Crude Oil breaking consolidation

WTI Crude Oil fans along on its bullish way

Back in April we (well, NFTRH) identified WTI in a bullish looking consolidation spiking above and below the SMA 50.

wti crude oil

I wanted to buy USO but first had to check to see if this sometimes inefficient oil tracker was doing its job. The ratio of USO to WTIC shows that it has been doing its job quite nicely for some time now. So it was added (then sold for a middling profit more for market risk management than the chart).

I am far from a commodity market internals expert but I think it has a lot to do with backwardation and contango, two concepts that professional commodity traders are all too aware of at all times. For the dumb likes of me, knowing that there is an ongoing trend in USO/WTI is fine as long as it continues.

USO was most recently added (and increased) earlier this month and the charts have remained very nice, especially the positive and non-overbought RSI and MACD we’ve noted weekly in NFTRH’s Commodities segment. Today appears to be a bump up and out of consolidation.

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This Post Has 7 Comments

  1. Bart

    I bought gas instead, which is also having a nice day. I did take both your NVDA and BABA trades, figuring they would not disappoint both (as both reported earnings). NVDA came out yesterday after the close and it traded at some point 12% down during after hours! But it completely recovered this morning. BABA was good. Nice!

    1. Gary

      After my spec trying to game TWTR and its big mouth would-be acquirer didn’t work I saw BABA sitting there saying ‘take me for a twirl!’. I just felt that it has had enough of a battering and is now a value. But bottom feeds are challenging because the trend is usually down.

      Was prepared for NVDA to disappoint, so today is a pleasant surprise.

      As for gas, you’re a braver man than I. :-)

  2. Fredrik (subber)

    Keep it simple Gary. This is what happens to a commodity after 7 years of underinvestment.

    Near term we have driving season, China reopening and Russian decline in output due to its henious war.

    Shale saved the oil price ten years ago and that won’t happen again.

    Look at inventories for oil, gas and coal. All bullish.

    1. Gary

      Good points sir.

      1. Fredrik (subber)

        We are in the early stages of a global energy crisis. HH gas at 9 bucks in May. Biden is desperately emptying the SPR to keep WTI below 150. Bringing new major production online is several years away and there are bottlenecks such as capital, people, equipment and strong ESG sentiment against the sector.

  3. Anonymous

    I learned the painful lesson of contango in natural gas during the last commodity cycle as it turned. Dennis Gartman’s getting back in the game, which tells me the commodity super cycle is upon us.

    1. Gary

      Are you saying that Gartman involved is a *good* thing??

Comments are closed.