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Market News Oil prices hit a new high, economists expect it will fall in the second quarter (with trading strategy)

Oil prices hit a new high, economists expect it will fall in the second quarter (with trading strategy)

At midday in the Asian market, thanks to continued restrictions on supply by major oil-producing countries and increased expectations for fuel demand recovery, oil prices rose for seven consecutive trading days, setting a record for the longest consecutive increase since January 2019 and a new high since January 2020.

Eden
2021-02-09
847

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US WTI crude oil futures prices rose 42 cents or 0.72% to $58.39 per barrel; Brent crude oil futures prices rose 32 cents or 0.53% to $61.02 per barrel; natural gas prices rose 0.80% to $2.906.


Brent crude oil futures closed for the first time in more than a year and broke through US$60 a barrel. The price of Brent crude oil futures for April delivery rose by US$1.22, or nearly 2.1%, to close at US$60.56 per barrel.


Brent crude oil rose 7.8% last week. Demand is expected to rise, coupled with OPEC's production restrictions, these are the driving forces for the increase in oil prices last week.


Brent crude oil futures closed above US$60 a barrel for the first time in more than a year, boosted by the market's optimism that the US would pass the latest round of economic stimulus measures.


On the scale of OPEC+'s existing production cuts, Saudi Arabia, the world's largest oil exporter, intensified its production cuts in February and March, further restricting supply and helping the global market restore balance. In addition, President Biden’s decision to oppose the immediate lifting of Iran's sanctions also allowed crude oil prices to find support.


Oil price is in overbought zone

Calin Birch, a global economist at The Economist Intelligence Unit, said, “There are several factors behind this wave of rising tide. The most important thing is the current optimism in financial markets that is currently high due to the launch of the new crown vaccine.”


She expects crude oil prices to fall from their current highs in the second quarter, "because the fact that the global economic recovery may not accelerate until the second half of this year." She estimates that the average price of Brent crude oil this year will fall between US$56 and US$57 per barrel. This is an increase of more than 30% over last year.


Stephen Innes, Axi's global chief market strategist, warned that from a technical point of view, Brent crude oil and US WTI crude oil are both in the overbought range. "I look at current prices cautiously, but the medium to long-term demand outlook remains healthy."


Trading strategy ( Source: Trading Central)


Pivot: 57.70


Our preference: long positions above 57.70 with targets at 58.90 & 59.40 in extension.


Alternative scenario: below 57.70 look for further downside with 57.30 & 56.90 as targets.


Comment: the RSI advocates for further advance.


Supports and resistances:

59.90

59.40

58.90

58.33 Last

57.70

57.30

56.90


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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