Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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 Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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