While oil rebounds, $80 is the key price level to watch for.
Q2 2021 hedge fund letters, conferences and more
Time For Some Fundamental Analysis
With supply slipping and solid prospects for demand, the black gold continues to rise, notably dragged by natural gas along with it, as we may see a shift in demand from natural gas to oil. A barrel of North Sea Brent for November delivery peaked at $79.50, up 1.4% from Friday's close. After four consecutive sessions in the green, buyers are not weakening. According to Goldman Sachs, the recovery in global demand is indeed faster than expected.
On the supply side, U.S. production in the Gulf of Mexico is still cut by some 300,000 barrels per day, a month after Hurricane Ida hit, according to the latest data from the Bureau of Safety and Environmental Enforcement (BSEE). In this environment, the OPEC+ meeting next Monday should raise more attention, even though an immediate change in the cartel’s policy seems unlikely for now.
On the UK side, BP said 30% of its gas stations ran out of fuel on Sunday as a rush of panicked consumers to pumps forced the British government to suspend competition rules. According to major oil groups, a shortage of truck drivers makes it difficult to get fuel from refineries. Some operators had to implement rationing while others have closed stations.
Figure 1 – WTI Crude Oil (CLX21) Futures (November contract, daily chart)
Figure 2 – Henry Hub Natural Gas (NGX21) Futures (November contract, daily chart)
In brief, crude oil is surging. Natural gas rebounded to get back to its previous highs. I’ll assess the current moves and be waiting to see how the $80 level will act both as a psychological and technical resistance level on the Brent prior to drawing new projections. Detailed positions can be found in my premium Oil Trading Alerts. For the time being, given the increasing volatility, my conclusion is that there is too much risk to enter any trade right now.
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Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
