WTI – West Texas Intermediate – Crude Oil

WTI – West Texas Intermediate – Crude Oil SUMMARY: NEUTRAL

Moving Average Sell
Technical Indicators Neutral
Fundamentals Negative


Technical Review by IRONFOREX

WTI plunged after Saudi Arabian oil minister Al-Naimi said that the country had been pumping 10.3mn barrels per day in March. Crude oil violated three support barriers in a row on Tuesday, and during the European morning Wednesday it is trading slightly above the 57.00 (S1) barrier. The short-term bias is negative in my view, therefore, I would expect a dip below 57.00 (S1) to initially challenge our next support at 56.50 (S2), defined by the low of the 29th of April. Our daily momentum studies support the case for further declines. The 14-day RSI just fell below its 50 line, while the daily MACD has topped and fallen below its signal line. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. As a result, I would treat yesterday’s fall and any future extensions of it that stay limited above 55.00 as a corrective phase.

• Support: 57.00 (S1), 56.50 (S2), 56.10 (S3)

• Resistance: 57.80 (R1) 58.30 (R2), 58.70 (R3)

Fundamental Review

World Economy World economic growth for 2014 is now seen at 3.3%, up from growth of 3.2% in the previous report. Global economic growth in 2015 remains unchanged at 3.4%. The OECD growth estimate is unchanged at 1.8% for 2014 and 2.2% in 2015. China’s growth forecast remains at 7.4% for 2014 and 7.0% for 2015. The growth forecasts for India in 2014 and 2015 have been revised higher to 7.2% and 7.5%, respectively, following large revisions by the country’s statistical office. Russia is now expected to see a contraction of 3.2% in 2015, compared to a contraction of 2.4% in the previous report. Brazil’s growth in 2015 has also been revised lower to 0.2%, from 0.7% previously.

World Oil Demand

The estimate for world oil demand growth in 2014 remains broadly in line with the previous report at 0.96 mb/d. For 2015, global oil demand growth is expected to average 1.17 mb/d, relatively unchanged from the previous month. Almost half of 2015 oil demand growth is projected to come from China and the Middle East.

World Oil Supply

Non-OPEC oil supply growth in 2014 is now expected at 2.04 mb/d, following an upward revision of 0.05 mb/d from the last report, mostly due to stronger-than-expected growth in 4Q14. In 2015, non-OPEC oil supply is projected to grow by 0.85 mb/d, unchanged from the previous assessment. OPEC NGLs in 2015 are forecast to grow by 0.19 mb/d. In February, OPEC crude production declined by 0.14 mb/d to 30.02 mb/d, according to secondary sources.

Balance of Supply and Demand

Demand for OPEC crude is estimated at 29.1 mb/d in 2014, broadly unchanged from the previous assessment. In 2015, required OPEC crude is projected at 29.2 mb/d, also unchanged from a month earlier.

Trading Recommendation

  • Buying is not recommended
  • Risking a short position is not recommended.

Factors Influencing WTI – West Texas Intermediate – Crude Oil – Prices

The are a number of factors that can affect crude oil prices, posivitily or negativitily. There is not rule when or how any of this factor can influence crude oil prices. Sometimes excess supply will undermine prices and  in another economic instance excess or lack of supply will be a welcomed by investors.

Physical Balancing

  • Inventories


  • Energy prices
  • OPEC supply capacity
  • Usable spare capacity
  • non-OPEC capacity
  • Geopolitics
  • Weather
  • E&P costs
  • E&P investments
  • E&P innovations


  • Energy prices
  • Economic growth
  • Industrial production
  • goods transports
  • personal transport
  • Weather
  • Innovation in energy using equipment

Markets & Market Behaviour

  • Energy prices
    –  Spot,
    – Futures
    – Option
    – Spread
  • Other financial markets
    – Other commodities prices
    – Commodity investment
    – Currency exchange rates
    – Stocks and other assets
    – Interest rates

Other Factors

  • China’s Economy. China is the second largest consumer of oil in the world and surpassed the United States as the largest importer
  • American shale investment and production is currently affecting negatively crude oil prices. It has reduced considerably the need for USA to import crude oil.
  • Reserves

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