Brent Crude Oil Analysis

A stronger US dollar as well as the things about the Iranian nuclear deal that would add to oversupply in case this deal may get through Congress seems to give the Brent Crude Oil market pressure to the downside. Also a somewhat larger fundamental issue shall be OPEC and its reluctance to reduce output. Furthermore OPEC's production seems to been trending higher in the recent months. All that should add to a weaker market. To be noticed is also the expiring August Brent crude oil futures today.

With looking at the monthly perspective of September's Brent crude oil futures contract (ICEEUR), we can see a one time framing lower market inside of a balance area that occurs since serveral months. Currently the market is testing the bracket low, a level to be watched.

Moving forward to the weekly timeframe, a one time framing lower market that occuring since several weeks is visible here as well. We can also oberve a potential continuing move to the week's balance area low. However, in the previous week we seen some support at the marked level. We'll see how this week's market will react to that particular area.

Also, the daily perspective reveals a rotational behavior in the last couple of days with testing the current balance area low. The market could not break Tuesday's low for a potential test of the next supportive level at around $55.60, the low from July 7, to finially see a ongoing one time framing lower market in case trader's are in a short position.

Anway, be open minded and stay focused for other possible scenarios.

All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.

Brent Crude Oil Market Analysis

Here is our top down perspective for Brent Oil (Cash Market) with plain candle charts to understand the big picture in a simple way and to identify the path of least resistance. As usual, we will start out with the monthly timeframe periodicity. With looking at this timeframe, we can actually see that the market ended his one time framing lower behavior that occured since several months as January's high got taken out from the previous month. We can also see January's "successfull" reaction to the support level. However, in the actual month the market came back all the way down to the test the bullish trendline. We'll see how the market will react to this level as the forming of a potential balance area is possible as well.

Moving forward to the weekly chart, we can identify a balance area with a current possible scenario to the test the bracket low around $48.00.

With the installed EMAs on this timeframe we can observe that the market gone below the month's average line (5EMA) and the current week got rejected from this level as well. So, there is plenty room to the downside here:

With looking at the daily bars chart, we can see various balance areas. Yesterday the market got back into a previous bracket area with a strong move and currently the market is testing the low of this balance area. This could serve as possible support as well as the support level around $53.00.

Possible explanation of that support area could be the 50% Fibanocci level here:

Yesterday the market accepted the 10EMA as resistance and today we moved below this week's average line (5EMA).

It will be interesting to see what will happen in the next days, but with all this informations we could conclude a path of least resistance to the downside with continued downside rotations. However, we should bear in mind the daily bracket low and have a open mind for other possible scenarios.

Stay happy as success is "only" a habit!

Brent Crude Oil COT Report February 10, 2015

Besides of the WTI Crude Oil COT Report we should also consider a look into the COT Report for Brent Crude Oil Futures and Options combined as well as NYMEX and ICE combined. With that said, we can see a total Open Interest of 2,663,517 of which Managed Money is long positioned with 269,674 contracts and short positiond with 114,800 contracts makes a net long position of 154,874 contracts.

Money Managers were net buyers of 15,046 contracts with a long liquidation of 2,062 contracts and a short covering of 17,108 contracts in the week ended February 10, 2015.

Source:
ICE COT Report
COT Report

Dollar Affects Oil Importers And Exporters Differently

As we know the Brent crude oil futures are priced in U.S. Dollars (USD). The increase in value of the USD against other currencies and the recent decline in USD crude oil prices has logically different effects on oil importers and exporters as the EIA (U.S. Energy Information Administration) points out:

For example, the price of Brent crude since July 1, 2014, declined by 56% through January 21 in USD. However, given the depreciation of the Indian rupee and Turkish lira against the U.S. dollar over the same period, Brent crude prices in terms of those currencies fell by only 55% and 52%, respectively. Turkish and Indian consumers are therefore experiencing a lesser decline in the cost of imported oil products than consumers in countries that use USD or currencies with lesser or no depreciation against the USD.

On the other hand when Canada or Norway, both net oil exporters, convert their oil sales revenue from USD to their currencies the price of Brent crude in Canadian dollars or Norwegian kroner has fallen only 49% and 46%, since July.

Here is the post from EIA with more details.

Brent Crude Oil Market Analysis

All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.

Welcome to a quick educational Macro Top Down Market Analysis on Brent Crude Oil from the yearly bars zoomed in to the monthly bars. The Top Down perspective is very important to understand the overall market context. The market is telling a story and you have to be able to read this with various timeframes and tools.

Let's starting with the yearly macro chart. Currently we trading outside of this balance zone that occurs since three years. Also, the low from two years ago got taken out. The bar from two years ago was a ouside bar and gave us the first heads up for a potential change in market context.

Moving forward to the quaterly bars we can obtain some more zoomed in informations. The market is trading below the bracket zone now and is not an inside bar anymore (orange shadow). We are heading towards to the next marked potential support are on this timeframe.

To mention is also the break out of this quaterly wedge here:

Next is the monthly bars chart. We can observe a five months one-time-framing lower market. Marked on this chart is a potential support area confluent with the 61.8% fibonacci retracement level. Overall this market is very bearish rated with the informations so far.

Anyway, we will take one more quick look at a weekly bars chart with installed EMAs. We are one-time-framing lower since several weeks here and the 5EMA is been successful rejected. So the short-term-trend with the 5, 10 and 20 EMA is intact as well as the long-term trend with the 50 and 100 EMA.

You can see how much market generated informations we can get out of plain market charts. We could now move forward to analyze the market with various tools like VWAP, TPO profiles or price channels to better understand the overall market story as well as moving and touching base on smaller time frames to identify some potential trade opportunities combined with a strategical risk management. You can learn more about all this in our trading education.

Enjoy your success!