In the oil markets, every twist and turn teach you something.
Take the West Texas Intermediate (WTI) crude oil futures.
Despite escalating Middle East tensions, production challenges, and global demand shifts, the U.S. oil benchmark has defied volatility expectations.
In an impressive display of resilience, the WTI not only withstood significant pressure from the above factors — it even climbed 6% to a two-month high…
Creating two unique opportunities we helped our clients take advantage of.
See the approach we use for profit-taking in oil and gas trades.
Or check out five critical events behind new opportunities on our radar.
- New Middle East Tensions: Strikes between Pakistan and Iran added a new layer of tension. While global oil supplies have remained relatively stable, increased shipping costs hint at potential market implications. This means we’re holding some of our positions for short-term gains while being vigilant for any significant market shifts that require a change of strategy.
- Differing forecasts between The Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) hint at uncertainties in the long-term global oil demand. OPEC remains optimistic, while the IEA remains cautious. But whatever happens, there’ll be opportunities in vertically integrated oil firms amid stable crude oil prices.
- The Chinese Meltdown: As a key player, China’s economic slowdown raises questions about future oil consumption. Still, proactive crude oil purchases by Chinese refiners signal a hopeful anticipation of increased demand over the next six months. In this case, we target undervalued offshore drillers.
- The Federal Reserve’s Resolve With Interest Rate Hikes remains a significant factor influencing the global oil market. On the one hand, higher-for-longer interest rates could keep oil prices within our target range, and here, we zero in on companies benefiting from stable oil prices. On the other hand, any interest rate cuts by the Fed could raise oil prices, in which case we target cash-rich oil firms in two of America’s hottest oil fields.
- U.S. Production Peak: Yesterday, I wrote about America’s new production peak of 13.3 million barrels per day. It’s just one outcome of U.S. oil drillers’ defiance of freezing temperatures, and the numbers will likely improve. In this case, the West Texas Intermediate (WTI) is one place I would look at for short positions that could yield 35% or more over the next three weeks.
Here are some numbers to work with (regarding the WTI as above):
- Major support = $64.52 – $58.46.
- Additional support = $65.83 – $60.09.
- Potential upside target = $76.57 – $79.77.
I hope this helps.
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