WTI crude tumbles to 3-months lows, swings respond as per whims and fancies of FxWirePro’s directional hedges

Last month, it was little frightful trading for crude oil price trend. The global benchmark, Brent futures, dropped more than 12.71% last month, evidencing its worst monthly performance of 2019.

Technically (for Brent crude), we raised a caution of back-to-back shooting star & spinning top occurrence that is coupled with overbought pressures signaled by the momentum oscillators hampering the previous bullish sentiments (refer weekly plotting).

Consequently, bears managed to plummet prices below EMAs with stern bearish candle with a big real body.

On daily terms, ‘Evening Star’ at 71.58 levels signaled weakness, furthermore, shooting star & hanging man patterns have plummeted the prices way below DMAs.

Both RSI and Stochastic curves are showing the downward convergence to these price slumps to indicate the intensified selling momentum on both timeframes. While to substantiate this bearish stance, bearish DMA and MACD crossovers indicate the downtrend to prolong further.

Fundamentally, weaker oil prices pose a challenge to the OPEC (Organization of the Petroleum Exporting Countries). Later this month, the association and its Russia-led allies, in addition, will assemble in Vienna to reassess the global demand/supply equation for the rest of the year.

Prices had spiked as much as 33% during this spring upon the pact to curb oil output late last year. However, the potential economic slowdown in China and apprehensions about the Trump trade policies are threatening oil price prospects (sanctions on Venezuela is extra pressure).

For now, the concerns on shrinking global demand for oil, crude market participants have got challenging questions about supply as to how much banned Iranian oil is reaching foreign refiners?

Updates on crude oil derivatives trades: In crude oil segment, we initiated a risk reversal strategy by going long in Brent Dec’19 10D call versus short Dec’19 10D put. They also went tactically short Brent-Dubai Q3’19 swap spread due to mounting risks from Iran sanctions. 

In addition, we activated Brent crude directional hedge, by adding shorts CME Brent futures for June delivery for arresting downside risks in short-run, simultaneously, longs in CME Brent futures of August’2019 month deliveries (trades advocated when it was at $70 areas).

Currently, at spot reference of Brent: $62.70 levels, as the market tone is troublesome, we note that the continued decline in crude oil with Brent testing fresh lows in the minor trend and threatening $60/bbl or below levels that makes the energy commodity dancing exactly as per our whims and fancies.

Hence, we wish to uphold the same positions now with a view of arresting both swings directionally. Courtesy: JPM

Currency strength index: FxWirePro's hourly EUR spot index is inching towards 49 levels (which is mildly bullish), while hourly USD spot index was at -146 (highly bearish) while articulating (at 12:49 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex