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Crude Oil is trading above and below the 100-day MA

The price of WTI crude oil

Crude oil

Crude oil is the most popular tradable instrument in the energy sector, providing exposure to global market conditions, geopolitical risks and the economy. The instrument is strategically used and located in the global economy. Crude oil has proven to be a unique option for traders given the volatility and effectiveness of swing trading and longer term strategies. Despite its popularity, crude oil is a very complex investment instrument, given the litany of oil price swings, risks and policy impact stemming from OPEC. Short for the Organization of the Petroleum Exporting Countries, OPEC functions as an intergovernmental organization of 13 countries, helping to define and dictate the global oil market. through other instruments exhibited there. This includes energy stocks, USD/CAD and other investment options. Crude oil itself is traded on a duality of markets, including West Texas Intermediate Crude (WTI) and Brent. Brent has been the most widely used index in recent years, while WTI is more heavily traded on futures contracts at the time of writing. Apart from geopolitical events or OPEC decisions, crude oil can move in different ways. The most basic is simple supply and demand, which is affected by global production. Rising industrial production, economic prosperity and other factors all play a role in crude prices. By extension, recessions, lockdowns or other stifling factors can also influence crude prices. For example, excess supply or subdued demand due to the aforementioned factors would cause crude prices to decline. This is due to traders selling crude oil futures or other instruments. If demand increases or production plateaus, traders will bid higher and higher on the rough, driving up prices.

Crude oil is the most popular tradable instrument in the energy sector, providing exposure to global market conditions, geopolitical risks and the economy. The instrument is strategically used and located in the global economy. Crude oil has proven to be a unique option for traders given the volatility and effectiveness of swing trading and longer term strategies. Despite its popularity, crude oil is a very complex investment instrument, given the litany of oil price swings, risks and policy impact stemming from OPEC. Short for the Organization of the Petroleum Exporting Countries, OPEC functions as an intergovernmental organization of 13 countries, helping to define and dictate the global oil market. through other instruments exhibited there. This includes energy stocks, USD/CAD and other investment options. Crude oil itself is traded on a duality of markets, including West Texas Intermediate Crude (WTI) and Brent. Brent has been the most widely used index in recent years, while WTI is more heavily traded on futures contracts at the time of writing. Apart from geopolitical events or OPEC decisions, crude oil can move in different ways. The most basic is simple supply and demand, which is affected by global production. Rising industrial production, economic prosperity and other factors all play a role in crude prices. By extension, recessions, lockdowns or other stifling factors can also influence crude prices. For example, excess supply or subdued demand due to the aforementioned factors would cause crude prices to decline. This is due to traders selling crude oil futures or other instruments. If demand increases or production plateaus, traders will bid higher and higher on the rough, pushing prices up.
Read this term futures contracts

Futures contracts

A futures or futures contract represents a legal agreement to buy or sell a security or asset at a predetermined price at a specific time in the future. It should be noted that the parties do not know each other. These transactions generally involve commodities or other securities involving the buying and selling at a forward or predetermined price. Futures contracts also adhere to a delivery date, which specifies the date of delivery and payment. Compared to other forms of investing, futures contracts are much more complex, as they involve specified and non-flexible parameters. Futures contracts are traded on exchanges which act as a unified market for buyers and sellers. The buyers of contracts represent the holders of long positions, while the sellers represent the holders of short positions. Both parties risk their counterparty walking away if the price goes against them. As such, the contract may involve both parties incurring a margin of the value of the contract with a mutually trusted third party. This margin can vary significantly, depending on the current market volatility of the security being traded. Futures contracts can be incredibly risky. and are the classic definition of stock market speculation. A trader who predicts that the price of an asset will move in a certain direction can contract to buy or sell it in the future at a price. If this prediction is correct, the trader will profit from it. If the prediction is incorrect, there will be losses. Futures trading is considered an advanced type of trading that requires prior knowledge and understanding. For this reason, retail traders will rarely have access to futures trading through brokers without first going through specific questions or account requirements.

A futures or futures contract represents a legal agreement to buy or sell a security or asset at a predetermined price at a specific time in the future. It should be noted that the parties do not know each other. These transactions generally involve commodities or other securities involving the buying and selling at a forward or predetermined price. Futures contracts also adhere to a delivery date, which specifies the date of delivery and payment. Compared to other forms of investing, futures contracts are much more complex, as they involve specified and non-flexible parameters. Futures contracts are traded on exchanges which act as a unified market for buyers and sellers. The buyers of contracts represent the holders of long positions, while the sellers represent the holders of short positions. Both parties risk their counterparty walking away if the price goes against them. As such, the contract may involve both parties incurring a margin of the value of the contract with a mutually trusted third party. This margin can vary significantly, depending on the current market volatility of the security being traded. Futures contracts can be incredibly risky. and are the classic definition of stock market speculation. A trader who predicts that the price of an asset will move in a certain direction can contract to buy or sell it in the future at a price. If this prediction is correct, the trader will profit from it. If the prediction is incorrect, there will be losses. Futures trading is considered an advanced type of trading that requires prior knowledge and understanding. For this reason, retail traders will rarely have access to futures trading through brokers without first going through specific questions or account requirements.
Read this term stand at $106.19. That’s down $3.33 or -3.04%

The high price reached $109.76. The low reached $101.53. Settlement is near the middle of this range.

Looking at the daily chart, price broke below the 100-day MA (and an upward sloping trendline) near $104.62. The bounce at the close took the price back above that MA level. This MA is near the middle of what has been home to most of the price action since early March (see red box). This box ranges from $93.14 to around $116.38 (large but real).

There were two upside down races. The March one saw the price climb to the highest of the year. The most recent extension above the zone moved to $123, before reversing lower.

On the downside, the rising 200-day MA (green line in the chart above) is heading to the lower extreme at $93.14. If the price of Crude Oil were to decline from here (get and stay below the 100-day MA), this 200-day MA would approach the lower extreme of the “red box”, increasing the importance of this level from a technical point of view.

The price action and the failure of the 2nd round higher suggests that the peak may well be in place. Falling demand due to the weakening global economy may alleviate the supply problem somewhat, but the winds of war remain an issue (and hopefully there won’t be either hurricanes that will disrupt supply this year).

This is why there are techniques that help link the price action to the storyline. Uncertainty is also why the low to high trading range is justifiable.


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