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Crude Oil Weekly Forecast: Tendency of Traders to Bet on Highs via News

By 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.

WTI Crude Oil finished last week’s trading within sight of highs, this occurred after a low of 68.500 was tested early in the week, but after the low the reversal upwards occurred because of geopolitical concerns.

Crude Oil Weekly Forecast - 22/09: Traders Bet High (Chart)

  • There will be a human tendency to look at the WTI Crude Oil price upon its opening on early Monday and believe the value of the commodity should jump because of the heightened tensions being seen between Israel and Hezbollah.
  • Crude Oil finished last week having scraped near the higher parts of its price range on Thursday and Friday.
  • The lack of a selloff on Friday emphasizes in many ways, larger players in WTI Crude Oil went into the weekend playing it safe and holding onto their long positions.

There is no reliable crystal ball to judge what will happen in the Middle East over the next twenty four hours. However, for all intents and purposes – for now – it appears that tensions are certainly flaring, but for the time being a more severe escalation may actually not happen. Large traders in WTI Crude Oil are experienced in geo-politics and while they are certainly anxious, day traders who are speculating on a simple trend to emerge higher in the near-term may find that this does not happen. Fear has already been factored into WTI Crude Oil in many respects.

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Higher Price after Lows Touched

WTI Crude Oil did begin to touch the 68.500 realms on Tuesday and Wednesday of last week, but this did not test lows seen the week before. Perhaps lower price action would have developed the middle of this week, but news from the Middle East regarding electronic devices among the Hezbollah detonating certainly caused a stir of nervous agitation among energy traders. WTI Crude Oil is certainly affected by sentiment regarding geo-politics and this weekend has not produced more tranquil news. In fact, there are signs that hostilities could get worse.

However, day traders should look at the highs made in WTI Crude Oil on Thursday and note that resistance also proved durable. Prices could have gone higher on Friday, but they actually stayed below Thursday’s lows. Tomorrow’s opening in WTI Crude Oil may be affected significantly by developing news over the 16 hours. If calm prevails large traders may be able to take a deep breath and believe for the moment that WTI Crude Oil will remain within it lower trend which it has demonstrated the past two and half months.

Risk Management and Betting on WTI Crude Oil

Any trader who pursues WTI Crude Oil over the next few days needs to acknowledge they are participating in a casino like environment. Volatility will likely cause price velocity and sudden reversals based on news developments.

  • Traders who want to buy simply because they feel nervous about the loud geo-politics need to also consider that more experienced players with actual skin in the game probably have better insights and may be more comfortable.
  • If WTI Crude Oil remains calm on Monday’s opening and remains within a known price range over the following hours, this may be a signal the commodity could actually reverse lower and back to depths seen last week.

WTI Crude Oil Weekly Outlook:

Speculative price range for WTI Crude Oil is 69.750 to 76.500

Traders need to be careful in WTI Crude Oil early this week. Perhaps sitting on the sidelines and simply watching trading on Monday may prove beneficial. If Monday’s trading doesn’t produce any fast price action upwards, this could be a sign that large traders are still basing their outlooks on rather lackluster demand over the mid-term. If news from the Middle East escalates certainly this could ignite more buying.

Day traders should also keep in mind that U.S growth numbers will be published this coming Thursday via the GDP reports. If the Middle East stays relatively calm and U.S economic data is not overtly strong, WTI Crude Oil could have reasons to actually produce more selling. However, traders who are entering the energy sector this week and wanting to speculate need to understand things may change quickly. Risk management will be critical this week in WTI Crude Oil.

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Robert Petrucci
About 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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