New WTI Oil Future Short

OPEC producers last thursday did not reach any agreement to limit production. Oil ministers said they were happy with current oil prices which is understandable as these have nearly doubled in the last 4 months. The pressure to limit production has clearly been relieved.

Some OPEC countries not producing at full capacity might be tempted to increase their outputs. On top this some recent outages (Libya, Iran, Nigeria,..), are in the process to be corrected so the supply/demand balance risks to turn again in a glut.

On the technical side , one can clearly see on the chart below that strong resistances appear at 50 to 51 USD / baril levels . The daily trend given by MACD has turned negative, the force index is in the process of doing the same. Negative divergences appear on the RSI chart and recent positioning of speculators were at the highest ever on the bullish side which is significant on a contrarian point of view.

We take a short position on the July Crude oil future at current level of 49,09USD.
I would not advise to let go this trade if oil prices cross significantly above the 51 USD mark .
So we place a stop loss at above 51 on a closing basis and above 52 on a during session basis .

Crude Oil Chart – June 6th 2016