China Trade War doesn’t seem to make much of an impact any more. Either the market has priced it in, or that people are not suspecting that demand will be affected that badly. v
    • Saudi says it is OK with $80 Brent ^
    • There have been some reports of USA now becoming the world’s largest producer of oil. Whether it’s true or not, basically oil production is now in a ‘three kingdoms’ situation between the USA, Russia, and OPEC Saudi.
      • OPEC Saudi and Russia are in cooperation to make what they can from oil, boost their market share, but not push the price so high that demand from developing countries suffers or that USA’s shale becomes profitable for the USA. This is a difficult balance to achieve, and it seems the range of $70 to $80 Brent is their short-term target. With gap of Brent to WTI of about $10, this would translate to a price of $60 to $70 WTI. ^
      • Saudi wants to appease the USA by keeping a lid on prices now, but might not do so after the USA’s upcoming election.
        • Iran has been Saudi’s rival, so with USA helping to place sanctions on Iran, Saudi will continue to ally with the USA for a while on that front.
        • I think Saudi wants to raise prices (but not too much), but still a raise from where it currently is. ^
  • Level of uncertainty?
    • This is still high and will only start resolving itself starting in Nov.
    • USA stock markets are at record highs again.
  • Upcoming events/meetings?
    • US Midterm elections: 6 Nov 2018
    • Hard deadline on Iran sanctions: 4 Nov 2018
    • Russia and Saudi, amoung others, are scheduled to meet this weekend to discuss their oil production strategy going forward. I have a feeling there will be a price spike after this event. ^
  • Oil discoveries or disruptions?
    • USA oil inventories are decreasing. ^
• Check status of economies
  • Oil demand?
    • See above comment on trade war
• Check other charts for movement
  • USD
    • USA has been weakening slightly. ^
  • Gold
    • Gold has gone flat recently.
• Technical analysis
  • There seems to be a price support at the $64-65 level. ^
  • IV percentile is lowering
  • TTM_LRC ranges
    • WTI prices are now in the upper 1SD range
• Check Chart discrepancies
  • Quarterly expiry of futures and next futures chart
  • Gap between WTI and Brent
    • Prices have a difference of about $10, which is relatively wide, or at least wider than usual. ^

The Forecast

The next set of forecasts have moved in the November expiry date. I believe there is a price floor and the upside to the price of oil is unknown, but I think the price is generally bullish. The WTI price is currently about $71.20.

• I am 85% confident that the price of WTI oil will not be below $63 on 14/11/2018.