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Sequential oil collapse, after Baker Huges oil rig count data

WTI Short idea

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The oil decline is continuing for the sixth consecutive day, with the number of operating platforms operating in North America today the main driver of the downturn. The strong dollar, the world's record-breaking mining and Sell Off-a stock market, which suggests lower consumption in the future, are also in support of the decline. Following the announcement of the number of oil platforms from Baker Huges, the WTI dropped below $59 a barrel for the first time since December 26.

Has the trend changed and when is it appropriate to take short positions?
It seems fundamentally everything against a rise in oil prices. This week it became clear that the US has become a bigger producer than Saudi Arabia, surpassing it with a record 10.25m barrels a day. In the meantime, US stocks rose slightly but hit the price significantly. Looking at the state inventory chart, it is clear that they are far from record values ​​and taking into account the plans of the state drills, they will still rise.

The dollar also has a strong influence on the price of oil. The growth of the green currency will most likely not stop, as congressmen today voted for a two-year budget extension, a solution that completely eliminated the imbalances in the face of the dollar.

In addition, most of the hedge futures traders increase their short positions at key levels.

Technically speaking, the end of the long trend is still questionable, but the price breaks through a key area of ​​support and, given the foundation, an aggressive entry from here with the SL at $ 61.20, the last downside bar would be good. Dem (8) is in the over-sales area, and we need to consider it if we are more conservative and looking for a good positioning.

Alternative Scenario: If the price goes back over the main diagonal, the negative scenario will be spoiled, and the oil price will be more likely. Given the foundation, however, we expect the potential growth to be severely limited and to provide better levels for Short.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov


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