Crude Oil Price Analysis September 2020 | Prices Up on Gulf Storms?

by birtanpublished on October 3, 2020

The oil price has had a strong recovery since uh those lows that we saw back in april but i think there is something strange going on in the market at the moment and it could provide us with an opportunity going into september here's the oil price this is west texas crude this is the cash cash market uh for 2020 so far so we hear those highs up above 65 beginning of january then traded um down towards 10 the 21st of april clearly of course that the may contract went negative then had loads of press about that and since then we've had this really

Strong bounce back um but you can see it's really stalled over the last probably couple of months or so now let's just zoom in to what's been going on since june so there's plenty of day-to-day volatility and it did actually break out to fresh recovery highs again 5th of august but we never get any follow-through so i'm wondering um is there an opportunity coming up in oil now it's gone really quiet is it is this um the calm before the storm before we

See um another big move on oil so in this video i'll talk about what's driving it then we're gonna come back onto this and look to get a trade on let's take a look at the trades we have at the moment so as usual there's a few trades running we do have an energy trade on that the natural gas trade from the 21st of july is doing well that's up about 720 pounds so that's um it's more than tripled uh the risk on that trade that's doing okay the other big winner apple of course

Stock market is continuing to move higher and um the euro us dollar trades from uh may and july are still going okay but no oil trade so we're going to change that i was sure all before got stopped out so we're going to change that in this video i'll talk a bit about what's driving oil then we'll come back onto this and look to see if we can set a trade up hello i'm david jones from capital.com and our normal schedule of programming returns after a bit of a break last week and i thought let's take a look

At oil because we haven't looked at it for a few weeks and there's something it's a bit strange going on with the oil price but i'll talk about it more in this video as usual i'll jump back and forwards onto the platform and we'll see if there's a trade to set up if you're watching this and you haven't subscribed if you could click on subscribe it helps support the channel and it means we can continue to push out lots of what are hopefully interesting videos for you to watch in the weeks and the months ahead so let's get into it

I'll talk about what's driving oil then we'll go back onto the platform um look at things in more detail look at the trends and the levels and see if we can get a trade on so we know the price of oil has um more than quadrupled since that april loan famously we saw the may contract for oil um go negative uh in april getting as low as about minus 36 minus 38 uh a barrel the cash price of oil was down around 10 a barrel uh and here we are now uh well above forty dollars a barrel for the oil price you know really strong bounce back

It's so strong we've seen a fresh uh five month high set um at the beginning of august poking out to its best levels since march but this is what's strange about the oil price and i'll look at it in more detail when we go back on the chart we see it break out but we don't get any follow-through um there's not suddenly a surge of short covering uh new buyers coming in so it's um these new highs these new recovery eyes they're setting um don't seem that convincing and this is why there could

Be an opportunity we have seen a slight rise at the beginning of the week as a couple of storms close in on clearly a a key oil producing area in the gulf of mexico so we have um hurricane marco and tropical storm laura heading towards the gulf this means that the oil companies took staff away because of the threat of damage obviously and it means in effect that all production for the gulf may be hit by a half you know while while we're effectively

In shutdown for a lot of these producers but as i say the market reaction hasn't been overly drastic so far for many months we've seen cuts in production by opec plus uh group of oil producers and they have trimmed back those production cuts by a couple of million barrels a day but they are still going to be cuts in place compared to normal of about 7.7 million barrels a day but but some are still worried that with um still not strong demand uh for oil

Could we see again a bit more over supply in the oil market weighing on the price on top of that we have the ongoing worries about the coronavirus as we're seeing you know resurgence in in parts of europe asia some states in the u.s there's still i think a big question mark over what the economy looks like over the next um i don't know three to six to nine months how is demand for royal uh going to come back so there's still an argument for saying well this bounce

Back we've seen has it overestimated the economic recovery and that's what we'll get into when we look at the chart and set the trade up when we talk about levels to watch not much has changed because volatility has been relatively low we have this new five-month high 43.60 set at the beginning of august then we've got 44. and then support coming in the late july low the most immediate one for me 38.80 but let's put some color on these numbers let's jump on the chart and um see if we can get a trade on

So let's start off again with the daily chart on crude oil so um we had the slide into april we've had the recovery since then we had a trend going on and you can see it's just a bit sideways um really since then if we look at the the rsi down here we've had i mean nothing much from the rsi we've got to go back to the 22nd of june when we had an extreme reading either way from the rsi back then the rsi went overbought the market did sell off

For a couple of days but since then it's just stuck in the middle well not quite in the middle but stuck you know slightly between sort of 50 and 70 percent never really pushing to an extreme so the trade i want to do really from from a risk reward point of view i i just wonder um given the lack of upper momentum given really the lack of um volatility on the threat of these two storms coming into the gulf of mexico i'm just wondering uh are we seeing at least an

Intermediate top uh for oil let me just focus again on june let's flip this to the hourlies so when i say the price action is a bit strange we get these breakouts like we had uh july 21st breaks out uh and then sells off again breaks out again early august we don't get any follow-through the market goes back to trading sideways so i'm just wondering is there a lack of conviction to buy into this this upward momentum and is perhaps the better medium term trade here uh to

