“Crude Corner”: Oil Industry Insights, Market Analysis and Price Outlook

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“Crude Corner”: Oil Industry Insights, Market Analysis and Price Outlook

On Wednesday, the United States Energy Information Administration reported that U.S. crude inventories rose another 15 million barrels for the week ended April 17 to 518.6 million barrels.

That marked a 13-week climb and followed a record weekly increase of 19.2 million barrels a week earlier.

Another large oil build propels us closer to a record oil inventory level, which is now less than 17 million barrels away.

As refining activity dips to a new 12-year low, the crude build has actually been kept in check by lower oil imports – dropping below 5 million barrels per day for the first time in the weekly data since 1992.

Rising Unemployment, Rising Oil Inventory

The Labor Department reported that the number of Americans applying for state unemployment benefits totaled 4.427 million last week.

Combined with the prior four jobless claims reports, the number of Americans who have filed for unemployment over the last five weeks is 26.45 million.

That number far exceeds the 22.442 million jobs added to payrolls since November 2009, when the U.S. economy began to add jobs back after the recession.

The bottom line is that 26.45M people are NOT consuming products produced by crude oil.

They aren’t commuting, going to the gym, going out to dinner or leisurely traveling.

April Crude Oil YEARLY Cycles

  • The 10 year cycle makes a high on April 15, the pulls back into April 19 then makes a major top on May 2.
  • The 20 year cycle makes a major low on the April 11 then rallies into the April 25.
  • The 30 year cycle continues its sell off into April 18 then rallies into the end of the month.

Historically, April is the second most bullish month of the year for crude oil.

With that said, there’s really no clear correlation to support that statement right now.

But, there is a seasonal tendency for oil prices to rally during the latter part of this month.

Key turning point dates:

  • April 3
  • April 16 to 17 – close to 10 and 30 year cycles
  • April 23 to 24 – close to 20 year cycle

Long-Term MONTHLY Price Outlook

The $12.00 price area can potentially absorb annual selling pressure, above which the $28.00 price area remains a several week target, the $57.00 price area is potentially in reach over the next several months.

Upside, the $28.00 price area can absorb buying pressure through the remaining May trading sessions, with a daily settlement above the $28.00 price area indicating a good annual low has been placed.

The $57.00 price area then becomes a several month target where the broader market can potentially place this calendar year’s high.

Downside, a daily settlement below the $12.00 price area will most likely yield a $3.00 price area test within several days to follow, the lowest price support presently found on any chart.

Further downside would result in another negative price retest like we saw earlier in the week on the May CLK20 expiring contract.

WEEKLY Price Outlook … April 20 – 24, 2020

The main trend remains bearish according to the weekly swing chart.

The market is in no position to change the main trend to bullish, but holding the mid-March bottom at $21.00 price area which could help June WTI crude oil build a solid enough base to support a strong short-covering rally…

While the short-term trend also remains bearish.

Taking out the short-term top at the $34.00 price area won’t change the main trend to bullish, but it will shift momentum to the upside.

Taking out $21.00 price area will reaffirm the downward bearish trend.

The short-term range is between the $21.00 to $34.00 price range.

Its 50% level or pivot at the $28.00 price area is controlling the weekly direction of the market.

On the upside, the nearest 50% level resistance comes in at the $38.00 price area.

Based on the past week’s price action, the direction of the June WTI crude oil market for the week ending April 24 is likely to be determined by trader reaction to the pivot at the $28.00 price area.

Downside, a sustained move under the $28.00 price area will indicate the strong presence of sellers.

The first target is the main bottom at the $21.00 price area.

Penetrating this bottom will indicate the selling pressure is gaining traction.

Crossing to the weak side of the downtrending angle at $19.00 price area will put the June WTI futures contract in an extremely bearish position, most likely creating a further downside move.

Upside, a sustained move over the $28.00 price area will signal the presence of optimistic buyers.

If this move is able to create enough upside momentum then look for a potential spike into the $34.00 price area.

Short – Term DAILY Price Outlook … April 24, 2020

For Friday, the $12.00 price area remains a long-term support level that can absorb not only daily selling, but also selling pressure throughout the balance of May’s trading activity as long as the market continues placing weekly and monthly settlements above $12.00 price area.

The next several weeks are likely to yield an upside potential of testing the $30.00 price area.

Upside today, the $19.00 price area most would likely contain initial strength, beyond which the $22.00 price area is likely and able to contain the balance of the session’s strength.

A settlement today above the $22.00 price area indicates potentially reaching the $27.00 price area within several days.

Downside today, breaking below the $12.00 price area allows a further fall to the $11.00 price area intraday.

A weekly settlement today below the $12.00 price area will likely allow further downside to the $3.00 price area next week.

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