Monthly Archives: October 2018

The price of oil is even more unstable than before, and now has shot up due to the factors below. I suspected that it would shoot up, I just didn’t predict it this quickly. There is a lot of talk about the $100 oil, but I’m not too sure about that. I do think that prices are generally strongly on the up trend from now till Nov. Even the actual supply issues from Iran can actually be partially solved, the panic has hit the market and trades are not following logic. It seems like emotion and reaction to the news will drive the prices upwards. So, what better way than to trade bullish too and capatialise on the gains. Some reports state that the cold numbers for oil supply loss from Iran will only come out in Nov, so that will be something to watch for.

Forecasting Checklist

• Oil industry news
  • Political Plays?
    • The USA China Trade War saga continues, but the impact of it seem totally forgotten at the moment.
    • Last week:
      • The JMMC resulted in OPEC saying that though it will increase production, it will do so based on the demand that they observe, and not due to USA’s request.
      • USA said that they would keep oil prices stable by selling their strategic reserves.
    • This Week:
      • Even if they pump more, Saudi can’t keep up with the supply lost from Iran.
      • Retracting what they said before, USA said that they won’t be selling their strategic reserves.
      • China is reportedly scaling back their oil purchases too.
      • Rumours that India will cut back on buying Iran oil too.
  • Level of uncertainty?
    • Very high now, considering that parties have been flipping flopping between states.
    • USA stock markets are just below record highs.
  • Upcoming events/meetings?
    • US Midterm elections: 6 Nov 2018
    • Hard deadline on Iran sanctions: 4 Nov 2018
  • Oil discoveries or disruptions?
    • This article reports that with higher prices would come more investments in oil infrastructure. This could do things such as alleviate USA’s pipeline bottleneck issues. Regardless of timing, it seems that $100 would be a possibility as there currently is no short-term solution to meet the disappearance of Iranian oil.
    • It could be that next year USA can solve their supply bottleneck and push out even more oil onto the market and compete with the other top producers globally.
• Check status of economies
  • Oil demand?
    • Saudi has commented that they see demand remaining strong and increasing slightly in the next three months. ^
    • So far there isn’t a demand destruction price yet. However, some have speculated that when Brent goes above $90, there will be some demand destruction and the prices may pull back.
• Check other charts for movement
  • USD
  • Gold
• Technical analysis
  • I’d expect a new price support to form, but I am unsure where.
  • IV percentile is lowering
  • TTM_LRC ranges
    • WTI Prices are hitting the +2SD line
• Check Chart discrepancies
  • Quarterly expiry of futures and next futures chart
  • Gap between WTI and Brent
    • The gap is maintaining itself at about $10.

The Forecast

Saudi said they were okay with $80 Brent With Brent at about $85, it seems they got their wish. They will be lots more money at this price and at this stage, even if they pump more, they cannot bring the price down in the short term. This would mean that the price is generally bullish. The WTI price is currently about $75.33.

• I am 80% confident that the price of WTI oil will not be below $68 on 14/11/2018.