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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

How High Could Crude Oil Price Go?

Commodities / Crude Oil Jun 30, 2017 - 02:15 PM GMT

By: Nadia_Simmons

Commodities

On Wednesday, the black gold gained 1.13% after encouraging the EIA weekly report. As a result, light crude climbed to the previously-broken lower border of the trend channel, but closed the day below it. Will we see further improvement in the coming days?

Although yesterday’s EIA weekly report showed that crude oil inventories rose by 118,000 barrels in the previous week (missing expectations of a draw), the report also showed that gasoline inventories, dropped by 894,000 barrels (beating analysts’ forecasts), while distillate stockpiles declined by 223,000 barrels and beat expectations of a rise of 453,000 barrels.


This bigger-than-expected drop in gasoline inventories eased worries about a slowdown in demand for refined products, which supported the price of the black gold. As a result, light crude climbed to the previously-broken lower border of the trend channel, but closed the day below it. Will we see further improvement in the coming days?

Let’s take a closer look at the charts and find out (charts courtesy of http://stockcharts.com).

Yesterday, we wrote the following:

(…) crude oil extended gains, which resulted in a climb above the previously-broken 38.2% Fibonacci retracement. In this way, the commodity invalidated the earlier breakdown, (…) bounced off the green zone and closed the day above $44.

What’s next for Crude Oil?

Taking into account yesterday’s price action, the buy signals generated by the daily indicators and the medium-term picture, we believe that (…) the first upside target will be around $45, where the previously-broken lower border of the red declining trend channel is.

From today’s point of view, we see that crude oil extended gains (making our long positions more profitable), which resulted in a climb to the above-mentioned first upside target. Although this resistance could pause oil bulls, the buy signals generated by the indicators remain in place, supporting further improvement. Additionally, an invalidation of the breakdown under the 38.2% Fibonacci retracement and its positive effect on the price remain in cards, which suggest a climb above $45 in the coming days.

If this is the case and we see such price action, the next upside target for oil bulls will be around $46.50-$46.71, where the mid-June highs are. If this resistance is broken, we may see an increase to $48.20-$48.42 (early June highs) or even to the upper border of the blue declining trend channel (currently above the barrier of $50).

Summing up, long (already profitable) positions continue to be justified from the risk/reward perspective as crude oil extended gains and climbed to the previously-broken lower border of the red declining trend channel.

If you enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Oil Trading Alerts as well as Gold & Silver Trading Alerts. Sign up now.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski
Founder, Editor-in-chief

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Disclaimer

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons’ reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


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