Featured Photo From: https://responsive.fxempire.com/cover/1845x1230/webp-lossy-70.q50/fxempire/2020/05/Crude-Oil-Pump-6.jpg
WTI Crude Oil Futures gained 88% last month, as oil reaches a record gain for the month of May. USOil is essentially flat since open, but looks like it recently converted that resistance into support, and perhaps become a long position for traders. Futures gained during the month of May, but dropped today in light of the tensions between US and China.
What Are Futures?
Traders purchase or sell contracts with a predetermined price at a specific time in the future. In other words, traders enter in a contract now for a future price of that commodity, stock or index. Futures markets are based on this flow of predetermined prices that are expected to come.
Last month, the June and July futures for oil were up substantially, creating a strong sentiment for investors to purchase oil. But futures change; one week, they could be up and the next week down.
On the chart above, you can see the heavy changes in price for the futures contracts. This chart shows the WTI Crude Oil futures prices in the past one year. Futures hit as high as $63.27 on January 6, 2020. As of now, July futures are down a little over 1% for the day at $35.13. Since late April and into May, prices climbed significantly due to increased demand. Today, we saw a small decline even as OPEC plans on continuing cuts on production to lessen supply and cause prices to rise again. This drop in futures prices has something to do with relations with the US and China.
In more recent news, Russia and OPEC are closer to reaching a decision, but tensions between the US and China not only affect market prices, but commodities like oil too. The report on potential production cuts is expected to be on June 4, which will determine the decisions of traders and investors alike. If we were to see an extended cut for another month, demand in this global commodity will probably rise, as well as the price.
The 14 day RSI now reached 63, almost the highest it's ever been since the beginning of this year, showing signs of becoming overbought (overbought is 70). Regardless, the prices will swing depending on news of the US and China talks.
This screenshot I took on TradingView shows the price of oil in relation to the S&P 500. You can tell that they are mostly climbing and descending together. That is why the US and China issue is imperative in oil's price, along with OPEC's decision on cuts. With oil climbing closer to its 200 DMA, we might be able to reach that resistance level if production cuts happen again and tensions between the US and China dwindle.
With the Sino-American relationship creating volatile markets back in 2019, this could prove to be the biggest mover for US markets and commodities. Traders are awaiting the news on OPEC as futures fluctuate between small positive and negative gains/losses for the day. Tensions have gotten worse between the two countries based on how the US blames China for mishandling the present pandemic and their national security laws. Traders are concerned that the price will not continue to rise.
- Watch for OPEC's decision expected to report on June 4 - Stay posted on US-China conflict - Look out for upcoming resistance on the 200 day moving average - If oil futures gain, the current price of oil will follow - US market indices can help gauge the price and momentum of oil - Keep an eye on USOil futures as well as US market futures
About Our Community
Thanks for reading! If you are interested in joining our trading community, we have chatrooms, trade alerts from our top traders, and educational content. You can join using the link below, and get a discount on your membership.
Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.
AI- Generated Trading Setups
AI-generated bullish/bearish bias setups on forex currencies, gold, & indices.
Today's economic figures came out in US and Canada. GDP came in higher than expected in Canada while the price of goods purchased by consumers was lower than last month. Here are some pullback ideas for USD and CAD from GDP and PCE numbers. EdgeFinder Analysis NAS100 is a bullish reading on the EdgeFinder still. […]
This week has brought more inflation data with it regarding the USD's PCE and PMI numbers. Powell is also set to speak this Friday about monetary policy going forward. The RBNZ will also release their latest interest rate news tomorrow with expectations of an unchanged rate at 5.5%. EdgeFinder Analysis GBPUSD is a bullish bias […]
This week is a big PMI week for Europe, UK and US. Additional inflationary metrics will add to the overall sentiment of these countries' monetary policies going forward. Here are some setups for the coming week on these currencies. EdgeFinder Analysis GBPCAD is now a +7 on the EdgeFinder as we wait for CPI news […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.