With the WTI June 2020 contract expiry date of May 18, I think we will begin to see a realization that many traders will need to dump contracts before physical settlement. Cushing storage is quickly approaching max. working capacity, with many reports stating all storage is leased and spoken for at the facility. The oil glut for May delivery caused USO to dump all June 2020 contracts for a very good reason (they seemed to learn from their mistakes). Hopefully the buyers of these contracts have a lot of empty swimming pools, or the delivery risk has simply shifted hands like a game of hot potato.
USOIL is facing a supply / demand situation that will not be solved for many months as the industry reacts to production cuts and the restart of the economy. Assuming OPEC+ fully complies with production cuts (OPEC data publishes on May 13) and none of the shut-ins delay or come back online, we may be facing oversupply until December 2020 (maybe September 2020 to be optimistic).
TA: I think USOIL has reached a short term double top. Lots of resistance at $27.50 and bulls trying to retest this level due to the SA price improvement news. Where does USOIL bottom for June 2020? Depends on how much storage the last guys standing actually have access to. I think we are at least looking at support of $19.00 and then $14.50. After that, who knows.
Key data / items to watch:
Weekly API and EIA crude data
Other storage data / news (what is happening with all of the floating storage / SA oil due to land in 5-10 days?)
Demand indicators / re-openings
Airline news (restrictions WILL be put in place, and it will be interesting to see how this impacts flight numbers and demand)
This is not trading advice and should not be considered an investment consideration. Educational purposes only.
USOIL is facing a supply / demand situation that will not be solved for many months as the industry reacts to production cuts and the restart of the economy. Assuming OPEC+ fully complies with production cuts (OPEC data publishes on May 13) and none of the shut-ins delay or come back online, we may be facing oversupply until December 2020 (maybe September 2020 to be optimistic).
TA: I think USOIL has reached a short term double top. Lots of resistance at $27.50 and bulls trying to retest this level due to the SA price improvement news. Where does USOIL bottom for June 2020? Depends on how much storage the last guys standing actually have access to. I think we are at least looking at support of $19.00 and then $14.50. After that, who knows.
Key data / items to watch:
Weekly API and EIA crude data
Other storage data / news (what is happening with all of the floating storage / SA oil due to land in 5-10 days?)
Demand indicators / re-openings
Airline news (restrictions WILL be put in place, and it will be interesting to see how this impacts flight numbers and demand)
This is not trading advice and should not be considered an investment consideration. Educational purposes only.