Stale crude oil

Bloomberg
Stale oil James Alexander Michie

A Colgate Energy LLC oil drilling rig stands in Reeves County, Texas, U.S., on Thursday, Aug. 23, 2018. Spending on water management in the Permian Basin is likely to nearly double to more than $22 billion in just five years, according to industry consultant IHS Markit. Photographer: Callaghan O'Hare/Bloomberg

It is said that crude oil should be entering an extended range market. In fact, if the story is taken into account, it could be established as a guide. Being those receptive operators are very likely to prevail as the market feels very optimistic near the peaks and bearish towards the nadirs. However, natural gas seems to be the opposite, as it seems to have a bullish potential that outweighs downside risks.

There are those who believe that crude oil should remain the domain of the receptive operators. The 2018 Brent maximum of $ 86.74 per barrel should represent good resistance over an extended period, as the market seeks to support. Back in the middle of the 2012–16 price decline, $ 10 above or below the $ 77 level should mark the bell curve of the trading range for a while. A good support area is $ 67.

Comparisons and estimates

Likewise, the demand in comparison with the supply and the tendency towards the retreat in the curve of futures of a year, seem to have reached their maximum point from maximum levels of several years. Similarly, it is considered as unlikely that prices will appreciate more in this environment.

It should be noted that the estimates of demand versus supply include data from the Energy Information Administration and the International Energy Agency. Likewise, the main drivers of natural gas indicate that the opportunity for rising prices outweighs the downside risks. As such, the recent recovery with market prices in a winter weather premium may leave the gas a little vulnerable in the short term. However, if we talk about the bigger picture, it is quite favorable to the price. Likewise, natural gas, normally the most volatile of the main commodities, remains linked to one of the narrowest percentage ranges in the history of futures.

On the other hand, the exit of traders from the positions of crude oil and oil in favor of natural gas raises the risk of reversal. The price for cold weather should leave the market a bit vulnerable when it arrives, with the potential to be less extreme than expected. While the average reversion in crude oil was the predominant history of energy performance in October, but positive total yields should remain positive.

Nonetheless, traders who held WTI resistance near $ 75 per barrel are likely to be in effect, with an endorsement of $ 65. In the middle of the most significant reduction since last June’s channel, if that correction matches, it is likely that the WTI revisits about $ 60.

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Source: Bloomberg

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