CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

WTI crude oil: When prices can’t rally on good news…

Article By: ,  Head of Market Research
September 7, 2022 5:02 PM

There’s an old saying in trading that crude oil bulls should be keep top of mind this week: If a market can’t rally on good news, it’s likely headed much lower.

On Monday, OPEC+ surprised markets by cutting production by 100K bpd starting in October, suggesting that the oil cartel would like to see prices supported, despite fears of a global recession. Crude prices rallied briefly above $90 before rolling over to reverse those gains yesterday.

Then, earlier today, top US officials reportedly told Israel’s PM that a nuclear deal with Iran was unlikely in the foreseeable future. Most analysts view a nuclear deal as a precursor for Iranian oil supplies to come back on the world market, so the report that that first step was further away than previously thought suggests that there will be less supply (and, theoretically, higher prices) for longer than assumed.

Rather than using that report as an opportunity to buy WTI (US Oil) off technical support at 85.00, traders have instead sold crude down to its lowest level since January, before the war in Ukraine even began. In other words, oil traders have now had two chances to bid up oil on better-than-expected news this week, and on both occasions, crude was trading much lower in just a handful of hours.

Technical view: West Texas Intermediate crude oil (US Oil)

As we mentioned above, oil is breaking below previous support at 85.00 to its lowest level in nearly eight months. Crude is clearly putting in a series of lower highs and lower lows below its downward-sloping 100-day EMA, signaling a clear bearish trend over the last couple months. Despite the new lows in price, the 14-day RSI indicator is not even in oversold territory, hinting that prices may have further to fall before seeing any technical respite from the selling:

Source: TradingView, StoneX

To the downside, the next important level to watch will be $80.00 round number, followed by the 78.6% Fibonacci retracement of the 2022 rally near $77.00. To flip the near-term bias in favor of the bulls, traders would need to see prices rally sharply from here to regain the 100-day EMA at $98.00.

How to trade with City Index

You can trade with City Index by following these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    • Open an account in the UK
    • Open an account in Australia
    • Open an account in Singapore

  2. Search for the market you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website 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.

© City Index 2024