OPEC Hike Hits, But Crude Holds—Bias Turns Neutral/Bullish

Energy Update

/ by Blue Line Futures

OPEC Hike Hits, But Crude Holds—Bias Turns Neutral/Bullish


WTI Crude Oil Futures (June Future)

*BIAS UPGRADED TO NEUTRAL / BULLISH from NEUTRAL

Friday’s Settlement: 58.29, up -0.95 [-1.60%] for the day, down -4.73 [-7.50%]

WTI Crude Oil futures ended last week sharply lower, driven by speculation that OPEC+ would accelerate output hikes.

The group then surprised markets on Friday by moving up the date of their May 5th meeting to May 3rd.

On Saturday, we got the OPEC decision we have been worried about, an output hike of +411k bpd for June. This was the potential bearish catalyst that has kept us sidelined since Kazakhstan made their comments on the 23rd. With the bear case being realized we turn our attention forward.

Today, Crude Oil is down -1.23 [-2.11%] to 57.07

WTI Crude Oil futures opened Sunday night lower by close to ~4% and made lows at 55.30. The OPEC meeting discussed above was the primary driver of this bearish gap down.

The macro environment is trading mixed to risk-off this morning, with the S&P and Dollar trading markedly lower into the US open. Yields are mixed, with long-end rates rising sharply and the front end staying close to unchanged.

There is a hint of the de-dollarization trade in today’s price action. This is something worth keeping an eye on as those flows seemed to have slowed last week.

Summary & Bias

The bearish catalyst that has kept us sidelined has now been realized. As we turn our analysis forward, the environment is chalked with bullish potential catalysts. Because of this, we have shifted our bias to Neutral / Bullish.

The Iran negotiations are spiraling and have resulted in secondary sanctions announced last week. A thawing of the US-China trade war is starting to make progress, Venezuela sanctions are being ramped up and enforced, and negotiations with Russia have come to an impasse, with more sanctions threatened last week. On top of this, global inventories remain near seasonal lows while US gasoline demand remains resilient.

Technical Analysis:

June futures have held support so far today with the lows being 55.30. While we have shifted our bias to a more bullish tilt, we’d like to see how price performs through the US open. If the rare and major four-star support level at 54.67**** is broken, there is nothing but air and risk to the downside increases dramatically.

We see upside potential towards the 60.00-62.00 area if prices hold firm through the start of today’s session. There is a chance prices flush when real money volume comes through at 8:30 AM.

For intraday trading, our pivot and point of balance is set at…

 

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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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