MAY 2020 WTI OIL LONG
"WTI oil was heavily brought to its knees in the first quarter of this year. This was due to speculation on Wall Street, extreme unprecedented volatility, an open war between oil producers and a global drop in demand for black gold of more than 30%. However, there are several reasons why oil could show solid growth in the coming weeks. We will explain them in more detail. "
MEDIUM-TERM INVESTMENT ANALYSIS OF WTI OIL
MEDIUM-TERM INVESTMENT ANALYSIS OF WTI OIL
September 2020 oil WTI long. Development of the average historical seasonality of September oil futures WTI (NYM) in the last 30, 15 and five years. The graph shows the long-term correlation of seasonal price movements. The chart shows that in the history of the last thirty years (purple), fifteen years (blue) and five years (red), the WTI oil analysis usually experienced a seasonal increase in price during the year from mid-May to the end of June.
- Although seasonal cyclical events are somewhat subdued in this volatile year, there are arguments that should support our expectations of a rise in the price of black gold.
- Table. An overview of historical prices and the development of seasonal trade in September oil WTI (NYM) since 2005. The table shows that over the past 15 years, the percentage of successful analyzes in the period May-June reached 80% with an average profit of 3,190 USD / contract. Indicative validity of the analysis from 5.5.20 to 30.6.20 *.
* The indicative potential termination of the analysis, considering the behavior and performance of the analysis over the last fifteen years, can be influenced by many factors, short-term trends and active work with a trailing stop.
Factors leading to an analysis of the potential growth in WTI Oil's share price
- WTI oil was heavily brought to its knees in the first quarter of this year. This was due to speculation on Wall Street, extreme unprecedented volatility, open war between oil producers, a global drop in demand for black gold of more than 30%, huge supply and globally filled oil reservoirs. However, there are long-term recurring seasonalities in the market that should help oil grow in the foreseeable future. The first and with the upcoming season is main the seasonal motoring season. This seasonality has NEVER FAILED in the history of the last fifteen years. The reason for this is simple. Just as you can be confident every year that summer is replaced by winter, so you can be sure that with the arrival of the summer motoring season, people will set off. By plane, boat or car, just anything that takes them from one place to another. During the winter, refineries maximize fuel oil production at the expense of gasoline. But with the advent of spring and improved driving conditions, gasoline consumption is rising. In addition, the industry must accumulate supplies for the upcoming summer holidays and motoring season. This combination usually pushes up petrol and oil prices between May and June.
- After black gold fell to a new all-time low in March, it can now be assumed that with the restart of economies, there is room for potential growth. Although black gold does not seem to be on the rise globally, the price of oil is rising today for the fifth day in a row. In addition, it is good to realize that all the bad things that the markets have gone through in recent weeks is already included in the current price. The supply, together with the global surplus, can hardly be higher. Theoretical risk of a fall in prices again. Weak demand. Growing geopolitical risk. All of this is already reflected in the price, so the only thing left is the positive growth in consumption, after the economic restrictions associated with the coronavirus pandemic begin to loosen, when people get back in their vehicles, go to work, start making money, start spending and planning where to travel this year.
- Hopes for a recovery in demand are helping oil prices. During Monday's trading session, oil futures continued to rise after a report by data company Genscape indicated that black gold stocks in Cushing, the United States, had risen by just 1.8 million barrels last week. If the US Petroleum Institute (API) data confirmed this later on Tuesday and government statistics on Wednesday, it would mean a significant change in inventory growth compared to the trend in recent weeks.
- Oil prices also continue to rise in response to signs that US producer closures are weakening the short-term imbalance between supply and demand. Reports from individual energy companies show that production taps are off.
Warning of potential risks for WTI Oil
- The above could be negatively affected by uncertainty and fears of possible subsequent pandemic waves following the restart of global economies. With zero experience of the current situation and a potential threat of re-emergence, efforts to recover economies quickly could quickly take hold. In addition, the current "relative" calm in the global energy market could be disrupted in the foreseeable future by a re-simmering trade war between the world's two strongest economies, China and the United States. Although at the turn of 2019/2020 the US and China were ready to sign a draft economic agreement that would lead to the final end of the nearly two-year trade war between these countries, the US President's current threats to China threaten to drop the agreement. On the contrary, China could theoretically have worse times than ever before. Reason? Accusations of China as the "creator" of a global pandemic and the WHO as an incompetent ill-advising tyrannosaur, saying "Me nothing, me musician." Import tariffs at 100% of goods imported from China? It will not help the Americans in any way, but "divine rhetoric" and beating the breasts of the "savior of the USA" are useful before the election.
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