Analysis

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USOIL
Nov 25, 2020, 12:20 PM GMT
#Commodities

There Will Be No Glut!

All of you movie buffs out there probably immediately understood the reference in the title to the movie "There will be blood". Without getting into too much film trivia here, the story revolves around the early days of the crude oil industry, and today's analysis focuses on the latest developments concerning the price of crude oil futures.

The price of the commodity enjoyed a remarkable rally recently, as fears over muted global demand were promptly replaced by heightened investors' enthusiasm following the latest vaccine news and developments at Washington. The market is riding high on its expectations for the future, which is distorting the general demand for safe-haven assets in favour of oil and the greenback.

For as long as demand for crude remains so high, the risk for a new supply glut remains comparatively low. The current bullish sentiment is undeniably strong, and the price of oil is expected to continue climbing in the following weeks, which is substantiated by most underlying fundamentals.

Therefore, traders who would like to capitalise on this market setup would have to look for the next opportunity to join the existing trend, preferably following a bearish correction. That is why the purpose of today's analysis is to examine the best possible scenario for the implementation of such trend-continuation trading strategies.

Profit & Loss
Short Term Long Term Net % Gains
+ - + -
1.57 USD 0.78 USD 0.98 USD 0
3.80%
Short Term
+ -
1.57 USD 0.78 USD
Long Term
+ -
0.98 USD 0
Net % Gains
3.80%

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