2022/10/10 (085) Technical Analysis

A Volatile Week With Rising Oil Prices Is Behind Us.
The OPEC – The Most Inflience Broker Of The Oil Price – Has Put It`s
Foot Down And Excecuted It By Cutting Further Oil Demands Last Week!

Oil Price Has Risen Sharply In The Last Few Days – After Massive Selling Pressure

OPEC cuts and other factors caused the price of oil to rise again by up to USD 10 in the past week. Mainly, if I’m wrong, OPEC’s supply cuts are driving the majority of financial market participants to want to trade the oil price at prices that are again more expensive.

Who would have thought that the price of oil would come back so strongly again? Not me! Admittedly – but I didn’t expect the strong sale before that either. Although I maintain our short 4 Trading Capability. But so strong down! And then back up? I don’t know how to argue anymore. Because the oil market had already priced in a cut in oil production by OPEC (and the OPEC+ group as a whole) since Monday through rising prices; if I interpret the news situation correctly. For example, the WTI oil price started at around USD 81.60. Then, on Wednesday afternoon, OPEC announced a production cut of 2.0 million barrels of oil per day in November (original announcement here). Which reduces the global oil supply – and thus the prices up again. And what does that tell us? The price of oil is and will remain in the hands of OPEC – a Muslim cartel. At the same time, the US President also made no offer; after he not only reduced his own oil production in the USA, but even closed it – because of his green Christian-democratic left-wing energy policy. So it doesn’t surprise me that the oil price is trading just under USD 100. However, I am no longer assuming significant price increases of more than 100 USD. Because I think the conflict in eastern Ukraine should be priced in. Irrespective of this, the oil price has risen again to almost USD 92 since the announcement on Wednesday afternoon. In retrospect, we can say that the cuts in OPEC caused the price of oil to rise by a good 10 dollars in the past week! Which was also the sharpest rise in oil prices since early March, when it exploded over Russia’s war of aggression in Ukraine.

OPEC Cut Took Effect Last Week

Where one might think that last week’s OPEC announcement on Wednesday had already been processed with the oil price continuing to rise, the oil price continued to show strong strength on Thursday! Bloomberg wrote: “The tightening outlook (in the oil market) has halted the decline in oil prices, which has been weighed down by concerns about a global economic slowdown and aggressive central bank rate hikes. Russia also reiterated this week that it will not sell oil to countries , which are introducing a US-led price cap, adding to supply uncertainty.”Very Important Price Action Areas
For The Next Days, Weeks And/Or Months

$ 128.37 03/01/2012 false break-out high

$ 119.46 02/24/2011 upper resistance
sideway-trend-channel
from feb`11 to sep`14

$ 98.87 08/09/2011 lower support
sideway-trend-channel
from feb`11 to sep`14

$ 88.52 06/22/2012 false break-down low

I am afraid that we will be in this price action price zone as far as longer than I originally imagined! Because inflation, in our so-called West, doesn’t seem to get down – on the contrary! And UKOIL seems to want to stay up as well? However, stay cosequent in ths 4XSetUp. Don`t trade UKOIL without entry and/or exit price levels – even if they don`t match mine.

$ 100 08/15/2022 4XSetUp @ Stop Price

$ 95 09/06/2022 4XSetUp @ Entry Price

$ 70 08/15/2022 4XSetUp @ Target Price

The historical overarching scenario in the UKOIL could be looming, with a fall from the sideways trend formulated above – with a fall to the GAP, during the Coroa virus outbreak. This is what this 4XSetUps aims for. However, only if inflation comes down. But this is currently not doing us any favors – on the contrary. Still high inflation seems to be mutually increasing with increasing energy consumption in the context of the Russia/Ukraine war.

$ 45.20 03/06/2020 GAP intraday low
$ 37.88 03/09/2020 GAP intraday high

Because if inflation eases and/or the Ukraine/Russia war calms down, renewed demand from China shouldn`t keep UKOIL at this high levels! Granted, even if it doesn’t look like it at the moment. However, the price target of USD 70 remains – but now only longer, probably not until the 4th quarter of 2023

$ 86.68 10/25/2021 3rd big new & 2021 high
$ 77.82 07/06/2021 2nd big new high 2021
$ 71.36 03/08/2021 1st big new high 2021
$ 65.79 12/02/2021 low after 3rd big 2021 high
$ 64.76 08/23/2021 low after 2nd big 2021 high
$ 60.30 03/23/2021 low after 1st big 2021 high
$ 50.58 01/04/2021 1st day intraday 2021 low”Even as crude oil prices fell somewhat in the final third quarter of 2022, the factors dragging down oil prices came to an end as the sustainability of Russian supply and the continued release of US oil reserves became uncertain,” said Peter McNally, Global Sector Lead for Industry, Materials and Energy at Third Bridge. Which leads me to the conclusion that the OPEC+ cuts are working in the interest of the oil-producing countries – while we consumers, in our so-called West, literally foot the bill at the gas station. And that too, under the guise of a green energy policy. Which, with the EU sanctions against Russia, has also not (yet) caused the oil price to fall. On the other hand, the current demand from China is not particularly high; so that from OPEC’s point of view it evens out. The oil price has just leveled off below the psychologically important USD 100 mark. And our short trading capability 4XSetUp in the UKOIL aims to ensure that the conflict in Europe is resolved benevolently, because at some point the point will also be reached that the oil price for us in Europe, especially in Germany, will be reduced by us as consumers will be so high that the price will have to be pushed down by the supply side (if only in their own interest); to be able to sell oil at all to us Europeans, especially Germans. The strong USD, also against the USD, in which oil is known to be settled, ensures that we in Europe, especially in my home country of Germany, have nothing – absolutely nothing – to laugh about as far as current energy policy is concerned! On the contrary …

Some Expert Commentary Last Week

The economists at Commerzbank (CoBa) also commented on the OPEC+ production cuts on Thursday. “With a formal cut in the daily production quota by 2 million barrels, OPEC+ is using its power to prevent a fall in the oil price. Effectively, daily production is more likely to be cut by 1 million barrels, because many countries are already well below the quota produce. But this would also be enough to prevent the surplus previously forecast for the final quarter of the year. In the monthly reports due to be published next week, the energy agencies will presumably warn that the supply is too tight,” according to the CoBa.

“Although the economic outlook has continued to cloud over in recent weeks, oil demand is likely to decrease only slightly due to the ongoing fuel switch from gas to oil.” Furthermore, the analysts wrote in Frankfurt, “In addition, the EU oil embargo and the possible implementation of a price cap on Russian oil are getting closer. Both could prompt Russia to cut production further. A stronger expansion in supply outside of OPEC is therefore not in sight either. Because the US The Energy Agency remains skeptical about US production and has even downgraded its expectations compared to June.Against this backdrop, it will probably take a whole series of bad economic news for the oil price to come under more pressure again. However, data from China could be the opposite – because the prospect of an increase in export quotas for oil products could have led to a recovery in crude oil imports, which have recently been weaker, as early as September. After all, the refineries are likely to ramp up their production again,” according to the statements by CoBa.