Crude Whipsaws on Venezuela Headlines as Volatility Surges

Energy Update

/ by Blue Line Futures

Crude Oil finished lower yesterday after reaching the 50-Day moving average, prompting some profit-taking. Later in the day, President Trump tweeted regarding “Venezuela turning over 30-50 million barrels of high-quality oil,” triggering a wave of fear selling. Headline-driven moves can be useful in pushing prices away from fundamental equilibrium, but when they also trigger systematic/technical trading programs, the momentum shift can make fundamentals irrelevant for longer than expected. Understanding that, in conjunction with how truly cloudy and unpredictable this situation is, favors very patient and level-driven long positioning (55.13***), or risk-defined upside plays in the options markets.

This morning, there are reports of a Russian response to Venezuela, and unconfirmed internet rumors that they have sent submarines to escort Venezuelan oil tankers. This rumor is also working with reports that the US military is working to hunt-down and board these vessels currently in transport. It’s a very unclear environment, but it’s realistically a powder-keg situation. The probability of direct confrontation between global super-powers, even if it’s a short and isolated event, is much higher than normal at this point in time. Traders should position and manage risk accordingly.

If traders do want to attack this from the downside, staying risk-defined on your short positioning and utilizing options markets is imperative in this environment.

Technical Analysis:

We’re looking for a retest of the 50-Day moving average, but a floor needs to develop before this bounces. The bounce-back this morning has prices back up to our 56.78*** level. Buying through the US open from here would be encouraging. Real-money volume needs to be seen before making a judgment call from here. Anyone speaking confidently about how this situation unfolds should be avoided; uncertainty is extremely high, and risk management should be top of the priority list.

Please note some of the key trading zones highlighted in the intraday chart below. These regions have featured some key volume flows and momentum shifts in recent days. Flows at these levels will be important to watch on an intraday basis.

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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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