CRUDE OIL UPDATE (3:00 pm EST)
In my last blog on crude oil (Dec. 5) I wrote:
"Crude may be forming a support line around $75, but if that breaks and prices move below last week's low of $73.60, we could see crude moving toward $65."
Well, that support line did break, and crude dropped to the $70 level last week.
On Nov. 22, I wrote:
"Last Friday, the Biden White House released a statement declaring its Administration would repurchase crude oil for the SPR (Strategic Petroleum Reserve) when prices get at or below $67 - $72 per barrel. If the Administration follows through with this plan, that price range could be a good spot to buy."
So we have also dropped into the Biden Administration's declared price range to repurchase crude for the SPR We note, however, that they specify "at or below" which means it could be under $67. Prices have risen sharply this week from last Friday's low near $70, so buying may have commenced. But let's consider our technical and cycle analysis before we act on trading advice from the White House.
It's still not clear if the current medium-term cycle in crude started with crude's Aug. 16 low at $84.31 or with the Sept. 26 low at $74.98. The Aug. 16 labeling would make the cycle older than the Sept. 26 labeling, but we note that in both scenarios, the cycle has turned bearish. Why? Because last week prices dropped to $70, and that is below the initial starting points in BOTH scenarios. When a cycle turns bearish, prices usually move lower until they reach the final bottom of the cycle. It's a little early for a final bottom in the younger (Sept. 26) cycle, but a final bottom in the older (Aug. 16) cycle could happen anytime now (it may have already happened with last Friday's $70 low).
We entered a new reversal zone specifically for crude this week (Dec. 13 - Dec. 22), and prices are rising sharply into it. This suggests an imminent top and reversal back down could happen this week or next. I'm going to take a bearish view here and go with the idea that prices could fall lower than $70 and closer to or even below $65 over the next several weeks. The last two weeks in December and the first week of January would be a good time frame for a significant bottom in crude, whether it be a younger or older cycle. Let's wait to see if prices can turn down again and move closer to our $65 target. If they do, we may have a good buying opportunity setting up soon.
In my last blog on crude oil (Dec. 5) I wrote:
"Crude may be forming a support line around $75, but if that breaks and prices move below last week's low of $73.60, we could see crude moving toward $65."
Well, that support line did break, and crude dropped to the $70 level last week.
On Nov. 22, I wrote:
"Last Friday, the Biden White House released a statement declaring its Administration would repurchase crude oil for the SPR (Strategic Petroleum Reserve) when prices get at or below $67 - $72 per barrel. If the Administration follows through with this plan, that price range could be a good spot to buy."
So we have also dropped into the Biden Administration's declared price range to repurchase crude for the SPR We note, however, that they specify "at or below" which means it could be under $67. Prices have risen sharply this week from last Friday's low near $70, so buying may have commenced. But let's consider our technical and cycle analysis before we act on trading advice from the White House.
It's still not clear if the current medium-term cycle in crude started with crude's Aug. 16 low at $84.31 or with the Sept. 26 low at $74.98. The Aug. 16 labeling would make the cycle older than the Sept. 26 labeling, but we note that in both scenarios, the cycle has turned bearish. Why? Because last week prices dropped to $70, and that is below the initial starting points in BOTH scenarios. When a cycle turns bearish, prices usually move lower until they reach the final bottom of the cycle. It's a little early for a final bottom in the younger (Sept. 26) cycle, but a final bottom in the older (Aug. 16) cycle could happen anytime now (it may have already happened with last Friday's $70 low).
We entered a new reversal zone specifically for crude this week (Dec. 13 - Dec. 22), and prices are rising sharply into it. This suggests an imminent top and reversal back down could happen this week or next. I'm going to take a bearish view here and go with the idea that prices could fall lower than $70 and closer to or even below $65 over the next several weeks. The last two weeks in December and the first week of January would be a good time frame for a significant bottom in crude, whether it be a younger or older cycle. Let's wait to see if prices can turn down again and move closer to our $65 target. If they do, we may have a good buying opportunity setting up soon.
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