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Fundamental Forecast forUSOIL:Bullish
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Baker Hughes Rig Count on Friday Grows to 597 As U.S. Supply Stockpile Hits Record
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Technical Post: Crude Oil Price Forecast: Technical Picture Favors The Patient Bulls
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Saudi has Made Largest Production Cut Since 2009 Backing OPEC Compliance Report
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Where will the Crude Oil go in the first quarter of 2017? Get our forecast here!
Crude Oil looks poised to end the week lower for the first time in five weeks. However, there is a silver lining. As of Friday morning, the weekly price range in Crude Oil is the smallest in 13-years. If you had to pick a week to be on the wrong side of a long Oil trade, you picked a pretty good one.
Looking at the broader picture, there is naturally some angst building about price stability as US Stockpiles surge to new records. The price of Oil though doesn’t seem to mind as we’ve moved roughly sideways since the start of the year. Much of the credit for the lack of downward pressure has been given to the compliance of OPEC members in adhering to the production cuts that have helped to limit the previous supply imbalance.
We’ve recently heard figures as high as 92% about how much has been cutrelative to the promised amount. A significant factor to keep an eye on with Oil is not just the lack of price action since January, but rather the rising trend in other commodities like industrial metals. Headlines from Reuter’s this week helped further support Oil on reports that OPEC could extend or deepen supply cut at May meeting if oil stocks are still too high. Naturally, there tends to be a positive correlation to energy products like Oil and industrial metals. In the last week, the famous Dr. Copper (a term coined by the view the Copper holds predictive value in explaining global market demand,) recently surpassed the November peak.
The rise in industrial metals alongside the production cuts from OPEC could be setting up a convincing Bullish background for Crude Oil alongside rising inflation that is getting ever closer to Central Banker targets, and in the Fed’s case, has recently exceeded targets.
We continue to get an increasing amount of activated US rigs as shown via the Baker Hughes Rig Count alongside extreme positioning from hedging bears and speculative Bulls. The current Rig count moved up rigs in the U.S. TO 597, which has moved steadily higher from 404 in May of 2016. For perspective, the 5yr peak was 1989 active US Rigs back in 2012. It may seem surprising that this background has led to the lowest weekly trading range in 13-years and the lowest intraday ATR5) since 2014 (before Oil fell from $112 to a low of $26 in early 2016), but that’s the environment we find ourselves.