Oil prices retrace off the highs, overview remains volatile
Natural gas prices suffer a pullback, while for oil, EIA’s inventory data showed a larger surplus.
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Oil WTI Technical analysis, overview, strategies, and levels
Energy took plenty of attention yesterday, especially when it came to natural gas prices following events out of Russia and comments from both its president and deputy PM (who is also the former energy minister), the former requesting proposals on how to stabilize the energy market and that Gazprom would send more gas via Ukraine than initially contracted, and the latter suggesting selling additional volumes on the company's electronic platform and stressing the certification of the already completed Nordstrom 2 gas pipeline.
For oil prices (where at these levels the source of movement has been emanating from the energy crisis), the pullback went beneath key support levels, easily giving conformist breakout strategies the edge. Any further volatile moves with this intensity would mean levels will face difficulty holding, keeping conformist strategies breakouts in line with its volatile technical overview while those looking to go contrarian can consider reversals (but ideally after a significant break/breach first to avoid getting stopped out on the first move).
And given there are factors outside of oil prices but within the energy sphere to consider, its overview is different from what would have normally been a bull trend where most of its technical indicators are flashing green, and prices at the lower end of its bull channel after briefly going above it the day before.
As inventory data out of Energy Information Administration (EIA), it showed an increase of 2.3m barrels for oil that was above expectations and that out of API, gasoline up while distillate dropped slightly.
| Current technical overview | Volatile |
| Technical overview conformist strategy | Buy 1st resistance upon breakout from below, sell 1st support upon breakout from above |
| Technical overview contrarian strategy | Sell 1st resistance upon reversal, buy 1st support after reversal |
| S/L for 2nd resistance | 79.93 |
| 2nd resistance | 79.38 |
| S/L for first resistance | 78.83 |
| 1st resistance | 78.28 |
| Relative starting point | 77.19 |
| 1st support | 76.10 |
| S/L for 1st support | 75.55 |
| 2nd support | 75.00 |
| S/L for 2nd support | 74.45 |
IG client* and CoT** sentiment for Oil WTI
In sentiment, it has remained a consistent heavy buy bias amongst larger speculators according to the Commitment of Traders (CoT) reports just shy of extreme long bias. But for retail traders, it’s an opposite majority short that has risen from 55% yesterday morning to 59% today.
Oil WTI chart with retail and institutional sentiment
*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.
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