Oil Prices Jump To 11-Month High (With Trading Strategy)
Oil prices gained more than 1% hit their highest since February after a bigger-than-expected inventory draw.

Oil prices gained more than 1% on Wednesday, with U.S. crude rising for the seventh day after industry data showed a bigger than expected drop in inventories, and investors shrugged off worsening developments in the pandemic.
U.S. West Texas Intermediate (WTI) was up 0.62%, at $53.591 a barrel; Brent crude was up 0.59%, at $56.927 by 15:50(GMT+8).
Both benchmarks are trading at the highest since February before the coronavirus outbreak in China began spreading across the world and billions of people went into lockdown to prevent a pandemic that is now in a deadlier second wave.
Prices are shrugging off the latest developments in Europe and the United States where death tolls and new infections keep rising, with the focus on rollouts of vaccines, however patchy.
Even as China is grappling with its biggest coronavirus spike in months, comments from President Xi Jinping providing an upbeat assessment of the world’s second-biggest economy and biggest oil importer supported prices.
“Crude oil prices also continued to rally on economic optimism in China after President’s Xi comments and an inventory report from API showed that crude oil inventories fell more than expected,” said Avtar Sandu, senior manager commodities at Phillip Futures.
Oil stocks in the U.S. dropped by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed late on Tuesday.
Still, falling inventories and rising oil prices are likely to tempt U.S. drillers back into the fray, especially as Saudi Arabia and other major producers cut their output, effectively ceding market share to American producers, the analyst said.
Saudi Arabia, as the leader of OPEC, is playing a complicated game with at least four opponents in mind: Russia; oil-trading hedge funds; the U.S. shale industry; and the novel coronavirus.
The Saudis announced that, unilaterally and of their own accord, they would be cutting the million extra barrels.
The Saudi production cut can be seen as a combination insurance play, short squeeze, and shale gamble, all rolled into one. The net result is that it’s a big positive for U.S. energy stocks.
The production cut was an insurance play because Saudi Arabia, and most of the producers in the traditional OPEC group, are still worried about demand risks created by the pandemic. If new lockdowns are imposed, or if the vaccine-powered recovery is delayed by the slowness of getting shots into arms, the Saudi cut will provide something of a buffer against that.
The shale gamble looks like it will pay off, though, because U.S. oil and gas producers seem more focused on paying down debt and solidifying dividends than trying to immediately ramp up production with oil prices back above $50 per barrel.
If Saudi Arabia has played its cards right, and the vaccine-powered recovery continues to unfold, the oil price could continue to march higher over the course of 2021 as resurgent demand couples with an ongoing fall in the U.S. dollar.
The ideal combination, and the thing the Saudis are hoping for, is to see a renewed wave of optimism kick in just as their multi-month cuts expire, helping lift the oil price back into the $60 to $70 range. That combo would, in turn, be very bullish for energy stocks.
Trading Strategy (source: Trading Central)
Pivot: 53.20
Our preference: long positions above 53.20 with targets at 54.00 & 54.70 in extension.
Alternative scenario: below 53.20 look for further downside with 52.50 & 52.00 as targets.
Comment: the RSI is bullish and calls for further advance.
Supports and resistances:
55.10
54.70
54.00
53.70 Last
53.20
52.50
52.00
Pivot: 56.60
Our preference: long positions above 56.60 with targets at 57.80 & 58.20 in extension.
Alternative scenario: below 56.60 look for further downside with 56.00 & 55.50 as targets.
Comment: the RSI is bullish and calls for further upside.
Supports and resistances:
58.60
58.20
57.80
57.14 Last
56.60
56.00
55.50
Guideline for Trading Central strategy
Trend chart reading guideline
1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days
2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.
3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;
4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.
How to use TC strategy?
1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell.
2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.
3. [Alternative scenario] is the plan B for your reference.
4. [Comment] is the technical analysis of market trends and technical support for trading strategies.
5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.
Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.
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