AUD/JPY lows help with Oil entry prices

The study below shows WTI Crude Oil making a notable low approximately 6 weeks after the AUD/JPY first enters weekly oversold territory. 

Correlating the technicals in other assets helps me determine what I think may be a safer entry point, rather than relying solely on Oil price data.

Another example of this appeared in a recent post which monitors the Gold/Oil Ratio.

For now, I’d like to see WTI Crude trade down to the $65 mark.

December 21, 2022

by Rob Zdravevski

rob@karriasset.com.au

Oil – Buy signal approaching

Under the guise of getting the bigger calls right and continuing from the previous post…….

and for something acutely related to the Gold/Oil ratio…..

when we find the Gold/Oil ratio at overbought levels on a weekly basis, this suggests that the price of WTI Crude Oil is in buying territory.

We are potentially approaching the 14th time (over the past 30 years) that this buying signal will occur.

Keep in mind, I’m talking about the price of Oil.

Logically, oil related equities should also prosper and have the ability to deliver operational leverage, however you’d need to do the research on any specific companies numbers such as their debt, interest expenses, free cash flows, contracted or forward delivery prices etc etc.

December 15, 2022

by Rob Zdravevski

rob@karriasset.com.au

Following a $10 bounce, Oil is now a marginal trade

Further to today’s note about Oil, OPEC and Oversold break-even inflation rates…….

This note told you,

…..when Oil hit my long-standing lower target of $77.50 (trading to $76.25 intra-day).

That was 7 trading sessions ago and it coincided within the Oversold weekly reading for the 5 year break-even inflation rate.

Oil has bounced $10 since then.

Today, Oil has a short term upward trend developing,

but its only a trend.

At $87, it’s in no-mans land.

It could go $13 up or $13 down.

With new money, it’s a marginal trade or position to take.

Following a couple weeks of trade, I’m betting that WTI Crude sees $74 before it sees $100.

October 6, 2022

by Rob Zdravevski

rob@karriasset.com.au

Crude Oil and AUD/USD watch

3 days ago, I wrote that Oil needed a quick drop of ‘$2 or $3’ in order to extend some strength in oil’s current downtrend.

WTI Crude fell $4.75 on Friday, closing its trading week at $78.74

Equally, the AUD/USD exhibited expected weakness during Friday’s session. It closed at 0.6531.

So, I’ll watch for how the AUD/USD and WTI Crude symbiotically test their next respective levels of 0.6464 and $77.50, as neither ‘daily’ downtrends are confirming continuing strength.

Hint: probability is rising that we are at the tail-end (+/- 3%-6%) of the downdraft in both assets.

September 24, 2022

by Rob Zdravevski

rob@karriasset.com.au

31% decline is losing some steam

Here are some WTI Crude Oil trend lines I’m watching.

The downward trend remains intact, however on a daily basis it’ll need a quick drop of $2-$3 in order to add some strength to this trend, otherwise we can kiss a visit to $77.50 and any notion of ~ $65 good bye for the time being.

Should this trend wane, it will correspond with the AUD/USD and the CRB Index finding a floor.

September 20, 2022

by Rob Zdravevski

rob@karriasset.com.au

Oil continues marching higher

My current read of the Brent Crude Oil price is….

if it closes above $70, then there is clear air to the $74-$76 region, while probability of a spurt to $80-$82 remains, such a move would swing the pendulum into extreme territory.

and then we’ll see OPEC start to increase output.

Basically, traders are waiting for a break above $70 and if they see it, then watch them pile in.

for context though, going Long Oil today (currently trading at $69.50) is a marginal bet. I see the risk/reward equation as being either $6 up or down.

After all, Brent Crude already seems stretched on various measures after having tripled from its $16 low in April 2020. Establishing a new ‘long’ position at this moment is akin to squeezing the last 10% out of a trade.

Keep in mind, that markets tend to move in the direction where they can inflict the most damage……..and a $80 oil price would hurt more (politically and commercially) than if fell to $50.

March 12, 2021

by Rob Zdravevski

rob@karriasset.com.au

Increase supply means lower oil prices

The increasing supply of oil and natural gas needs to translate into lower energy prices at the consumer level, in order for any cyclical upturn in economic activity and asset prices. I’m not sure how much of the current price factors in the Syrian rebellion and Iranian sanctions but it’s difficult to believe that Brent is trading at $115 considering all of the persistent weak economic news.

It would advisable for producers of thick tar sand oil (such as Canada and Venezuela) to ramp up extraction before it becomes uneconomic. With Chavez’s recent re-election and PSVDA’s recent disruptions, along with Canada’s trade deficit under pressure due to falling metal commodity prices it is plausible that this will happen.

Further to a recent post where I refer to lower oil prices into the end of the decade, below is an extract of a news story sourced from Bloomberg referencing recent comments from the International Energy Agency (IEA).

“The IEA suggests oil demand is basically going to be unchanged and that’s not going to lend support to the market,” said Gene McGillian, an analyst and broker at Tradition Energy inStamford, Connecticut. “The more-than-ample supply we have here is preventing oil from breaking off.”

The Paris-based agency also said global markets will become better supplied in the next five years as demand growth slows and production rises in North America and the Middle East.

Worldwide fuel consumption is projected to rise to 95.7 million barrels a day in 2017 from 89 million last year, the IEA said. Output is forecast to advance about 1.5 million barrels a day each year to 102 million barrels a day in the same period.

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