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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.

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

Learn more about oil trading.

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


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