Weekly Technical Perspective On Crude Oil Prices

CRUDE OIL WEEKLY PRICE CHART

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Notes: Last month we highlighted a key resistance zone in crude prices at, “70.42-71.32 where the 100% extension of the 2016 advance and the 50% retracement of the 2011 decline converge on the median-line.” Price registered a high-close at 71.33 before posting an outside weekly reversal off parallel resistance (on building RSI divergence).

Oil is down more than 10% off the yearly high at this point with prices testing parallel support today in New York trade. We’re likely to see some back-and-fill (recovery) here but the broader risk remains lower while below the yearly high-week close at 67.46. Ultimately a breach / close above the 70.42-71.32 resistance range would be needed to mark resumption of the broader uptrend.

CRUDE OIL WEEKLY PRICE CHART (ANALOG)

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Bottom line: We’ve been tracking this price analog with the 2009 advance in crude oil since the start of the year. The analysis suggests sideways-to-lower price action over the next few weeks with a break lower from here targeting support objectives at the lower median-line parallel, currently around ~61.80s- look for a more prominent reaction there IF reached (area of interest for possible near-term exhaustion / long-entries). Keep in mind we get the release of crude oil inventories tomorrow at 2:30pm ET.

CRUDE OIL IG CLIENT POSITIONING

• A summary of IG Client Sentiment shows traders are net-long the Crude Oil (USOil)- the ratio stands at +1.71 (63.1% of traders are long) – bearishreading
• Retail has remained net-long since May 25th ;price has moved 8.1% lower since then
• Long positions are 2.5% lower than yesterday and 11.7% higher from last week
• Short positions are 2.3% lower than yesterday and 1.5% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil - US Crude prices may continue to fall. However, retail traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed Crude Oil trading bias from a sentiment standpoint.