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Risk, Reward Favors a Bullish Oil Outlook on the Shorter-ter

Aside current geopolitical unrest, trade war escalation, we fancy that the short-term risk, reward favors a bullish oil from a technical vantage point. It has been a crazy week for oil prices as geopolitical tensions and trade war escalations has caused increased volatility in prices of this commodity. Notwithstanding, price have maintained its shorter-term range (albeit haphazard) and we are currently at the base area (that is the support of the range) (highlighted in yellow) [see m15 Chart] in which we would look to set-up our trade accordingly.

As this is being published, we just received news that 6-7 Saudi Arabia Aramco’s pump have been blown up by explosive-laden drones. This is following the alleged attack of cargo vessels on the Strait of Homuz this Monday– a key route for transporting oil from the Persian Gulf to the rest of the world. As much as it’s being underplayed by the Saudi Arabia and the media this drives increased fear in the oil space. We can ride on this increases uncertainty to buy oil at least on the short term.

Fig 1: 15-Minute (m15) WTI/US Oil/US Light Crude

WTI/US Oil/US Light Crude (July)

Buy @ current price (instant execution)

Stop: 6074

Limit: 6250


Alternatively, this is a heightened time in terms of risk in the oil market, so it is advised to always use a stop loss as the above outlook can be nullified at any point in time.


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