Follow-through selling in Crude Oil- WATCH THE TREND PIVOT

September 3, 2020

There was no real substantive news overnight in Oil after yesterday's news that Iraq was looking for relief from cuts in 1Q2021. Iraq tried to do damage control, pointing to its efforts to make up for cuts it was behind on and its pledge to 4Q2020 cuts. Right now, traders and analysts are rounding up the "usual suspects" for why oil is lower- a bounce in the US Dollar and questions about the return of demand/Covid. Because those "props" are not incremental on the margin, participants must be even more respectful of the weakness... The Trend Pivot needs to be watched, as spot has dropped below the Trend change pivot of $41.46. This means that a Friday close here will change the Trend from UP to DOWN. The Trend has been up for 16 weeks. Producers need to pay attention to a potential change in Trend tomorrow- if they are considering hedges they will have more risk and less time to react should this new Trend continue with lower prices.  

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