Oil prices jumped roughly $5.00 following initial reports of the agreement and have spent the past few weeks consolidating in a relatively tight range from roughly $51.60 – $55.20.
Taking into account all recent decisions and actions, energy market participants are raising the question “How will President Trump impact on oil prices?”
In his recent round of executive orders, President Donald Trump signed orders to resume progress on both the Keystone XL pipeline, as well as the Dakota Access pipeline, both of which were halted by the Obama administration citing environmental threats.
Given the President’s recent action, it appears as though the North American oil infrastructure stands poised for a change in the coming years. Just how much of an impact these changes will have on oil futures prices will remain at the forefront of conversations going forward.
On the other side of the globe, terms agreed upon in the latest OPEC meeting to cut oil production appear to be working effectively with leaders of key oil-producing countries confirming the cartel’s compliance. Oil prices jumped roughly $5.00 following initial reports of the agreement and have spent the past few weeks consolidating in a relatively tight range from roughly $51.60 – $55.20.
The signing of said executive orders certainly sets the stage for future policies; however, how much of an impact it will have on oil price, and when that impact will be realized, remain largely unknown. After all, extraction costs from Canadian Oil Sands remain significantly more expensive than Middle Eastern on-shore drilling operations and just how large of an impact these pipelines will have on the global market, assuming they are completed, remain a topic of much debate.
In light of all the above, I am confident that 2017 will bring exciting new trading opportunities across the board and, in an effort to educate our audience on the commodity markets, RJO Futures is providing a complimentary issue of our 2017 Commodity Trading Guide to our readers, which you can request here.
From a technical standpoint, the oil futures market appears indecisive and price action has been largely range-bound. Intermediate term direction remains positive; however, the near-term trend is largely undefined leading some participants to consider mean-reversion trade strategies. Momentum indicators can prove useful in market environments similar to the one seen in crude oil and the RSI Indicator could serve as an excellent addition to a trader’s repertoire.
Individuals navigating through a sideways trading environment can look to RSI divergences for an early indication of a potential reversal in near-term momentum and, for those interested in receiving additional information on how to implement these signals into a trading strategy, I encourage you to contact me directly. Near-term resistance can be seen at the 55.20 level where later December / Early January price action had a difficult time trading above. Near-term support comes in from 51.59 – 51.92, which is an area that traders could “key in on” for trading signals. In a neutral market environment, often times range extremes can present opportunistic risk/reward trading opportunities given the nature of the market.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.