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Can WTI Snap Its 10-Day Losing Streak?

Posted Friday, October 4, 2019 by
Shain Vernier • 2 min read

The past three weeks of trade have been challenging for WTI crude oil. Since the mid-September attacks on Aramco production facilities in Saudi Arabia, it has been all downhill for prices. In the midst of the sell-off, November WTI futures have posted a 10-day losing streak. Today’s early action has prices in the green ― can crude oil close in positive territory for the first time in two weeks?

While we may see crude oil tick higher on this afternoon’s close, the fundamentals remain bearish. Current supplies are growing and recession concerns are hampering demand projections. Both of these drivers point to depressed pricing and the likelihood of more OPEC production cuts to be announced at the December meeting.

On the U.S. production front, the weekly Baker-Hughes Rig Count is to be released later on today at 1:00 PM EST. North American drill rigs in operation have dropped consistently throughout the year. Today’s figure is likely to extend this trend, coming in beneath last Friday’s 713 rig count. Although energy players are sure to be watching the Baker-Hughes figures with interest, the release is unlikely to move the needle in WTI crude.

A Daily Green Candle For WTI?

For ten consecutive sessions, December WTI has closed in negative territory. This is quite a bearish run and one that may not be over yet. However, price action is currently bullish and a daily green candle has a shot at setting up.

November WTI Crude Oil Futures (CL), Daily Chart
November WTI Crude Oil Futures (CL), Daily Chart

There are two levels on my radar for the immediate future:

  • Resistance(1): 38% Bear Run, $54.24
  • Support(1): Swing Low, $50.99

Bottom Line: Any opportunity to join the prevailing bearish trend in WTI should be considered. As long as the Swing Low ($50.99) holds as the near-term bottom, I will have sell orders queued up from $54.19. With an initial stop loss at $54.79, this trade produces 60 ticks on a standard 1:1 risk vs reward ratio.

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