WTI Crude Oil Forecast: November 2020

Robert Petrucci

WTI Crude Oil has traded within a stable range the past month, but if Joe Biden wins the coming US election that could quickly change.

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WTI Crude Oil has found a rather comfortable value range the past month.  A test of support did occur in early October, but the $36.70 per barrel level proved adequate and essentially produced a snap reversal within the next week back to highs around $41.00. Since then the commodity has largely traded within a consolidated framework between $39.00 to $41.60 with support levels incrementally rising.

As of this writing WTI Crude Oil is trading slightly below the $40.00 per barrel juncture. However, traders should prepare themselves for volatile movements to take place within the energy sector. The reason for this is the potential of a shock to the market if the US election provides a victory for Joe Biden.

Simply put during the last debate of the two presidential candidates, Joe Biden made it clear he will look to regulate the US shale market with a much tighter grip. Whether he is able to do it or not shouldn’t interest speculators, what they should take into consideration is the notion Joe Biden could side with environmentalists and climate change groups. A victory by Biden on the 3rd of November could set off a storm in the energy sector and traders should count on a quick and violent response to the value of WTI Crude Oil.

Let’s remember for a moment what happened when traders realized President Trump won the election four years ago.   The entire US equity market went ballistic and volatility ruled the coming days with sudden spikes in values which emerged and helped lift US indices to eventually all-time high values. Please note, I am not saying if Joe Biden wins the coming US election that WTI Crude Oil is going to return to the $100.00 per barrel level, what I am suggesting is that his open support for stronger regulations on the shale oil industry because of the implications of fracking, will be viewed as a dynamic impetus within the energy sector.

If Joe Biden wins the coming election traders may want to be ready for the price of WTI Crude Oil to suddenly jump higher.  The reason for this conclusion is because a victory for the Biden camp may eventually mean tighter government mandates and oversight of the shale industry could lead to decreased supply.

Speculators may believe the fear of decreased supply will cause momentary bedlam within the energy sector which will have an immediate knock on effect to the price of WTI Crude Oil near term. Folks, it may not happen, first Biden may not win the election. Second, perhaps trading will remain calm and collected and instead of volatility developing, market participants will be tranquil even if Biden wins. However, history suggests the broad markets will generate sudden gyrations when the election results are known as investors react to whoever is chosen as the victor.

The price of WTI Crude Oil is within a tight range because economically supply and demand have made its current value the fair market price. Concerns are building about a second wave of coronavirus hitting the international scene, but nations seem to be positioning themselves to try and keep their economies open as much as possible.  

However, the coming US election could cause chaos within WTI Crude Oil in the next couple of weeks due to behavioral sentiment rapidly changing. Traders will need to use limit orders wisely. If Joe Biden wins the US election traders may want to speculate on the price of WTI Crude Oil jumping higher. Expect volatility.

WTI Crude Oil Outlook for November:

Speculative price range for WTI Crude Oil is 38.00 to 47.00 USD.

Support at 39.00 USD looks attractive, but if punctured lower WTI could retest the juncture of 38.00 USD if weakness develops.

Resistance around 41.70 USD looks significant, but if prices rise on political developments speculative quick spikes reaching the 47.00 USD level would not be an outright shock.

Crude oil

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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