WTI Pressured as Saudi Stance Hardens Ahead of OPEC+

Energy Update

/ by Blue Line Futures

WTI Pressured as Saudi Stance Hardens Ahead of OPEC+

WTI Crude Oil Futures (June Future)

Yesterday’s Settlement: 58.21, down -2.21 [-3.66%]

If you read yesterday’s report, you know our fear was that the JP Morgan report talking about the probability of OPEC+ accelerated supply hikes had some credence. Since Kazakhstan said they will not obey production compliance, we have shifted our bias to neutral. Our fear on the bull case has been that OPEC+ will respond to Kazakhstan by ramping production to punish them with price.

Yesterday, this fear was somewhat confirmed as Reuters reported that the Saudi’s may be pushing for an acceleration to output hikes at the meeting scheduled for May 5th.

The OPEC meeting is scheduled for Monday, and fake news heading into OPEC meetings is an epidemic. If the official OPEC plan differs from the bearish headlines we’ve seen, sharp whipsaw price action is possible.

Regardless, risk is still skewed to the downside with the Saudi’s taking on this attitude of punishment towards Kazakhstan.

(Detailed charts and a breakdown of yesterday’s EIA report are available on our online Research Portal)

Today, Crude Oil is down -0.76 [-1.31%] to 57.45

The selling in Crude Oil is still tied to OPEC expectations for Monday. Equities are looking like they’re breaking out to the upside, and large-scale liquidations of Gold longs out of China could be taken as a signal that a trade deal is more probable. Hopefully, positive risk sentiment returns and helps boost demand expectations for oil.

Technical Analysis:

WTI Crude Oil futures traded through and settled below support yesterday. A run back to the lows around 55.00 look probable.

Beware of violent price action around this OPEC meeting, sharp and sometimes false breakdowns/breakouts occur in minutes around these meetings when key decisions are made.

We remain neutral, but risk looks skewed to the downside. The last time the Saudis dealt with a non-conforming OPEC member (Russia) with supply hikes, they brought oil prices below 0.00. Not saying that they will do that this go around, but their resolve should not be tested.

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Futures trading involves a substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians, or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy, and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third-party application. Blue Line Futures employees use only firm-authorized email addresses and phone numbers. If you are contacted by any person and want to confirm your identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

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