My Oil pessimism is leading to a buy opportunity

My call of WTI Crude Oil visiting $65 still stands.

So, WTI Crude has fallen $9 in the past 2 days.

Now, it’s trading at $73.70

But that’s just reporting the news.

Depending on the strength of the downtrend, the next stop below is ~$62 and failing that, then we may see $54.

(technical trending analysis hint: watch the ADX on the DMI)

Back when Oil was surging to $120, my writings were warning readers to not chase prices higher especially following parabolic price moves and the gravitational pull of long, long term moving averages.

To boot, the price of Oil tracks GDP, it is a large component of inflation readings….and I think that the WTI Oil price leads interest rates.

Keep in mind, that the U.S. 10 yer bond yield was recently 4.33% and now its 3.71%.

To wit, the 10 year bond yield could see 3.30%, if not 2.5% in several months, to latently mimic the Oil price.

So, I say, many had no business buying Oil at $115 nor betting that GDP will expand and the near halving of its price from those highs should be recognised as assisting the moderation of near-term inflation.

While I think $65 is possible, it’s not a time to ‘short’ Oil as such a bet is marginal. Oil may fall $10 or rise $10. Ho hum !!

The fat part of the short trade has been seen.

The preparation is for a low in Oil and then how that relates to other assets and securities.

January 5, 2023

by Rob Zdravevski

rob@karriasset.com.au