Tue. Apr 23rd, 2024
The December Crude oil contract has endured a precipitous drop in the past three trading sessions – falling nearly $7 per barrel. Is this just a correction? Are we in the midst of a trend change?

The Bullish Case:

Crude gapped higher on Monday, October 9th, following the start of the conflict between Hammas and Israel, and the geopolitical risk surrounding the situation served as a bullish catalyst for the crude oil contracts. A primary reason for the rally was anticipated escalation in the conflict, which has yet to materialize – causing the rally to stall. However, the risk of escalation still remains. Third party involvement from other nations or interest groups has the propensity to push crude oil prices even higher than the initial rally following the onset of the conflict.

The Bearish Case:

The winter months are typically not very kind to crude oil prices. Demand for crude oil wanes as consumers are usually more sedentary during the winter months. The seasonal chart below displays the 5, 10, and 15 year average tendencies for the December Crude Oil contract. Over each of those periods, crude oil prices trended lower from mid-October through November. If escalation does not materialize, it is likely that crude oil will continue to move lower.

How Will We Know?

In order to keep the uptrend intact, December crude oil will have to defend its recent low around $80/bbl. A turn higher ahead of that point will be a strong indication that crude will buck seasonal tendencies and continue higher. A failure to defend $80/bbl likely indicates that prices will continue to move lower.

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Disclaimers:

CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/

*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.

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The post Crude Oil – Correction? Or Change in Trend? for NYMEX:CLZ2023 by Blue_Line_Futures appeared first on WorldNewsEra.

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