Crude oil verging on confirmation of yet another October high
Tony Sycamore November 18, 2021 4:59 AM
Building on its 4% fall overnight, crude oil is extending losses during the Asian session to be trading below $77 per barrel, almost 10% below its October $85.41 high.
This content will only appear on Forex websites!
The overnight fall, the result of growing downside risks to demand as a fourth wave of Covid-19 cases in Europe, has prompted some countries to reinstate lockdowns mainly for the unvaccinated and speculation of Christmas in Europe incorporating social distancing requirements.
Speculation that China and the U.S. may coordinate efforts to release oil reserves to dampen surging inflation is also weighing. A subject canvassed during the two Presidents' virtual summit earlier this week.
Potentially as a follow-up to this, China's state reserve bureau said today it is preparing for a release of crude reserves. However, it declined to detail if it was the start of a coordinated action with the U.S or China acting independently.
We have mentioned previously, including here a strong seasonal pattern for crude oil to rally ahead of the Northern Hemisphere summer before, peaking in October and retreating into year-end. At this point, it's worth noting the $85.41 high traded on October 25th.
Before jumping to hasty conclusions, the pullback from the $85.41 high to today's $76.76 low appears corrective/countertrend in nature, and should crude oil hold above a band of support $76.90/20 coming from July's highs and then trade above $80.00, it would set up a retest of the $85.41 high.
Aware that should the decline extend and close below support at $76.90/20ish, it would indicate crude oil has formed a medium-term tradable top at the October $85.41 high and that a deeper decline back towards $70.00 is underway.
Source Tradingview. The figures stated areas of November 18th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
- Open a Forex.com account, or log in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.