Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Is the Oil nearing the Bottom?

53 sec read

Oil Futures – Daily Charts (Front Month)

I woke up in the morning just to see the headlines “Oil Drops to 21-Year Low With Storage Filling as Demand Shrivels”. Ever-since OPEC and its allies agreeing to cut production by 9.7 million barrels per day, Crude oil continuing its downward journey.

OIL 5min Intraday Charts (Front Month)

The front-month May futures contract was down 14.88%, or 2.72 dollars, to $15.55 a barrel as of 10:27 p.m. ET (0228 GMT). That contract is expiring on Tuesday, and the June contract, which is becoming more actively traded, was down 1.29 dollars, or 5.15%, to $24.71 a barrel. Brent was also weaker, falling 28 cents, or 1%, to $27.8 a barrel.

WTI Crude near term contract is totally disconnected from London Brent futures. Our local MCX market is not open yet however, roughly 583 pts of the premium is witnessed in the next month’s May Futures contract compared to the front month expiry as on Friday closing. Similar Premium was there during Feb 2016 when the oil was trading around 25 dollars per barrel before bottoming out.

And the Gold Oil Ratio is currently at 100+ levels which is at super extreme levels compare to the historical average. Hence more odds that Crude Oil Prices are likely to be at the value investing zone.

Do you think Oil Nearing bottom here? I do. Expecting Crude to bottom out in 1-2 weeks from here in a very short term.

Trading sentiment is at the extreme and fear of oversupply concerns are there despite a record oil production cut.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

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