Go short if we take a look at the month so far on the hourlies it looks it looks something like this so we had those highs just about 43.50 we've got support uh ahead of 41. volatile bursts day to day um but not much in the way of direction looking at the rsi down here um it's trading around about 60 so the trade i'm going to do is perhaps slightly against our normal approach because arguably well that trend from those

April lows is still up but we're just not seeing that much momentum so i'm going to go short i'm going to go short oil up here around about 42 60. and i'm gonna for a stop i'm gonna use this this previous high uh beginning of august as my reference point around 4280 uh sorry 43.80 i should say that sort of level so what i'm gonna do is go go short oil and um put a stop loss let's say slightly more than a dollar above those highs so i'm gonna go 45

I think uh for a stop uh on this trade so about two and a half dollars away from where i get in that way if it does start breaking down and breaks down to towards 40 i can move my stop so i'm going to just set that trade up now then we'll have a look of some targets so i'm ready to go and i'm going to sell 113 barrels um where the price is trading now around 42 67. uh put a stop loss in at 45. so if the market rallies up to 45 i'll come out the trade i get stopped

Out for our normal risk of a couple of hundred pounds let's just um set that trade up send it through so we're now short uh oil let's take this out and have a look at a target i think if we see this this 41 to 41 and a half level broken we could see it pick up a bit of downside momentum and start trading below 40 and then i think about moving my stop down to try and lock in some profits um so this is almost like almost like a gut feel trade where we're not seeing that much of a push when we see it break

To fresh all-time highs and not the all-time highs fresh recovery highs so i'm just wondering if we are do something of a rolling over um in all i think if i get stopped out at 45 then i'm out of the trade and then i'd start looking you know for a move probably back to this this uh short-term peak in march just shy of about 49 a barrel but at the moment given the lack of volatility i'm just wondering if um we are doing something of a correction in oil so here's our short trade down

Right down here uh short 113 barrels at 42.66 the stops are in at 45 so we'll um come back to this over the next couple of weeks or so and see how things have uh have turned out for the oil price and whether being sure oil is the clever thing to do going into september that's it for this update um the price is still strong but we're not getting much follow through maybe september we'll see some pressure on the oil price we'll come back and

Take a look at it but uh from me david jones and capital.com we'll leave things there good luck with your trading for more trading videos just like this please subscribe to our channel

Related Videos

from daily forex this is chris taking a look at the uh bitcoin market here you can see that we have uh found the market to be bullish we have broken above the ...
James fake revenue at deutsche bank has risen by 47 in the third quarter has this good momentum continued in the fourth quarter as well look we're continuin...
from daily forax this is chris taking a look at the um us stock indices this is the s p 500 and you can see that the s p 500 has uh rallied quite a bit did pul...
The capital position now and the confidence you have to deploy that dividend well indeed we have uh we've had a uh a very strong quarter um in which uh you ...
Hi everyone my name is adita and a few years ago i got divorced and became a single mom of two kids and that's when i started to look for ways to invest my ...
Have you ever thought of the true value of gold I mean really the value of something isn't its price it's what you can buy with it that is the true valu...
Hi this is vlad from effects empire euro dollar failed to settle above the resistance at 1.1870 and is trying to get below the support at 1.1830 if this attempt...
from daily forex this is chris taking a look at the uh crude oil marking cwti has gapped a little bit lower and then basically did nothing so uh at this point ...
Rupert what does this all mean for for equities but in general actually asset classes would you buy right now yeah so we are still broadly constructive on risk ...
Today I'm looking back at the Tesla stock on March 17th I did an analysis based on my ambassador diamond analysis the IDB a and I suggested that after its s...
The thing is if it's a legitimate expense and you are legitimately working from home take it you're literally throwing money leaving money on the table ...
from fx empire this is chris taking a look at the euro dollar and you can see that we are reaching above 118 as new york gets on board and perhaps trying to ma...
from daily forex this is chris taking a look at the euro and the pound you can see the euro has fallen a bit during the trading session here on friday as there...
The crude oil price has had a great recovery off those april lows but it does appear to be struggling over recent weeks so given the resurgence of the coronavir...
The recovery in silver continued into july and in the last week uh the price went somewhat parabolic moving from 19 up to 26 and you can see the sort of volatil...
Now one of the things that almost all millionaires have in common is they have exceptional I mean exceptional communication skills because they recognize that c...
Hi this is vlad from effects empire silver is currently trying to settle above the nearest resistance level at 23.30 if this attempt is successful silver will g...
from daily forex this is chris taking a look at the gold and silver markets you can see gold has smashed into this little short-term downtrend line that i have...
So tell us a bit more about the survey what what are your clients telling you about the lessons learned from this pandemic and what does it tell us about the fu...
At first glance ichimoku charts um can seem somewhat intimidating with a lot going on when we're looking at markets but they're also a really powerful w...